Wal-Mart Health Reform Move Has History, Reason

Although it seems to have come as a shock to some, Wal-Mart’s decision to embrace employer health care mandates as part of health care reform shouldn’t surprise anyone who has followed the company for any period of time.

On July 24, 2007, then CEO Lee Scott outlined Wal-Mart’s position on health care reform and other issues impacting lower income workers in an appearance before the National Council of La Raza, a group focused on discrimination and poverty issues affecting Hispanic Americans, and even then backed comprehensive health care reform in United States.

He noted that an already declining housing market had pushed blue-collar workers out of jobs and that rising gasoline prices also were shrinking the discretionary income of lower income consumers.

Then there’s health care. Scott said constantly rising health care costs had been taking money out of everyone’s pockets, and, naturally, because they have less of it, the effect had been most severely felt among the lower income consumers that shop Wal-Mart.

Scott said Wal-Mart had reacted proactively on the health care front. In 2006, the company launched its $4 prescription drug program, an effort that has helped popularize low-cost and free prescription initiatives throughout retail. Wal-Mart also has committed to a network of moderately priced neighborhood clinics.

Yet, Scott asserted that Wal-Mart had larger ambitions:

We have joined together with other companies and think tanks and labor unions to form the Better Health Care Together Coalition. Our goal is straightforward: American’s health care system must be fixed by 2012.

Scott pointed out that some social measures Wal-Mart backed – in 2005 Scott and Wal-Mart had stumped for a minimum wage increase — had made real progress. “Finally, starting today, the first installment of the minimum wage increase goes into effect,” he pointed out at the NCLR event. “We are thrilled that millions of working Americans will get a well-deserved and long overdue pay raise.”

Yet, in discussing health care and other issues impacting lower income consumers, Scott went out of his way to note that Wal-Mart wasn’t getting involved in social issues out of pure altruism. The company’s business is involved. Health care, the minimum wage and other issues such as immigration reform all affect who is coming through Wal-Mart’s doors as customers and employees. Whatever boosts the ability of lower income consumers to spend money, whether it’s better wages or lower health care costs, is important to the company. What it called for then and is calling for now, is a level playing field.

Wal-Mart has never relished the role of corporate bad guy. Long before Wal-Mart became rich and famous, founder Sam Walton crafted a stock-purchasing program that made investing affordable to employees. While once praised for such efforts, the company, again, had a good business reason for the program. The ability of employees to build a nest egg even at relatively low wages made working at Wal-Mart feasible for more than would otherwise be the case, providing the company with a more stable work force and saving the training costs associated with rapid employee turnover.

If health care costs keep rising and reform fails, the playing field will likely tilt even more severely toward Wal-Mart being isolated as representative of and, in a convolution of logic, responsible for the problem at hand. Beyond that, the company’s customers are going to have less disposable income to spend at its stores even as its employees suffer more time away from work due to illness in a society where even many middle-class workers can’t always afford to do what the doctor tells them.

Just like a growing number of Americans, Wal-Mart needs health care with which it can afford to live.