Wal-Mart backs employer mandate for health coverage

The company's surprise move is criticized by other retailers, who say a mandate would drive up costs and drive down employment.

By Pamela Lewis Dolan — Posted July 20, 2009

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In a move not at all reminiscent of the Wal-Mart of the past, the nation's largest employer joined forces with the nation's largest labor union to tell President Obama that it supports a mandate for employers to provide insurance to employees.

Wal-Mart and the Service Employees International Union drafted a joint letter along with the Center for American Progress, a self-described progressive think tank based in Washington, D.C., to tell Obama they believe today's soaring health care costs are a result of so many people being uninsured. The solution, they wrote, is an employer mandate "which is far and broad in its coverage."

"Wal-Mart believes that if we support a mandate and are being asked to pay higher taxes, we should be assured in return that savings will be real," said Leslie Dach, executive vice president of corporate affairs and government relations for Wal-Mart, in a prepared statement.

Wal-Mart declined to comment further. Wal-Mart and SEIU began working together on health care issues in 2007, when they released guidelines for ensuring greater health coverage by 2012. Among the steps was "shared financial responsibility by businesses, government and individuals."

Other retail groups aren't hiding their shock over Wal-Mart's move.

"This was quite possibly the most unwelcome development to date of the health care reform debate for us," said Neil Trautwein, vice president and employee benefit counsel with the National Retail Federation.

Trautwein said the federation has been fighting employer mandates for at least 30 years. And while Wal-Mart is not a member, the federation has worked with the company in the past simply because it was too big to be ignored. But "I don't think you'll find a great lining-up behind Wal-Mart from the retail community and other employers" on this issue, he said.

In June, before Wal-Mart sent its letter to Obama, the federation had sent a letter to Sens. Edward Kennedy (D, Mass.) and Mike Enzi (R, Wyo.), who lead the Senate Committee on Health, Education, Labor and Pensions.

"It would drive up the costs of goods and drive down employment and do nothing ultimately to address the root cause of increasingly expensive health care and coverage," wrote Steve Pfister, the NRF's senior vice president of government relations.

J.P. Fielder, spokesman for the U.S. Chamber of Commerce, said while the chamber did not issue a statement on Wal-Mart's action, "We continue to oppose this."

The American Medical Association in 2008 adopted policy supporting a mandate that individuals obtain minimum coverage, but does not have specific policy addressing an employer mandate to provide coverage.

Some are wondering what Wal-Mart has to gain from this move.

According to Trautwein, because of Wal-Mart's size and supply chain expertise, "I think they think they can survive a reformed health care system with an employer mandate better than their retail competitors."

Wal-Mart maintains that all employers need to share in containing health care costs. The company has worked in recent years to improve its own reputation as being bad for the health care system.

The employer was long criticized for making it difficult for its employees to get company insurance, forcing them onto public aid. A few states attempted to pass bills requiring companies of a certain size to offer health insurance, measures that were aimed squarely at Wal-Mart.

The company now boasts that it insures more than half of its work force, including part-time workers, and that nearly 95% of its employees are insured either through Wal-Mart's plan or another insurance provider.

The company also rolled out a $4 prescription drug plan last year, with more than 300 medications.

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