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Wal-Mart Comes Out for Health-Care Reform

PH2009060203669.jpgIt was March of 2007 when I first spoke with Andy Stern about his unlikely alliance with Wal-Mart on health reform. It wasn't exactly a natural partnership. And it seemed likely to end it tears.

SEIU, after all, helps fund Wal-Mart Watch, the organization that spends its days doing its level best to wound the Bentonville, Ark., retailer by hyping bad stories and leaking damaging memos. One of Wal-Mart Watch's recurrent themes, of course, is that Wal-Mart's health plans were inadequate for their employees. And now they were entering into a coalition together? "You would be living in fantasy land not to be skeptical about this," Stern admitted to me.

Yesterday, Wal-Mart, along with SEIU and the Center for American Progress released a letter articulating shared principles for health reform. And it went a ways toward ending my skepticism. I figured whatever SEIU and Wal-Mart produced would be a bland set of principles offered at a safe and uncontroversial moment. This is the opposite.

The throws its weight behind two primary policies. The first is the so-called "employer mandate." This is, essentially, a tax on employers that don't provide health care. It both helps pay for health care and helps get more people covered. It's a top priority for Organized Labor. The business community, however, loathes it and has spent the past year organizing aggressively against it. Various members of Congress had begun wavering on the provision. The business community, it seems, was winning.

Until yesterday. "Not every business can make the same contribution," said the letter, "but everyone must make some contribution. We are for an employer mandate which is fair and broad in its coverage, but any alternative to an employer mandate should not create barriers to hiring entry level employees."

Is there some vague language in there? Sure. But it's a huge deal. And don't take it from me. Take it from the Chamber of Commerce, which bitterly opposes the policy and released a statement blasting Wal-Mart. "Some businesses make the decision to use the government as a weapon against their competition," said James Gelfand, the chamber's senior manager for health policy. "We do not agree with this method -- the government is a blunt instrument and taxes have extreme unintended consequences, negatively affecting the economy as a whole. We also recognize that momentum is moving against an employer mandate. The business community will be stepping up our advocacy as necessary, too."

Wal-Mart and SEIU also convened around a couple of cost control options. Most notably, they endorsed the "trigger" option first proposed by the Bipartisan Policy Center: In essence, if costs didn't come down, then there would be automatic reductions in payments to providers. They also mentioned the White House's proposal to empower MedPAC to reform Medicare.

But as most observers have stressed to me, the key signal in here was the timing. The past few weeks have been a bit grim for reformers. The coalition seems, if not fractured, a bit uncertain. The opposition is beginning to focus its firepower. The Congressional Budget Office is tossing everything into chaos. These are the hard days for health reform. And this is when SEIU and Wal-Mart intervened. This is when they chose to crack the business coalition and create a thousand articles aligning the administration with the country's largest employer. The Obama campaign was famous for keeping endorsements in its back pocket until they were needed most. It's hard not to wonder how long it has had this waiting.

This isn't, of course, a story of altruism. By being of use to the administration, Wal-Mart ensures that its concerns will be heard and heeded. By publicly associating itself with health reform, the company repairs some of the damage SEIU and others have done to its reputation in recent years. And, in a more macro sense, by throwing its weight behind strict cost controls, Wal-Mart makes it likelier that it gets the largest of all possible benefits: an eventual slowing in the double-time march of health-care costs.

But health reform isn't supposed to be about altruism. And that's arguably the most important message of this letter. Reforming health reform isn't just some liberal president's agenda item. It's good business.

For More: See Igor Volksy and Jon Cohn.

Photo credit: Gerald Martineau -- The Washington Post Photo.

By Ezra Klein  |  July 1, 2009; 5:38 PM ET
Categories:  Health Reform  
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Next: An Interview With Wal-Mart Spokesman David Tovar


Just wanted to point out (not a novel observation) that this bit in the letter:

"We are for an employer mandate which is fair and broad in its coverage, but any alternative to an employer mandate should not create barriers to hiring entry level employees."

is pretty important. Finance seems to be edging towards a version of the employer mandate that isn't a real pay-or-play provision, but would penalize employers whose employees are on Medicaid or getting subsidies to buy non-employer-based coverage -- the theory being that this will penalize the "free riders" who are tossing their employees into taxpayer-supported system, rather than doing their part.

Low-wage employees, like those hired by Wal-Mart, are of course going to be disproportionately taking advantage of those programs. So Wal-Mart would probably wind up paying more relative to its competitors if that were the policy ultimately chosen, as against a head-count based fee, or a percentage of payroll type approach.

Not to say this isn't very helpful and big news, but I wonder if the news out of Finance the past few days is the likeliest explanation for the timing here.

Posted by: Mike_Russo | July 1, 2009 5:47 PM | Report abuse

I do hope you'll read Radley Balko's response to your conclusions, Ezra. It seems you still haven't learned about the love affair between Big Government and Big Business.

Wal-Mart and the Employer Mandate: Ezra Klein Misses the Point

Posted by: MacGhil | July 2, 2009 2:47 PM | Report abuse

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