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Monday, October 24, 2005

Always Low Priced Healthcare. Always.

Bargain value healthcare from Wal-Mart? Wal-Mart has plans to begin offering cheaper healthcare coverage to its employees. I can't find the catch, other than the quality of healthcare coverage under the plan being consistent with the goods Wal-Mart sells. Still, the reviews are generally though not universally favorable, with the most criticism directed towards coverage for older workers:

Wal-Mart to Expand Health Plan for Workers, by Michael Barbaro, NY Times: Wal-Mart ... is introducing a cheaper health insurance plan, with monthly premiums as low as $11, that the company hopes will greatly increase the number of its employees who can afford coverage. ... The new benefits, which Wal-Mart calls the Value Plan, follow years of complaints that at ... the nation's largest employer, health insurance is out of reach for many of its 1.2 million workers... forcing thousands of them to turn to state-sponsored programs or forgo health coverage altogether. "We are lowering the costs to make health insurance more affordable," said a Wal-Mart spokesman, Dan Fogleman, ... Asked if the new insurance plan was in response to growing criticism, he said, "It's fair to say we are listening, but more so to our associates than anyone else." Health insurance specialists generally praised the new plan, saying its lower premiums were likely to attract more employees and thereby reduce the ranks of the uninsured. ... Currently, fewer than half of Wal-Mart's workers are covered by company health insurance, compared with more than 80 percent at Costco, its leading competitor. ...

Several health insurance specialists questioned whether the company, which is working to burnish its public image, was trying to quickly increase the number of workers who use its health insurance at the expense of the coverage's quality. "Is it the greatest health care plan in the world? Probably not," said Howard Berliner, a professor of health policy at the New School for Social Research. "But my concern is getting people health insurance so they can get health care when they need it. In that sense, anything that speeds that goal is for the better." Uwe E. Reinhardt, a health economist at Princeton University, said that by allowing workers several visits to the doctor before requiring them to pay out of pocket, Wal-Mart had "removed a big financial barrier between doctors and patients," adding that critics "would have trouble attacking this plan."

But analysts cautioned that the new insurance plan would prove a better fit for workers who are young and healthy ... A 60-year-old Wal-Mart employee ... might visit a doctor three times in a one month and then need to pay $1,000 before the company would share the cost of care. Given that many ... employees are paid less than $19,000 a year, the deductible "is pretty significant," ... Tracy Sefl, a spokeswoman for Wal-Mart Watch, ... said that "a plan that is characterized as a healthy person's plan doesn't fully address the needs of a majority of their work force." ... Even as they commended Wal-Mart for offering a more affordable health insurance plan, some industry watchers expressed surprise that the company waited as long as it did to offer a more affordable option...

My hope is that this will attract high quality workers to Wal-Mart, so much so that the increase in productivity more than compensates for the cost of the plan giving Wal-Mart a further competitive advantage and forcing other companies to offer their own slightly more attractive healthcare programs. As the article notes, Costco covers 80% of its employees, but Wal-Mart covers less than half, so Wal-Mart is playing catch up with this move. But it's likely just that, a hope, and I'm not ready to wait for the private sector to solve this one. It hasn't so far. As Keynes notes in another setting, "In the long-run, we are all dead." Yes, but hopefully not from preventable causes.

    Posted by on Monday, October 24, 2005 at 01:20 AM in Economics, Health Care | Permalink  TrackBack (1)  Comments (4)

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    » $11 Health Insurance? from Always Low Prices -- Always

    Yesterday's big news was that Wal-Mart has decided to offer an even lower-cost, high-deductible insurance plan. In The New York Times Michael Barbaro writes about the $11 plan (which is actually $25 in most places): Wal-Mart said that under the... [Read More]

    Tracked on Tuesday, October 25, 2005 at 08:09 AM


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