Wal-Mart Increases Medicaid Spending, Decreases Wages

Main Category: Public Health
Article Date: 08 Nov 2005 - 11:00 PDT

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Wal-Mart increases Medicaid expenditures by an average of $898 per employee, according to a study presented on Friday at a conference held by the company to examine the impact of Wal-Mart on the U.S. economy, the New York Times reports (Greenhouse, New York Times, 11/5). Wal-Mart held the conference, called "An In-Depth Look at Wal-Mart and Society," to address criticism of wages, health benefits and workplace policies and "examine its effect on jobs, inflation and income growth," Bloomberg reports (Bloomberg, 11/4). Wal-Mart commissioned the independent economic research company Global Insight to manage the conference, conduct a study and solicit research (Joyce, Washington Post, 11/5). In total, nine studies were presented at the conference (Grant, USA Today, 11/7). For the Medicaid study, economist Michael Hicks, a professor at the Air Force Institute of Technology, examined the impact of Wal-Mart on government aid programs. According to the study, Medicaid expenditures increase by 1.5% for every 1% that the market share of Wal-Mart increases in a state. The study also found government cash aid to families decreases by 3.3% for every 1% that the market share of Wal-Mart increases in a state. The studies also indicate that Wal-Mart decreases wages in the communities in which it operates, Bloomberg reports (Bloomberg, 11/4). Wal-Mart does not increase expenditures for welfare or food stamps, the study found (New York Times, 11/5).

The Medicaid study is available online. Note: You will need Adobe Acrobat Reader to view the report.

The other studies are available online.

Roll Call Examines Effect of Wal-Mart Memo
In related news, Roll Call on Monday examined how an internal memo that recommended Wal-Mart hire more part-time employees and discourage unhealthy job applicants to help reduce health care costs "has given a jolt to anti-Wal-Mart activists' Capitol Hill agenda and forced Wal-Mart to do damage control in Washington, D.C., and around the country." Chris Kofinis, communications director for Wake Up Wal-Mart, said, "In an ironic way, Wal-Mart has given strength to the importance of this movement. A growing number of American people realize that this needs to be looked at from a political and legislative standpoint." Kofinis said that the memo "raises serious issues" related to the Americans With Disabilities Act. However, Susan Chambers -- Wal-Mart executive vice president of benefits and author of the memo -- said, "Nothing could be further from the truth," adding, "We are the single largest employer of people with disabilities" (Ackley, Roll Call, 11/7).

Editorials, Opinion Pieces
In addition, newspapers recently published two editorials and two opinion pieces on issues related to health benefits for Wal-Mart employees, such as the memo and plans to offer workers a new lower-cost health plan called Value Plan. Summaries appear below.

• Los Angeles Times: The memo "provides ample ammunition" to critics of Wal-Mart, but "it also speaks well of the company," a Times editorial states. Although the memo "is as much about spin as it is about substance," the document "makes some innovative suggestions," such as in-store health clinics and employee discounts on healthy foods, according to the editorial (Los Angeles Times, 11/5).
  
  
• Michael Critelli, Miami Herald: The memo "exposes a reality that we are aware of but rarely see so blatantly exposed: the crisis of major employers staggering under the weight of skyrocketing health care costs," Critelli, chair and CEO of Pitney Bowes, writes in a Herald opinion piece. "Prevention strategies" to reduce health care costs for companies can produce "dramatic" results, he writes. Critelli concludes that "prevention strategies clearly can generate the best long-term results by improving the health of workers and reducing health risks" (Critelli, Miami Herald, 11/6).
  
  
• USA Today: Value Plan "is a worthy experiment that could be attractive to other companies struggling to expand coverage but control health expenses," a USA Today editorial states. Although Wal-Mart could "do more," a "bare-bones policy" such as Value Plan is "better than nothing," the editorial concludes (USA Today, 11/7).
  
  
• Paul Blank, USA Today: Value Plan is "unlikely to insure one additional worker" because the plan has "extremely high deductibles and strict eligibility requirements," Blank, campaign director at Wake Up Wal-Mart, writes in an opinion piece. He concludes, "Americans will see Wal-Mart's announcement for what it is -- a company desperate to hide its growing moral bankruptcy" (Blank, USA Today, 11/7).

"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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