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Why Wal-Mart's Health Care Letter Matters

08/01/2009 05:12 am 05:12:01 | Updated May 25, 2011

When the nation's largest private employer joins with a leading labor union and a Democratic think tank to advocate that employers provide health insurance for workers, it's worth stepping back and handicapping what this means for the larger debate.

Making waves in health care is hardly new terrain for Wal-Mart. More than half of Wal-Mart's U.S. employees are currently covered by company-provided insurance. In 2006, the company announced a first-of-its kind prescription drug plan that enabled consumers to purchase a one-month supply of 143 drugs for as little as $4. Earlier this year, Wal-Mart rolled out an e-health system offering for physicians in small offices, the vast majority of America's doctors.

Today's announcement, however, goes to the heart of what will eventually determine the outcome of the health-care reform debate: the need to cut costs and do so quickly.

Case in point is last week's unprecedented pledge by the pharmaceutical industry to provide $80 billion worth of discounts on medications frequently purchased through Medicare, cutting the cost of prescription drugs for a number of recipients in half and reinforcing the strength of Medicare Part D. This followed an earlier announcement by the industry to reduce health care spending by $2 trillion over the next 10 years, a move welcomed by both Democrats and Republicans.

In a letter to President Obama, Mike Duke, CEO of Walmart; Andy Stern, president of the Service Employees International Union; and John Podesta, president and CEO of the Center for American Progress, made cost a central theme, saying, "we believe payment reform and efficiency initiatives need to be at the center of healthcare reform. The President and the Congress have put forward good ideas to improve the productivity of our health care sector. These policies need to be strengthened and adopted because health care reform without controlling costs is no reform at all."

The company made famous for low prices just helped further solidify cost control as a requirement for entry in the health care debate.