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Wal-Mart Becomes an Innovator in Employee Health Coverage

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By Ceci Connolly
Washington Post Staff Writer
Friday, February 13, 2009

Washington policymakers contemplating a fundamental overhaul of the nation's troubled health-care system may want to study the saga of Wal-Mart.

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Once vilified for its stingy health benefits, the world's largest company has become an unlikely leader in the effort to provide affordable care without bankrupting employers, their workers or taxpayers in the process. From its headquarters in Bentonville, Ark., the retailer is doing in the real world what many in Washington are only beginning to talk about.

At a time when other firms are scaling back or eliminating health coverage, Wal-Mart has made a serious dent in the problem of the uninsured. New figures being released today show that 5.5 percent of its employees now lack health insurance, compared with a nationwide rate of 18 percent.

The company has also put into practice many of the innovations that experts say will lead to higher-quality, more efficient care. Using its high-tech marketing savvy, Wal-Mart has introduced digital records, partnered with prestigious organizations such as the Mayo Clinic, and begun targeting costly health problems such as obesity and premature births.

Yet for all of Wal-Mart's achievements, the story of its immersion in the world of health policy is also a warning about the depth and breadth of one of the thorniest challenges facing the country today.

In attempting to strike a balance between healthy profits and healthy workers, Wal-Mart, like many businesses, still falls short of the comprehensive care that President Obama says he wants for Americans.

To reach near-universal coverage, the largest private employer in the nation relies heavily on the government and other employers to play a role. Of the company's 1.4 million workers, 52 percent are in a Wal-Mart health plan. Despite revenue that is expected to exceed $400 billion for 2008, the company charges its low-wage workers a substantial portion of their income for medical coverage.

Though proud of what it sees as dramatic progress, Wal-Mart itself warns that in a global market with a weakened economy, it cannot -- or will not be able to -- accept annual health-care increases of about 8 percent indefinitely.

"It starts to impact us competitively," said Linda Dillman, the company vice president tapped to oversee the health plan.

To Andrew Stern, president of the Service Employees International Union and a frequent Wal-Mart critic, the company's health contributions are not commensurate with its financial success. The moral, he said, is that "volunteerism has its limits."

But to Mark Smith, head of the California HealthCare Foundation, an independent nonprofit focused on health-care quality and efficiency, Wal-Mart's experience provides a different lesson.

"Even a company as big and successful as Wal-Mart cannot possibly solve this problem on its own," he said. "There are limits to what one company can do."


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