The “Wal-Mart Effect” on Healthcare

An article by The Atlantic’s Joshua Green discusses Wal-Mart’s role in the U.S. Healthcare system. (“The New War Over Wal-Mart”. The Atlantic, June 2006.)

Recently, Maryland enacted legislation requiring companies with more than 10,000 employees to spend at least 8% of their payroll on employee healthcare—this legislation is targeted at Wal-Mart, since the retailer, in its position as the apotheosis of American Capitalism, is the only employer who fits the bill (and accordingly is being asked to foot the bill).

Legislation like this is largely in response to activist groups, like Wal-Mart Watch and the Service Employees International Union, putting the pressure on Wal-Mart via leaked internal documents and grass-root campaigns illustrating the impact Wal-Mart has on the U.S. With its 1.7 million worldwide employees, Wal-Mart is the largest private employer in the history of the world. Critics of the mega-corp have attributed large losses of U.S. manufacturing jobs to Wal-Mart’s business practice of “Always low prices. Always," which requires a constant flow of cheaply manufactured goods (unionized factory workers in America would drive up Wal-Mart’s prices, preventing them from rolling back the prices.)

The mega-corp’s effect, or overall relationship, on healthcare in the nation is also staggering: its healthcare policy covers less than half of its employees, leaving the government to care for tens of thousands of its employees and their children through programs such as Medicaid. Given the immensity of this relationship, the president of the SEIU hopes to back Wal-Mart into a corner via proposals of “fair share” legislation like that recently passed in Maryland—effectively forcing Wal-Mart to publicly favor the adoption of a national healthcare policy.

This plan is bold, considering corporations such as Wal-Mart are reflexively opposed to government regulation—but the plan is not implausible. If Wal-Mart is forced via legislation to foot the bill for increasing healthcare expenses, its own self-interest in profits will encourage it to favor government regulation of the healthcare system. And with its 65,000 suppliers of goods, many of whom are largely if not entirely dependent on Wal-Mart for their continued prosperity, the mega-corp’s influence could be just enough to bring real healthcare reform to the States—and potentially abroad. (For a detailed discussion on Wal-Mart’s potential to effectuate systemic social, political and economic change, see Global System Change - Wal-Mart's Sustainability Strategy).

Thus, while groups like the SEIU campaign for and support legislation like that of Maryland’s, clearly it is a short-term remedy to a major crisis; just as clear is the fact that Wal-Mart, no matter how many pennies per item sold it makes, cannot by itself—much less any other company—shoulder the burden of healthcare costs.

How many states must adopt such “fair share” legislation before Wal-Mart reacts in the way the SEIU hopes?

Can the Federal Government effectively implement a broad, national healthcare system? And, if so, what would this healthcare system look like (i.e., a mixture of privately funded coverage plus government subsidization or pure government)?

Wal-Mart’s role is perhaps key to this major development.