News & Events

Wal-Mart Agrees To Back Employer Mandate in Health Reform Efforts (MC)

Wal-Mart, the largest private employer in the U.S., on Tuesday endorsed a proposal to require all large businesses to provide health benefits to their workers, the Washington Postreports.
According to the Post, the move marks a turnaround for the company, which has opposed such a requirement for many years and recently opposed a similar mandate in Maryland.

Wal-Mart’s endorsement of the employer mandate, which is strongly opposed by nearly all major business associations, could have a significant political and economic impact, as well as lend momentum to efforts by President Obama and Congress to impose such a requirement (Connolly, Washington Post, 7/1).

The announcement came in the form of a letter to Obama signed by Wal-Mart CEO Michael Duke, Service Employees International Union President Andrew Stern and John Podesta, head of the Center for American Progress and former leader of the Obama transition team (Stolberg, New York Times, 7/1).

The letter states, "We are for an employer mandate [that] is fair and broad in its coverage." It added that any "alternative to an employer mandate should not create barriers to hiring entry-level employees," a reference to a proposal in Congress to have employers pay workers’ Medicaid costs, which critics argue would discourage employment of low-income U.S. residents (Babington, AP/San Francisco Chronicle, 7/1).

The letter also says, "We are for shared responsibility. Not every business can make the same contribution, but everyone must make some contribution" (Young, The Hill, 6/30).

According to Wal-Mart spokesperson Greg Rossiter, Wal-Mart wants an employer mandate that bases how much a company pays for coverage not on the number of employees but on "profit per employee."

Such an arrangement would favor companies with many low-wage employees, like Wal-Mart, CQ Today reports (Armstrong, CQ Today, 6/30).

According to the letter, Wal-Mart’s support of an employer mandate depends on whether Congress offers a guarantee to businesses that health care costs will be contained. The company endorses the use of a trigger mechanism that automatically would impose reductions if health care spending rose above annual targets.

Leslie Dach — Wal-Mart’s top lobbyist, who met with White House Chief of Staff Rahm Emanuel on Tuesday — said, "We’re for an employer mandate, but we believe that it has be accompanied by these measures that are really going to deliver on savings."
Dach added, "If any business is going to be asked to take on an employer mandate, to face changes in the tax laws, there should be some sense that the promise of the bill to reduce health costs will actually occur" (New York Times, 7/1).
The company also said that small firms should be exempt and that the employer mandate should allow for moderately priced benefits packages like the plans Wal-Mart offers its employees. About 95% of Wal-Mart employees have some form of health insurance, either through the company, a family member or public insurance programs (Washington Post, 7/1).

Nancy-Ann DeParle, director of the White House Office of Health Reform, said, "It is significant that Wal-Mart, one of the country’s largest employers, and SEIU, one of the country’s major unions, have joined together to call for the enactment of health reform that will lower costs and assure quality and affordable health care for all Americans" (The Hill, 6/30).

In a meeting about the letter, Emanuel said, "Cost control and employer mandate are heads and tails of the same coin."

The business community has come out strongly against the employer mandate, as have congressional Republicans.

Neil Trautwein, vice president of the National Retail Federation, said that the group was "flabbergasted" by Wal-Mart’s endorsement, adding, "We have been one of the foremost opponents of the employer mandate." He said that the mandate is "the single most destructive thing you could do to the health care system shy of a single-payer system" (Adamy/Zimmerman, Wall Street Journal, 7/1).

James Gelfand, senior manager for health policy at the U.S. Chamber of Commerce, said that Wal-Mart is using the "government as a weapon against their competition," adding that "the government is a blunt instrument and taxes have extreme unintended consequences, negatively affecting the economy as a whole." He said, "We also recognize that momentum is moving against an employer mandate" and that the "business community will be stepping up our advocacy as necessary" (The Hill, 6/30).