business news in context, analysis with attitude

The Los Angeles Times suggests this morning that the Wal-Mart memo on how to reduce health care benefits in all probability will create the environment for new class action discrimination lawsuits to be filed against the company.

Jeffrey Winikow, a Century City employee-rights lawyer, tells the Times that "the memo is a cesspool of legal violations."

As reported on MNB earlier this week, the internal memo written by M. Susan Chambers, Wal-Mart's executive vice president for benefits, recommended that there were “numerous ways to hold down spending on health care and other benefits while seeking to minimize damage to the retailer's reputation.”

Among the recommendations are to reduce 401(k) contributions and woo younger, and presumably healthier, workers by offering education benefits; and to include physical activity with all in-store jobs so that the physically unfit are discouraged from applying. The memo also suggested that Wal-Mart “reduce the amount of time, from two years to one, that part-time employees would have to wait before qualifying for health insurance. Another (idea) would put health clinics in stores, in part to reduce expensive employee visits to emergency rooms.” The memo conceded that “38 percent of Wal-Mart workers spent more than one-sixth of their Wal-Mart income on health care last year.”

While critics have pounced on the memo as proof that Wal-Mart discriminates in favor of younger, healthier employees who have lower health care costs and, presumably, higher productivity levels, Wal-Mart has defended the memo as illustrating that it wants to provide programs that will help its employees to live longer, healthier lives.
KC's View:
If you read the memo in its entirety and try to be objective about it, it is almost inescapable that, however you feel about Wal-Mart, it is trying to grapple realistically with the health care crisis that faces every employer.

Would we agree with every item discussed in the memo? Of course not. But while you might disagree with the company’s desire to cut back on coverage of employees’ spouses, it is hard to argue with its motivation for that desire – since it says it spends more to cover spouses than it does to cover actual employees. While you might disagree with the notion that employees become less productive after a certain age, it is hard to dispute that a younger, healthier workforce is worth aiming for. And the idea that in-store health services offered to employees could help save money and improve productivity is something that we’ve promoted for some time – in fact, we’ve suggested that it might make sense for Wal-Mart to use the “Northern Exposure” strategy and put a bunch of people through medical school in exchange for two or three years of in-store residencies.

Knee-jerk reactions to the Wal-Mart memo are inevitable. But read the memo carefully. It is a blueprint that is controversial yet compelling for how to start addressing the health care crisis in America, and it makes one other critical point – that the national system is enormously flawed and in need of far more than a band-aid if it is to be fixed.