By Noam Scheiber and Michael Corkery
The New York Times, November 27, 2017
The steady growth of e-commerce has been a source of jobs and benefits as employment in traditional stores declines. But at online retailers taken over by Walmart, workers are finding one benefit in retreat: their company-sponsored health coverage.
In little more than a year, Walmart has spent nearly $4 billion acquiring e-commerce companies with thousands of workers. Last month, many learned that their potential out-of-pocket costs for medical expenses would increase in 2018 at a rate far exceeding the overall rise in health care costs — reaching thousands of dollars in many cases.
In 2011, it raised some premiums by more than 40 percent. Three years ago, it ended coverage for employees working fewer than 30 hours per week on average. Other large retailers, such as Target and Home Depot, made similar changes.
Health care benefits tend to be harder to come by in retail than in any other industry, with just over half of all retail employees eligible for company plans, versus more than 90 percent in manufacturing, according to a survey this year by the Kaiser Family Foundation.
The new Walmart options for hourly workers prominently feature what are known as consumer-driven plans, in which workers cover all their medical expenses out of pocket, up to a relatively high deductible. A medical-expense account to which the company contributes money helps defray these costs.
One coverage option for a worker and a child, including dental and vision, has a biweekly premium of about $67 (assuming no use of tobacco products). Walmart would in turn contribute $600 to a health reimbursement account. Once that $600 is exhausted, however, the worker would have to shoulder the full amount of family medical expenses up to $5,500.
Larry Levitt, a health insurance expert at the foundation, said that such high-deductible plans had increasingly become the cost-containment strategy of choice among many employers, but that the particulars of Walmart’s plan made it especially ungenerous.
By Don McCanne, M.D.
When the Affordable Care Act was crafted, it was decided to leave employer-sponsored plans in place because that sector of health care coverage was working so well, so they said. But look at Walmart, the nation’s largest private employer, half-owned by the nation’s wealthiest family – the Waltons.
With average wages of $13.85 per hour ($28,808 per year if working 40 hours per week with paid vacations), they expect a worker with a child to pay $7,242 in health care costs ($1,742 towards the premium and $5,500 in cost sharing). That is one-fourth of the family’s meager income! This is the pragmatic approach to health care financing advocated by the ACA supporters who tell us that single payer is not feasible? How can they consider this outrage to be pragmatic, or even feasible?
This is a prime example of the escalating shift to consumer-driven health care. It is not as if we didn’t understand the issues long ago. We should listen again to the words of our friend and mentor, the late Uwe Reinhardt, from a Quote of the Day on November 23, 2004. At that time I transcribed the following excerpts from the closing remarks of the keynote address that he gave to the Leadership Academy sponsored by the California Medical Association. (I am not aware of this address having been published elsewhere.)
Can a “Consumer-Driven” Health Care System Succeed?
By Uwe E. Reinhardt, Ph.D., Professor of Political Economy, Princeton University
“What should be the goal of a health system? It should improve health status. It should protect families from financial ruin over illness. It should leave people satisfied with the care they got. But it should also make them feel good about a sense of fairness in their society, as Canadians fiercely feel proud of the sense of fairness in their system, whatever problems they have. And the Germans and the Swiss are fiercely proud of the social contract of solidarity.
“Intermediate goals are access to timely care, that feeds into health status and that. See, these are not goals, they’re just instruments to reach these goals: efficiency and fairness, fairness in financing health care…
“We don’t talk enough about financial protection, about people who have cancer also going broke, and the insult and hurt that that represents.
“But, you know, ‘It wasn’t my fault that I got cancer, now I have to sell my house.’ That’s an insulting thing for a Canadian and German like me to think about. And it happens. Many, many American families go broke over health care.
“We don’t ever talk enough about fairness and equity, not at all about the social ethic. We talk about the Judeo-Christian ethic as if it were something else. It should really be ours, and, incidentally, there is a confusion in all kinds of other ethics. But they all ask for the same.
“In the present instance, I think we should ask how these goals are affected relative to the status quo and relative to alternative policy options that we might consider, like traditional, comprehensive coverage with managed care, single payer system, and so on. And I think we need to have some debate; which of these approaches actually gets us closer to those goals…
“A major problem in the U.S. is we never discuss ethics; that’s somehow a taboo topic, because here we get ideological and then we get political. And I say, ‘Bullshine.’ That is at the core of health care. That is the foundation that should surround health care, because that’s how physicians, among others, are trained.
“So, to me, we can’t really judge whether this will succeed. Some people will say, ‘It succeeds.’ It’s like beauty and honor, the evaluation of consumer-directed health care will be driven much more by ideology than by data. And that’s where we are right now. And I wish it were more driven by two things: data, to tell us what this thing really does, and, secondly, what would we like to be like as a people.
“Do we want to be the kind of people that treats soldiers the way we do ($8000/year pension after losing a limb)? Do we want to be the kind of people that leaves a mother, who raises three children for America, sitting there without health insurance or (with only) the policy that she can find on eHealthInsurance.com (leaving her with $20,000 out of pocket on $26,000/year income)? Is that what we’re about as a people? I’m just an immigrant here. I can’t tell you. This is your problem, not mine. I’m well to do; I buy out of this. But I urge you to reflect on those aspects of it before we get into the technique.
“We can do this. When you tell me the ethics; we can implement it, or the people who spoke yesterday. We know how to do this. But ethics first. And I think we put ethics last.”
In the four day meeting, Uwe Reinhardt was the only speaker to receive a standing ovation. It is not too late. We can still move forward with ethics first.
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