Issues | Health Care

Despite 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 around 50% of associates choosing to participate in their plans, the Wal-Mart health plan is simply not working.

Too Little Coverage

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

• Wal-Mart health insurance coverage lags far behind national average. Nationally, 64% of workers in very large firms (5,000 employees or more) receive their health benefits from their employer. Wal-Mart covers around 50% of its employees. [Employer Health Benefits 2007 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; Wal-Mart Press Release, 1/22/08]

• 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]

• Wal-Mart fails to cover preventive care. According to Wal-Mart's most recent health plan, preventive care (except for mammograms, pap smears, and well child visits) is not available to associates. This provision seems to fly in the face of Wal-Mart's "personal sustainability" program. [Wal-Mart 2008 Associate Benefits Book, Page 71]

• Wal-Mart Employees Still Wait Twice As Long For Health Care Coverage Than Workers At Other Retailers. The Wal-Mart average for full-time workers to qualify for benefits is six months, compared to the retail average of three months. Part-time employees must wait a full year before receiving benefits. Since the majority of workers do not stay a year, the majority never get health care. [Wal-Mart 2008 Associate Benefits Book, Pages 10 and 13; Employer Health Benefits 2007 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust]

• Employees With Pre-existing Conditions Must Wait At Least One Year For Treatment. After finally reaching eligibility after six months or one year, depending on employment status, an employee must wait an additional year to receive full coverage for a pre-existing condition. If an employee enrolls late, he or she must wait 18 months. [Wal-Mart 2008 Associate Benefits Book, Page 53]

Too Many Hurdles

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

• Wal-Mart charges extra for ambulance usage and emergency room visits. Wal-Mart charges an additional deductible of $100 for the use of an ambulance, both land and air, as well as $100 for emergency room visits. This reoccurring cost on top of the already high deductible devalues the effectiveness of insurance and punishes employees for severe illness and injury. [Wal-Mart 2008 Associate Benefits Book, Page 58]

• Wal-Mart's new plan excludes spouses of peak-time and part-time truck drivers. This exclusion leaves the spouses of many Wal-Mart employees without a viable option for health insurance outside of public assistance. From the Wal-Mart's 2008 Associate Benefits Book, "Peak-Time associates and Part-Time Truck Drivers may only cover their Eligible Dependent children and may not cover their spouses. Special rules may apply if you transition from Full-Time to Peak-Time." [Wal-Mart 2008 Associate Benefits Book, Page 5]

• 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:

• Wal-Mart tells Ark-lawmakers that its $4 prescription plan revised health care Sen. Percy Malone, D-Arkadelphia, who owns several pharmacies, said Wal-Mart is just trying to polish its image. It wasn’t long ago that the company had a bad reputation for its employees’ health care, he said. "Now they’re giving us lectures on how to take care of America with health care - and I guess that's "Shop at Wal-Mart,'" he said in an interview. [Arkansas Democrat Gazette, 7/8/08] 

• 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]

• Wal-Mart's Medicaid Numbers Are Flat. After a year of touting health plan improvements, Wal-Mart still has the same percentage of employees using Medicaid as the year before. During the 2006 enrollment period, almost 2 percent of employees were on Medicaid. In 2007, it was around 2 percent again. [Wal-Mart Press Release, 1/11/07; Wal-Mart Press Release, 1/22/08]

• Wal-Mart's Instructions for Associates. This document bears the Wal-Mart logo and contains a section entitled, "Applying to a Social Service Agency?" This section instructs associations who are applying for social services to tell their caseworkers to verify employers information with Wal-Mart's outside contractor, The Work Number. [http://www.aflcio.org/corporatewatch/walmart/upload/employment_verification.pdf] 

• Topping State Rankings of Employees on Public Care. In 25 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, Oregon, 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; "The Food Stamp and Medical Employer Tracking Report," Oregon Department of Human Services, 1/13/09]

• 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]

Download the Fact Sheet

		Wal-Mart's New Health Plan: Medicaid In the most recent report from Policy Matters Ohio, Wal-Mart tops the list of Ohio employers with the most employees receiving government health care assistance. According to Wal-Mart, these rankings are "notoriously unreliable" and "hard to verify." However, when you consider that Wal-Mart tops the list in every state where the information is available, they start to look reliable. (PDF)

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