THE BLOG
11/14/2011 11:00 am ET | Updated Jan 14, 2012

Wal-Mart Has an "Oops" Moment

Wal-Mart had its own "oops" moment this week when it had to quickly pull the plug on a widespread news story about its ambitions to create a nation-wide health care program.

A 14 page "confidential" Wal-Mart document was leaked to NPR. The document was a solicitation for potential health care partners to develop a "national, integrated, low-cost primary health care platform." But within hours after the NRP story aired on November 9th, Wal-Mart issued a two sentence press release calling their own document "overwritten and incorrect."

The company did not, however, back away from the solicitation. In fact, proposals from health care vendors are due in Bentonville, Arkansas on November 22nd. The solicitation was so sloppy it says a final vendor would be selected by January 13, 2011 -- 10 months ago. So plans are moving ahead, despite Wal-Mart's disclaimer.

Under a heading called "Company Purpose," the solicitation reveals Wal-Mart's "overwritten" ambitions. The company says its intent is to use "the strengths of our business to drive costs out of health care and bring our customers the lowest prices on the products and services they need to stay healthy... we'll give the world an opportunity to see what it's like to save and have a better life and a healthier life."

That's big talk for a company that has been unable to give its own employees the opportunity to see what it's like to have a decent health care plan. The release of this internal document came roughly two weeks after The New York Times reported that Wal-Mart was "substantially rolling back coverage for part-time workers and significantly raising premiums for many full-time staff." Wal-Mart informed its "associates" working less than 24 hours per week that they would no longer have health care coverage at all. Deductibles for many workers are rising steeply.

If there is one area of its U.S. operations that has been aggressively attacked by critics over the years, it's Wal-Mart anemic employee health care plan. Low salaries and high deductible plans at Wal-Mart have forced tens of thousands of Wal-Mart workers to rely on publicly-subsidized health care. In my state of Massachusetts, a 2009 report showed that a total of 4,796 Wal-Mart workers relied on state and federal taxpayers for their health care support. Adding workers and dependents, Wal-Mart cost the Commonwealth $15.5 million in Medicaid expenses. This was more than twice the subsidy of $7.2 million for Wal-Mart workers and dependents in FY 2006. As of March, 2009, Wal-Mart had 11,681 workers in Massachusetts. That means 41% of Wal-Mart's employees were getting their health care from state and federal taxpayers.

Because Wal-Mart workers have no union, no collective bargaining, and experience high turnover, the labor-management blood pressure over health care coverage has been uncontrolled for years. Six years ago this month, I wrote about Wal-Mart's internal conversations with its employees on the subject of health care. The company posted on its employee website a FAQ called "Straight Talk: Answers to Tough Benefits Questions." Here is one question Wal-Mart posted:

Q: Since Wal-Mart makes billions of dollars in profits, why can't they contribute more towards my Medical Plan?

A: Last year, Wal-Mart spent approximately $4.2 billion on Associate benefits. The Medical Plan is already the largest category for benefits expenses, and benefits costs are projected to continue rising. Wal-Mart historically has contributed approximately two-thirds of the cost of the Associates' Medical Plan premiums. To continue to have a thriving, growing company, it is necessary to balance Associates' needs with expense control. Wal-Mart reinvests profits back into the business so we can continue to grow. This growth helps to support Wal-Mart's stability and success.

Wal-Mart had operating income of $25.5 billion in fiscal year 2011. They have been telling workers for years that giving them better health care would jeopardize the growth of the company. Meanwhile, the Walton family uses its vast wealth to open up a glitzy art museum this week near Wal-Mart's headquarters. Health care? Let them eat art!

No doubt Wal-Mart has grandiose plans to partner with managed care networks, as it has done with Humana to create a Medicare Drug plan. Their "confidential" health solicitation positions Wal-Mart to form Accountable Care Organizations (ACOs) with partners across the country, region by region. "One day," warns the website 24/7 Wall St. "the health care industry will wake up and see Wal-Mart looming over it with a long list of services available to the millions of people who go to its stores."

But before Wal-Mart offers the world an opportunity for a healthier life, the company needs to heed the Biblical dictum "physician heal thyself." Before selling American families a health plan, the Wal-Mart family should focus on improving the health coverage of its own workforce. We'll know that's happening when we see hundreds of thousands of Wal-Mart workers getting off government health subsidies like Medicaid.

Al Norman is the founder of Sprawl-Busters. He has been working with community groups to oppose big box sprawl for 18 years. His most recent book is The Case Against Wal-Mart.