Friday, March 04, 2005

Report: Stingy Health Care Forces Workers on to HUSKY

Wal-Mart Tops List of Offenders

A new report slams wealthy companies like Wal-Mart for health insurance practices that leave workers with little other choice than to go on the state's HUSKY plan.

The state is paying an estimated $43 million annually for health care insurance to cover workers at the top 25 major employers, led by Wal-Mart...
"Here is the richest retail company in the world, and we, the taxpayers, are subsidizing their coverage," said House Majority Leader Christopher Donovan, a Meriden Democrat. "I think people aren't aware of the extent that we're subsidizing the biggest, richest, most powerful companies. Wal-Mart shoppers need to know there's an extra cost of doing business." (Keating, et. al.)

Indeed. Wal-Mart is well-known for treating its employees poorly. But how are they doing it? Here's the scam:

"We don't design our plans to be supplemented by public assistance," said Dan Fogleman, a Wal-Mart spokesman. "Nor do we encourage our associates to apply for these programs."

But a Congressional report last year found that Wal-Mart had increased the health-benefit waiting period for full-time workers. In 2002, the waiting period jumped from 90 days to six months. By comparison, the report found, the average waiting period for employers the size of Wal-Mart was 1.3 months.

The report also found that Wal-Mart changed the definition of part-time in 2002, raising it to 34 hours or fewer a week, up from 28 hours or fewer - a stricter definition than many companies. 73% of the Wal-Mart employees on HUSKY work 30 hours per week or more.

Part-time workers must wait two years to apply for health coverage and they cannot add a spouse or children.

Monthly premiums for a family start at about $155 a month, but carry a $1,000 deductible. Wal-Mart could not immediately provide a range for monthly premiums for families that would carry a lower deductible. (Keating, et. al.)

So Wal-Mart doesn't have to encourage its employees to go on state assistance; it leaves them with virtually no other choice. We appear to be paying the bill for it, to the tune of about $5 million per year (according to a table in today's print edition of the Courant).

Wal-Mart is hardly the only offender, but it is the largest and obviously the wealthiest. In the case of fast-food chains like McDonalds, Burger King and Dunkin' Donuts, who are all high on the list, the problem is at the individual franchise level (franchises set benefits policies for these companies). Wal-Mart's policies are company-wide.

So what action can the legislature take?

Donovan said that the state should consider writing a letter to Wal-Mart, asking them to pay back the money in the same way that homeowners pay various taxes or sewer assessment fees. (Keating, et. al.)

I have a feeling that we won't see that money for a very long time. In the meantime, the future of the HUSKY plan is uncertain. HUSKY was originally meant for children only, and the cost of continuing to extend benefits to adults is obviously staggering. Fiscal conservatives especially find it hard to take:

[Sen. Louis] DeLuca's solution, however, involves stripping down the program and reducing the income limits in order to cut down the state's costs.

"I've always been against the government going into the insurance business," DeLuca said. "The HUSKY program was initially proposed to take care of needy people. It was never meant for adults. Why should adults be in a child's program?" (Keating et. al.)

The problem, of course, is that it leaves poor families in a bind. If you work 32 hours per week at Wal-Mart, and you need medical insurance, where are you supposed to get it from? Wal-Mart, because of its rules classifying you as part-time, won't give you its stingy health benefits for two years. If the HUSKY program disappears... what then?

There is no clear solution to the rapidly escalating costs of health care. Conservatives argue that the cost of malpractice insurance is to blame, and that malpractice settlements should be regulated. Liberals see this as yet another argument for a Canadian-style national health care system.

But even if malpractice insurance costs are drastically lowered, it's unclear whether struggling private insurance companies will lower their premiums accordingly. There are other issues at work here, including the high cost of drugs. As for single-payer health insurance, the dreadful mismanagement of the issue by the Clinton Administration in 1993 has virtually guaranteed that we won't see it again as a serious proposal for another decade at least. Is there a quick fix in the house?

In order to help resolve the overall health care problem, Rell is proposing a pilot program that would give Medicaid funds to low-income workers with the proviso that they use that money to buy health insurance through their employers. (Keating et. al.)

The problem there seems to be the old issue of robbing Peter to pay Paul, and does not hold companies like Wal-Mart responsible for their behavior. In the meantime, health care costs continue to be a burden for small businesses and employees alike, and no good solution appears to be on the horizon.

Keating, Christopher, Ritu Kalra and Kenneth R. Gosselin. "Report Slams Benefit Policies". Hartford Courant 4 March 2005.


Anonymous said...

The Wal-Mart practices are only going to grow, as Wal-Mart forces their competitors to lower their employee wages and benefits.
Single-payer healthcare can't wait a decade. It's up to blue states like us to come up with the solutions. Start by tackling catastrophic care and extending HUSKY - and tax the companies where they refuse to provide benefits. That's the Peter to rob. If that drives Wal-Mart from Connecticut, I won't miss them. They are making billions of dollars in profit off the backs of their employees, subsidized by our tax dollars.
It is immoral to tell someone, you can work full time, but don't get sick, because neither your boss nor your government are going to help you.

stomv said...

Why not require large retailers* to cover more health care? For example, let the state define 32+ hours as full time: if an employee works 32+ hours for x weeks in a row (say, 4) than he must be moved to full time immediately.

Why not require large retailers to maintain a reasonably high percentage of full time employees? I don't know what the current ratio is (I'd bet its about 50:50 personwise), but if it was increased 10%, than you'd have fewer part-time workers relying on HUSKY, and more full-time workers who would then be better insured.

Why not tax large retailers for their part time employees? For every part time un/underinsured employee on the books, a large retailer has to pay $y dollars per week to the state. This would be used to offset the state's cost of those employee's health care.

There are a number of legislative moves the state can enact to force large retailers to pony up for their employees insurance. Encouraging a higher ratio of full-timers would help quite a bit, as it would reduce entitlements and increase tax revenue.

In the mean time, where's organized labor? Why can't they push hard for a unionized Wal*Mart? It seems to me that a union would really help employees gain higher compensation, in the form of wages, steady hours, and insurance.

* Based on revenue, employees, whatever.

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