Issues | Health Care

Health CareDespite numerous tweaks to their health plan, Wal-Mart simply cannot offer an affordable plan to cover its workers. Lagging behind industry averages, Wal-Mart’s employees are subjected to unnecessary charges and fees; wait longer for coverage eligibility, and are forced to seek out public health programs to fulfill their health care needs. The Susan Chambers’ memo, release in October 2005 by Wal-Mart Watch, reveals how Wal-Mart executives value saving a buck over the health of their workers. With less than 50% of associates choosing to participate in their plans, the Wal-Mart health plan is simply not working.

Too Little Coverage

Over half of Wal-Mart workers fall through the company safety net:

  • Fewer than Half of Employees Covered. According to Wal-Mart's own website, "In January 2006, the number of associates covered by Wal-Mart health care insurance increased to 46%." [Walmartfacts.com]
  • Coverage Lags Far Behind National Average. Nationally, 63 percent of workers in large firms (200 employees or more) receive their health benefits from their employer. More than 80 percent of Costco workers are covered by their company plan. [Employer Health Benefits 2006 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; New York Times, 10/24/05]
  • Neither Affordable Nor Accessible. Wal-Mart provides health care options to their employees and families that have a deductible of $1,000 for individuals and $3,000 for families. Wal-Mart employees must endure long waits to qualify for benefits: six months for full-time employees and one year for part-time employees. [Wal-Mart 2006 Associate Benefits Book; Wal-Mart Press Release, 4/17/06]
  • Waiting Too Long to Qualify. The Wal-Mart average for full-time workers to qualify for benefits is six months, compared to the retail average of 2.7 months and the average waiting period for large firms (200 or more workers) of 2 months. [Wal-Mart 2006 Associate Benefits Book; The (Montreal) Gazette, 4/18/06; Employer Health Benefits 2006 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust]

Too Many Hurdles

Obstacles to coverage abound -- and workers sometimes give up trying:

  • Hidden Charges. The Wal-Mart 2006 Associate Benefits Book details the specific policies of the Associate Medical Plan (AMP) and reveals that the plan is filled with additional charges. Standard services - including office visit co-pays, emergency room visits and ambulance services, per-event deductibles, and pharmacy co-pays -- are not applied toward the standard deductible. For example, in addition to the standard deductible, a $300 pharmacy deductible must be reached, a $1,000 in-patient facility deductible per visit must be paid, and a $500 out-patient surgical facility deductible per visit must be paid. [Wal-Mart 2006 Associate Benefits Book, pp. 32 and 38]
  • High Out-of-Pocket Premiums. According to the Center for a Changing Workforce, in 2003, Wal-Mart employees paid 41% of insurance premium costs. At the time of the report, Costco employees paid about 10% of premium costs. Nationally, workers today pay an average of 16% of premiums for single coverage and 27% of premiums for family coverage. [Employer Health Benefits 2006 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; Wal-Mart and Healthcare: Condition Critical, Center for a Changing Workforce, 10/26/05]
  • Less Money for Benefits than Other Firms. In September 2003, Wall Street Journal reported, "Last year, average spending on health benefits for each of the company's roughly 500,000 covered employees was $3,500, almost 40% less than the average for all U.S. corporations and 30% less than the rest of the wholesale/retail industry, according to estimates by Mercer Human Resource Consulting, a unit of Marsh & McLennan Cos." [Wall Street Journal, 9/30/03]
  • Confusing to Even the CEO. In a speech before the National Governors Association, Wal-Mart CEO Lee Scott "conceded that one of Wal-Mart's new efforts, the introduction of health savings accounts, had gotten off to a slow start because setting up the accounts was 'too complicated.' He said he found the process confusing and had not yet set up his own account." [New York Times, 2/27/06]

Shifting Burdens to Taxpayers

As employees fall through the Wal-Mart safety net, taxpayers catch them -- and end up with the bill:

