retail news in context, analysis with attitude

The New York Times reports this morning that “after trying to mollify its critics in recent years by offering better health care benefits to its employees, Wal-Mart is substantially rolling back coverage for part-time workers and significantly raising premiums for many full-time staff.

“Citing rising costs, Wal-Mart, the nation’s largest private employer, told its employees this week that all future part-time employees who work less than 24 hours a week on average will no longer qualify for any of the company’s health insurance plans.

“In addition, any new employees who average 24 hours to 33 hours a week will no longer be able to include a spouse as part of their health care plan, although children can still be covered.”

The company has not revealed what percentage of its workforce would be affected by these changes, and the Times notes that “this is a big shift from just a few years ago when Wal-Mart expanded coverage for employees and their families after facing criticism because so many of its 1.4 million workers could not afford or did not qualify for coverage — rendering many of them eligible for Medicaid.”

Greg Rossiter, a Walmart spokesman, tells the Times, “Over the last few years, we’ve all seen our health care rates increase and it’s probably not a surprise that this year will be no different. We made the difficult decision to raise rates that will affect our associates’ medical costs. The decisions made were not easy, but they strike a balance between managing costs and providing quality care and coverage.”

The Times writes that Walmart says the change in policy is not related to mandates in the new federal health care law.

Walmart has been struggling in recent quarters, suffering through nine consecutive periods in which it had stagnant or declining US same-store sales. While it expects the current quarter to end this less than illustrious streak, the company remains under pressure to improve its performance.
KC's View:
It is worth noting here that as Walmart was cutting health care coverage, both Lisa Sedlar, CEO of New Seasons Markets, and Jeff Hansberry, Starbucks’ president of Global CPG and Foodservice, each made the point to their separate presentations at Portland State University how important it was to maintain high levels of employee health care coverage, even in hard times - that this was a core value from which their companies would not waver, no matter what.

No matter what. Three words that they apparently don’t know down in Bentonville.

However ... I will say that there is one change being made by Walmart of which I do approve. The Times reports that “Wal-Mart’s new health offerings will require many employees who smoke to pay a significant penalty. They will be required to pay an extra $10 to $90 each pay period — $260 to $2,340 a year — if they want health coverage.

And Rossiter defended the penalty, saying, “Tobacco users generally consume about 25 percent more health care services than non-tobacco users.”

I will be accused of being heartless. But I think that people ought to have skin in the game. And as long as Walmart is willing to help fund smoking cessation efforts (and this is not clear in the report), then I think it is appropriate that smokers pay more.