Will Walmart raise wages of those losing their insurance?

Providing Quality Health Benefits for Our Associates

By Sally Welborn, Sr. Vice President, Global Benefits, Walmart
Walmart, October 7, 2014

In the U.S., the 1.3 million people who work at our stores, clubs and distribution centers are vital to a great experience for the 140 million customers shopping with us each week. We’re in business because our associates bring us their unique skills and talents – and so we do our absolute best to offer all the benefits that come with a great job, particularly affordable health insurance.

Like every company, Walmart continues to face rising health care costs. This year, the expenses were significant and led us to make some tough decisions as we begin our annual enrollment. As a result, today we announced that our associates will see an increase in premiums for 2015.

We’re also changing eligibility for some part-time associates. We will continue to provide affordable health care to all eligible associates, including part-time, who work more than 30 hours. However, similar to other retailers like Target, Home Depot, Walgreens and Trader Joe’s, we will no longer be providing health benefits to part-time associates who work less than 30 hours. This will impact about 2% of our total U.S. workforce. 

We don’t make these decisions lightly, and the fact remains that our plans exceed those of our peers in the retail industry. Our premiums remain well below the industry average compiled by expert Aon Hewitt.  We also continue to pay the majority of health care costs for associates covered under our medical plans. For example, on average we cover more than 60% of our associates’ total health care costs and more than 75% of their premium costs. In contrast, the retail industry pays, on average, about 54% of total health care costs and 68% of employee premiums.


Walmart to End Health Coverage for 30,000 Part-Time Workers

By Hiroko Tabuchi
The New York Times, October 7, 2014

Walmart Stores, the world’s largest retailer and the nation’s largest private employer, said on Tuesday that it would terminate health insurance coverage for about 30,000 part-time workers, joining a string of retailers that have rolled back benefits in response to the Affordable Care Act.

Starting on Jan. 1, Walmart will no longer offer insurance to employees working less than an average of 30 hours a week, a move the retailer said was in response to an unexpected rise in health care costs.

The workers losing their coverage make up about 5 percent of the company’s part-time work force of about 600,000, including in-store, logistics and corporate workers, said Brooke Buchanan, a company spokeswoman. Walmart did not disclose what percentage of the part-time work force would be left without coverage. Many part-time employees were never covered for a variety of reasons.

Walmart said that it would work with a health coverage specialist to guide workers through the process of finding alternative coverage.



By Don McCanne, MD

Large retailers are infamous for low wages and limited benefits. Walmart has been a special target of critics, no doubt in part because a few members of the Walton family are amongst the very wealthiest people in the world - not just in the top 1 percent, but at the very top of the 0.01 percent. Providing more generous health benefits for all of their employees would cost only a small fraction of the annual net gain in wealth of the Walton family.

It is not as if Walmart’s health plans are comparable to those traditionally offered by most other large employers. According to their release, they cover only 60 percent of their employees’ health care costs - a level equivalent to the bronze plans in the very bottom tier of the insurance exchanges created by the implementation of the Affordable Care Act (ACA).

As ACA was being crafted it was decided that employers would not have to provide health care coverage for employees working under 30 hours per week. To no surprise, many employers adjusted the hours of their part-time employees to avoid having to include them in their health plans. Walmart previously had less than 24 hours a week as the cut-off for providing health coverage, but they changed that to under 30 hours since ACA allowed them to get more hours out of their employees without having to provide health benefits.

Walmart intends to provide guidance to the 30,000 employees who will lose their insurance. Those with poverty level incomes will no doubt be directed to Medicaid in those states in which they are eligible. Those just above poverty wages will likely be sent to the exchanges where they may be eligible for generous taxpayer supported subsidies. Why should the Walton billionaires provide coverage for these workers when the taxpayers will do it for them?

This should provide a good test of the principle that almost all economists preach: that employer-sponsored health plans are paid for by the employee in the form of forgone wage increases. Now that 30,000 employees working 30 hours or less will lose their insurance, surely Walmart will provide them with wage increases equivalent to perhaps three-fourths of the the employer contribution to the health plan premiums (since they work three-fourths of the full time hours). Walmart takes every opportunity to publicize how well they are taking care of their employees, yet they remain silent on wage increases for those losing their insurance. Economists need to take another look at the slight of hand revealing the deception of the forgone wage increases. Wage increases are forgone when health care costs increase for the employer, but just try to get the employers to restore alleged forgone wages when the health benefits are terminated.

When we change to a single payer national health program - and we will - employers will be relieved of their responsibility under ACA to provide health insurance for their employees. At that time efforts can be concentrated on ensuring that employees then receive living wages. That could be another great spin-off benefit of an improved Medicare for all.