  • Letting Workers and Families Rely on Public Programs. A memo written by Susan Chambers, Wal-Mart Executive Vice President for Benefits, for the Wal-Mart Board of Directors, said: "We also have a significant number of Associates and their children who receive health insurance through public-assistance programs. Five percent of our Associates are on Medicaid compared to an average for national employers of 4 percent. Twenty-seven percent of Associates' children are on such programs, compared to a national average of 22 percent (Exhibit 5). In total, 46 percent of Associates' children are either on Medicaid or are uninsured." Chambers wrote, "Wal-Mart's critics an easily exploit some aspects of our benefits offering to make their case; in other words, our critics are correct in some of their observations. Specifically, our coverage is expensive for low-income families, and Wal-Mart has a significant percentage of associates and their children on public assistance.'' [Susan Chambers Memo to the Wal-Mart Board of Directors; New York Times, 10/26/05]
  • Topping State Rankings of Employees on Public Care. In 24 states, Wal-Mart leads the list of companies with the most employees and dependents enrolled in state-funded health care programs. In all states that have released such data -- Alabama, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Illinois, Iowa, Maine, Massachusetts, Montana, Nebraska, New Hampshire, New Jersey, Ohio, Pennsylvania, Tennessee, Texas, Utah, Vermont, Washington, West Virginia and Wisconsin -- Wal-Mart tops the list. In Arkansas, where Wal-Mart's own headquarters is located, 3,971 of Wal-Mart's 45,106 employees are on public assistance. [Arkansas Democrat-Gazette, 3/17/05; Arizona Republic, 7/30/05 and 1/01/05; UC Berkeley Labor Center, 8/2/04; Federal Register Source; Associated Press, 3/3/05; St. Petersburg Times, 3/25/05; Atlanta Journal-Constitution, 2/27/04; Associated Press, 3/4/05; Institute for Local Self-Reliance 6/28/05; Great Falls Tribune, 6/26/05; Omaha World-Herald, 10/19/05; Chicago Tribune, 10/07/06; Associated Press, 5/12/05; New Jersey Policy Perspective 08/05; Ohio Dept. of Job and Family Services 3/1/06; Philadelphia Inquirer, 3/2/06; Chattanooga Times Free Press, 1/20/05; Salt Lake Tribune, 2/5/06; Vermont Guardian, 4/18/05; Seattle Times, 1/24/06; Charleston Gazette, 12/26/04; The Capital Times, 11/4/04; Milwaukee Journal-Sentinel; The Use of Public Health Assistance in Massachusetts in FY06]
  • Forcing Higher Medicaid Spending. Michael Hicks, an economist at the Air Force Institute of Technology at the Wright-Patterson Air Force Base in Ohio, conducted a study analyzing state Medicaid data from 1978 to 2003 and found that Wal-Mart causes an increase in state Medicaid spending by as much as $898 per person. [Business Week, 10/26/05]

Evading Responsibilities

To avoid paying for health care, Wal-Mart goes to great lengths to hide the truth:

  • Shifting Employees to Part-Time Status. A memo written by Susan Chambers, Wal-Mart Executive Vice President for Benefits, for the Wal-Mart Board of Directors, recommended: "Capture savings from current initiatives to improve labor productivity. These initiatives include reducing the number of labor hours per store, increasing the percentage of part-time Associates in stores, and increasing the number of hours per Associate." [Susan Chambers Memo to the Wal-Mart Board of Directors, http://walmartwatch.com/memo; New York Times, 10/26/05]
  • Admitting to a Part-Time Strategy. "Wal-Mart executives have acknowledged that the retailer will also shift to a heavier reliance on part-time workers, who now account for roughly 20% of the work force, higher than the national average for retailers. A recent JP Morgan report said Wal-Mart plans to increase the ratio of its 1.2 million-member U.S. hourly work force on part-time schedules to 40% from 20%, meaning the hours of as many as 240,000 workers could be cut below 34 a week, the threshold to be considered full-time." [Wall Street Journal, 4/11/06]
  • Phasing Full-Timers Out. Citigroup analyst Deborah Weinswig predicted that Wal-Mart's proportion of full-time workers is declining. In a 60-page research report, she predicted that "Wal-Mart will reduce its ratio of full-time workers to 60 percent over the next year or two, with the remaining 40 percent slated for part-time status. Wal-Mart's proportion of full-time U.S. workers -- which currently stands at about 75 percent -- could further fall to 50 percent in the future." [Associated Press, 5/3/06]
  • CEO: 'Disagree? Then Leave.' In 2006, the New York Times reported that "in a confidential, internal Web site for Wal-Mart's managers, the company's chief executive, H. Lee Scott Jr., seemed to have a rare, unscripted moment when one manager asked him why 'the largest company on the planet cannot offer some type of medical retirement benefits?' Mr. Scott first argues that the cost of such benefits would leave Wal-Mart at a competitive disadvantage but then, clearly annoyed, he suggests that the store manager is disloyal and should consider quitting." [New York Times, 2/17/06]

What You Can Do

Ready to work to get Wal-Mart employees more access to health care?

  • Join thousands in signing the Handshake with Sam agreement and calling on Wal-Mart to live up to its moral responsibilities
  • Tell friends and family about Wal-Mart's obligation to offer employees health care -- and how the store falls short
  • Write a letter to the editor of your local newspaper about the impact of Wal-Mart's health care practices on your community