Wal-Mart, Union Join Forces on Health Care
Alliance's Goal Is to Improve Coverage

By Ylan Q. Mui and Dale Russakoff
Washington Post Staff Writers
Thursday, February 8, 2007; D01

Two once-implacable foes in the business world found common ground yesterday, at least for a few minutes, as they publicly pledged to work together for the first time to fix what they called the nation's health-care crisis by 2012.

At a news conference on Capitol Hill, Wal-Mart chief executive H. Lee Scott sat at one end of a table and vowed to put aside differences to "drive this debate forward." On the other end was Andy Stern, president of the Service Employees International Union (SEIU) and frequent Wal-Mart critic, declaring he had made a "tough choice" in the goal to improve coverage.

How this unlikely alliance came about illustrates the deepening concern that businesses, labor groups and lawmakers have over skyrocketing health-care costs. The issue has divided the nation's largest retailer and the SEIU, which founded a group called Wal-Mart Watch that has harshly criticized the company's wages and benefits. But yesterday they said they could come together under the broad umbrella of universal health care. And each realized it could not be achieved without the other's help.

"That's what makes it powerful," Stern said in a phone interview. "It's risky, and it's right."

Wal-Mart used to be noticeable for its absence from business coalitions calling for government help with the health-care crisis. As the rising cost of employee medical care staggered other large companies, Wal-Mart, which did not provide health coverage for the majority of its employees, was silent. But during a national crisis over the growing ranks of uninsured workers, Wal-Mart quickly became a target.

The barrage of criticism over the past two years by the SEIU's Wal-Mart Watch and another group, Wake-Up Wal-Mart, backed by the United Food and Commercial Workers Union, has frequently put the retailer in the hot seat. Maryland's Fair Share Health Care legislation, nicknamed the "Wal-Mart bill," was crafted with input from the unions and required large companies to spend part of their payroll on health coverage or contribute to a state fund for the poor, giving rise to similar initiatives in more than two dozen states even though the law was eventually struck down. The union groups have galvanized political and grass-roots opposition to Wal-Mart through bus tours and nationwide conference calls.

The dispute left Wal-Mart increasingly isolated, particularly as it tried to move into urban areas critical to its growth. Public outrage from Southern California to the East Coast prompted local and state governments to block the company from planting superstores in one metropolitan area after another.

"Wal-Mart has actually been defeated in metropolitan America," said labor historian Nelson Lichtenstein of the University of California at Santa Barbara. "It makes a lot of business sense for them to try to get health care off the table."

Change began in 2005 after Wal-Mart created a health-care plan with premiums of $11 per month. In a speech to the National Governors Association a year ago, Scott announced other major concessions, including reducing the eligibility requirement for part-time employees from two years to one and adding coverage for their children. But he also wanted help from government leaders and other groups to make substantive changes to the country's health policies.

The speech caught Stern's attention. He was also impressed by Wal-Mart's efforts in environmental sustainability, in which it had worked with activist groups such as the Rocky Mountain Institute and TransFair USA. He took it as a sign the retailer was committed to changing not just its reputation but its practices.

"This was a company that was willing to create partnerships with people they might not normally agree with," Stern said. "It's always important to me that people don't just say things, they do things."

In his 2006 book, "A Country That Works," Stern wrote admiringly of how Dennis Rivera, president of the New York City Health Care Workers Union 1199, "taught us a great deal about how to tango" when he sent his members to join hospital operators in persuading the New York state legislature to raise insurance reimbursement rates. While the hospitals' pleas were viewed as self-serving, the workers won over lawmakers. Those billions of dollars of reimbursements found their way into better wages and "the gold standard of benefits for the hospital workers," Stern wrote.

In July, he wrote an opinion article in the Wall Street Journal declaring the death of employer-based health coverage and urging businesses to look for new solutions. Stern followed up with a letter to each head of a Fortune 500 company. Over the next few months, he received responses from many of them. By December, he was in discreet talks with Wal-Mart on ways they could reach a consensus on the problem of health care, if nothing else.

"We've disagreed on many issues in the past, and I'm sure we will disagree on others going forward," Sarah Clark, a spokeswoman for Wal-Mart, said yesterday. "However, resolving America's health-care crisis is so important to this country that we're willing to put aside our differences and work together."

In addition to Wal-Mart and the SEIU, the coalition announced yesterday includes other groups that historically have been at odds: AT&T, Intel, the Communications Workers of America, the Howard H. Baker Jr. Center for the Public Policy and Kelly Services. The coalition issued a statement decrying the state of the nation's health-care system and outlining four principles for an alternative, including ensuring that everyone has quality and affordable coverage.

But not everyone is convinced the coalition will be effective. Gerald M. Shea, the AFL-CIO's head of health policy, said he was concerned about the lack of detail in the coalition's plans.

"Their public positioning campaign is one thing. What they do is another," he said. "They want a solution by 2012 -- that's too far away from our point of view. What are you ready to do now?"

The UFCW had met with a Wal-Mart executive in December to discuss health care but decided the company was not taking enough steps to significantly improve its employee coverage. And it came out swinging again yesterday, with members handing out fliers from Wake-Up Wal-Mart denouncing the company at the news conference.

"Why Wal-Mart would want to look for a partner to cover up its health-care crisis is obvious," said Paul Blank, director of Wake-Up Wal-Mart. "But why anybody would decide to give a disingenuous player that stage is unconscionable."

Stern said the SEIU's Wal-Mart Watch will continue to speak out against the retailer as it sees fit. But now he has his eyes on bigger fish. The coalition spent the afternoon making rounds at Congress, stopping at the offices of House Speaker Nancy Pelosi (D-Calif.) and Rep. James E. Clyburn (D-S.C.), among others.

"We're way past the question, 'Can an employer solve this problem?' " he said. "We're at a point where the country has to solve the problem."

Staff writer Amy Joyce contributed to this report.

© 2007 The Washington Post Company