Friday, August 15, 2014

Walmart expects to spend $500 million on employee health care this year

Posted By on Fri, Aug 15, 2014 at 9:04 AM

Walmart announced that it expects to spend around $500 million for domestic employee health-care costs, up from a previous estimate of $330 million. Here's CNBC's report

Why is the retail giant seeing an increase in the number of employees signing up for health insurance? One reason is likely Obamacare's individual mandate. Because people face a tax penalty if they do not have coverage, many may choose to sign up for employer-sponsored health insurance that previously opted out. Another factor: 27 states have thus far chosen not to take part in Obamacare's Medicaid expansion. Because the law does not offer subsidies to people who make less than the federal poverty level, millions below the poverty line fall into a coverage gap in the states that refused to expand Medicaid. Many low-wage Walmart workers fall into precisely that gap, and may instead turn to employer-sponsored insurance (this is not an issue in states like Arkansas, which expanded coverage via the private option — many lawmakers told me during the legislative debates that Walmart lobbyists were working quietly to push for passage, and this helps explain why). 

Here's more from Walmart's management call yesterday

Walmart offers health insurance to employees who work 30 hours or more per week, as well as some part-time workers who work 24 hours per week but have been with the company since 2011 or earlier. The company said they expected an increase in employees seeking health insurance this year but the jump is outpacing their predictions. 

An official from the National Retail Federation told CNBC that the issue was likely specific to Walmart, which had unusually low participation in employee-sponsored health insurance.

"Wal-Mart is probably the retailer that was most under-penetrated in terms of the amount of the employees that were not enrolled in health care, so we don't see this being a big issue across the broader universe,"  said Trautwein [a vice president at retail industry trade group the National Retail Federation].

Some of those Walmart employees could eventually end up at Walmart for their medical care, as Max noted last week — the company is planning to have six primary care clinics and 100 acute care clinics in stores across the country. 

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