Marketplace Scratch Pad

Wal-Mart, the good guy?

Scott Jagow Jul 13, 2009

The gloves are off in the debate over health care. In one corner, you have Wal-Mart. In the other corner, just about every other retailer in America. Wal-Mart supports a requirement that all employers must provide health care. The National Retail Federation is vehemently opposed.

Today, the NRF posted on open letter on its website:

When Wal-Mart sent a letter to President Obama two weeks ago supporting government mandates on businesses as a part of reform, the retail industry was astonished. Seeing the company in lock-step with the unions on this issue was troubling to say the least. Although the move may provide a short-term public relations boost to Wal-Mart, it could have long-lasting, devastating consequences to retailers throughout the country.

This stunning turn of events left NRF with a decision to make. We could stand idly by and allow Wal-Mart to tip the scales on the health care debate, cower and release an innocuous statement that would neither support nor condemn their decision, or stand up for all retailers and come out swinging.

Obviously, they chose the latter. But health care activists are having a tough time with Wal-Mart’s stance. They like it, but they may not trust it. Why on earth would Wal-Mart want mandated health care? A recent LA Times story offers a couple of reasons:

Many healthcare activists are reluctant to go on the record criticizing Wal-Mart for fear they’ll discourage the company from continuing down the reform path. But privately, they say it’s possible Wal-Mart is backing mandates as a way to head off more onerous legislation.

Specifically, the company may be trying to put the kibosh on a “free-rider provision” that would require employers to contribute to individual policies or government programs like Medicaid if workers have no other recourse for coverage…

Another catalyst for the company’s born-again reform zeal could be a calculation that its size and income — $13.4 billion in profit last year — make it better positioned than rival retailers to withstand the financial burden of a mandate…

Many large and medium-size retailers may find a healthcare mandate too great a challenge amid ever-narrowing profit margins. For Wal-Mart, the higher cost of insurance could be offset by an influx of new customers.

That was my first thought. This would probably give Wal-Mart a competitive advantage. Here’s what Wal-Mart said in its letter to the President:

Not every business can make the same contribution, but everyone must make some contribution. We are for an employer mandate which is fair and broad in its coverage.

What do you think? Do you support an employer mandate, or do you think it would be economically destructive?

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