Wal-Mart – Target of Health Insurance Legislation

Wal-Mart Stores Inc., the nation’s and world’s largest retailer, is quickly becoming Florida’s largest retailer. The chain opened 50 of its 24-hour Supercenters throughout the state during 2002 and 2003, and there are nine Wal-Mart stores in Pinellas County- two Sam’s Clubs, three Supercenters and four regular Wal-Marts.

It is also among the state’s largest private employers, with 77,850 employees-far more than the 54,000 employed at Walt Disney World. According to Wal-Mart’s media relations hotline, there are 3,407 people employed by Wal-Mart in Pinellas County.

With these large employee rosters come high costs. Wages, overtime, benefits, taxes and other expenses make staffing and its related costs the biggest expense for almost all employers. When a company is big enough to employ tens of thousands of people, methods for cutting costs are an issue management visits daily.

Often management reduces employee benefits-namely health insurance-as a way to keep costs down, and until recently this practice was met with little resistance. But this month legislative action in both Maryland and Pennsylvania took exception to this practice. And lawmakers in 28 other states, including Florida, Connecticut, Kansas, Colorado and Tennessee, are preparing to introduce similar legislation. The face of cost savings at the biggest employers-and specifically Wal-Mart-may never be the same.

On Jan. 12 the Maryland Senate voted to override a governor veto of a bill requiring companies with more than 10,000 employees to pay for some health-care benefits. Dubbed the “Wal-Mart Bill,” the legislation is aimed squarely at the retail giant. It is already having a negative effect, as Wal-Mart’s shares had their biggest decline in a month, closing lower by 83 cents, soon after the vote.

Spurred into action by the AFL-CIO, which represent over nine million workers, states are beginning to recognize that healthcare costs must be paid by someone. And if it’s not employers, the burden often falls on the state. “The bottom line is that our health care system is broken-but it didn’t just split open. Big companies like Wal-Mart are pulling it apart and profiting at taxpayers’ expense,” says John Sweeney, president of the AFL- CIO.

Florida state Rep. Susan Bucher, D-Lantana, has filed a version of the health care proposal for the spring legislative session. It closely resembles the Maryland measure. Of Wal-Mart’s costs to taxpayers she says “It might be tempting to dismiss this issue as a larger one of corporate welfare, or to argue that we’re singling out Wal-Mart unfairly. But facts are facts: Wal-Mart does not just shift health-care costs onto taxpayers, it does so at a level well beyond that of any other employer.”

This legislation, if enacted, would apply to private employers with 10,000 or more employees. These companies would be required to spend at least 8% of total payroll on employee health care or pay the difference into a state-administered fund created to assist the uninsured.

Legislation like this is a direct response to the numbers of people on Medicaid. In Florida alone, an estimated 12,300 of Wal-Mart’s 91,000 employees relied on Medicaid for health care coverage in 2004. Wal- Mart’s position is that it has more employees on Medicaid simply because it is the state’s largest employer.

Clearly alarmed by these legislative actions, Wal-Mart has lowered its monthly health insurance premiums-some as low as $11 a month-so that more entry level employees can afford its company health care insurance.

Wal-Mart executives are denouncing the campaign, saying the company provides health insurance to nearly half of its employees. Sarah Clark, Wal-Mart Spokesperson, says “More than three-fourths of Wal-Mart associates have health insurance.”

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