Wal-Mart CEO Fires Back about Health Care Bills

February 27, 2006 (PLANSPONSOR.com) - Wal-Mart Stores Inc. Chief Executive Officer Lee Scott denounced state bills aimed at mandating employer spending on employee health care, saying governors should address rising health care costs in a broader manner.

“The soaring cost of health care in America cannot be sustained over the long term by any business that offers health benefits to its employees,” Scott said in a speech at the National Governors Association winter meeting in Washington, DC, according to a MarketWatch report. “And every day we do not work together to solve this challenge is a day that our country becomes less competitive in the global industry.”

MarketWatch reports that, in his speech, Scott reiterated impending changes to Wal-Mart’s health-care benefits that the company disclosed last week such as a shortening of the wait time for part-time employees’ eligibility from two years, granting eligibility for children of part-timers, and expanding a low-cost, high-deductible coverage plan from its current limited availability to half of Wal-Mart’s 1.36 million US employees by 2007 (See Wal-Mart Unveils Employee Health Coverage Improvements). Wal-Mart’s critics, primarily union-backed activist groups, note that Wal-Mart is promising the improvements to its benefits at the same time it is shifting its workforce to a greater portion of part-timers.

The Fair Share Health Care bills aim to mandate what employers with a specified number of employees spend on health care for their workers. The only state that has passed such a bill so far is Maryland (See Veto of ‘Wal-Mart Bill’ Overridden in MD Senate). However, the AFL-CIO is pushing for Fair Share Health Care bills in 30 other states (See Maryland ‘Wal-Mart Bill’ Preempted by ERISA).

The bills have been dubbed ‘Wal-Mart’ bills because in several states Wal-Mart is the only employer that meets the required number of employees. Wal-Mart has been under attack concerning the number of its workers that do not have health care coverage and rely on state Medicaid for health care coverage (See Doyle Accuses Wal-Mart of Health Care ‘Dumping’).

The Retail Industry Leaders Association has filed a lawsuit challenging the Maryland bill and a similar bill passed in New York, saying the bills illegally mandate health care expenditures since the Employee Retirement Income Security Act, not state and local laws, regulate employer health plans (See Lawsuit Filed Challenging Recent Health Care Mandates).

In response to Scott’s speech, New Jersey Governor Jon Corzine said, “American companies must start providing living wages and affordable health benefits to their employees and stop saddling the federal, state, and local governments and the taxpayers with their responsibilities.” Ohio Governor Robert Taft said employer-provided health care is not an issue for state governments to decide. “If there is going to be an effort to address health insurance, it has to be a national solution.”

Wal-Mart’s response to many of the charges made against it is contained at its own PR Web site here .