So just two days ago, Wal-Mart, which as I’ve pointed out in THCB before, has never really been serious about offering health benefits to its workers given that it makes higher profit margins when it doesn’t, apparently had a change of heart. The change of heart involved giving basically minimum wage the chance to pour their huge amount of extra savings into an HSA, and also to get health insurance (without a maximum benefits cap of a massive $25,000) after only one year of employment — ignoring the fact that Walmart deliberately has some of the highest turnover rates of any large corporation. But while Don McCane from the single payer crowd was not impressed, at least one usually non-free market loony blogger was somewhat convinced. (Note the somewhat jaded comment on Joe’s post from yours truly, in which I said that he was an optimist).
Why was he an optimist? Because any large or small employer that depends on a low income workforce will do better financially by letting that workforce turn-over quickly and keeping their benefits as low as possible. The Costcos and Starbucks are exceptions and their margins suffer in comparison. Of course when you’re talking about health benefits, you’d also do well to try to get your employee population to be younger and healthier than average, or else America’s former largest employer may be your future model. (as Uwe says, GM is an insurance company that builds cars to defray its health care expenses). So what did you really expect from the Beast of Bentonville.
Well of course it doesn’t take long to realize that Wal-Mart can’t help but trip over its feet in the PR department, event though it’s barely out of the glow of the minuscule positive spin it was getting. The NY Times gets its hands on the memo that tells the reality: Wal-Mart Memo Suggests Ways to Cut Employee Benefit Costs. What’s the rationale? Get the unhealthy employees out of there, and also eighty-six the ones that stick around and might collect those benefits. And of course hire McKinsey to tell you about that strategy, because you really need $700 an hour consultants to tell you how to reduce your health care costs using those techniques!
In some ways I have a smidgen of sympathy for Wal-Mart. After all they weren’t even around when the ridiculous employer-based system was created. But it’s only a smidgen. Given that employment based insurance is what we’ve got, and given that Wal-Mart is one of the planet’s most profitable companies, it could easily take the high road. Alternatively, it could easily use its political muscle to push for genuine universal health insurance in which everyone (including big corporations) pays a fair share. Instead it just wants to get out of any notion of responsibility, and dump everything on some one else–usually its employees and the taxpayer.
And apparently it’s a family trait.