Wal-Mart Stores Inc., under pressure by some states on worker benefits, will expand health coverage for employees, Chief Executive Officer H. Lee Scott said. He urged lawmakers to help companies reduce medical costs.
Wal-Mart, the world's largest retailer, also plans to open more than 50 health clinics in its U.S. stores and will allow more workers to become eligible for its lowest-cost insurance plan, Scott said Sunday at the winter meeting of the National Governors Association in Washington.
"We have to solve the health-care challenge facing America, we have to do it together, and we have to start now," Scott said.
Scott's proposals, which include cutting the waiting period for part-time employees to be eligible for benefits and extending coverage to their children, follow criticism from labor unions and lawmakers that Wal-Mart fails to provide adequate benefits. Maryland last month became the first U.S. state to require large companies to pay a set amount for workers' health care, and states including California are considering similar measures.
That kind of legislation, which imposes mandates on employers, "may score short-term political points" while failing to solve the real problem of rising health-care costs, Scott said.
Bentonville, Ark.-based Wal-Mart, which opened nine health clinics in stores in Arkansas, Oklahoma, Florida and Indiana last year, plans to more than quadruple the number this year. Advocacy groups including Wal-Mart Watch have criticized the retailer's pay and benefits, saying the offering is so poor that many Wal-Mart workers are on public assistance programs, including Medicaid.
Wal-Mart, which had more than $300 billion in revenue last year, is the country's largest private employer with 1.3 million workers. According to a Wal-Mart memo, 5 percent of its workers are on Medicaid and 19 percent are uninsured.
The company will expand the availability of the lowest cost "Value Plan" health benefit to at least half of all employees. The option costs $11 per month for individuals and 30 cents more per day for children.
Maryland in January passed a law that requires companies with more than 10,000 workers to devote at least 8 percent of their payroll to health care. Wal-Mart employs almost 17,000 people in the state. A group representing Wal-Mart and other so- called "big box" retailers this month challenged the law in Maryland.
A California bill, introduced by Democratic State Senator Carole Migden, would also require companies with 10,000 or more workers to spend at least 8 percent of their total wages on health care or reimburse California's state-run medical program by a similar amount.
Efforts to pass similar laws faltered in states including Washington, Indiana, Colorado and Wisconsin this year.
Shares of Wal-Mart fell 25 cents to $45.45 on Friday in New York Stock Exchange composite trading. They have declined 2.9 percent this year after falling 11 percent last year.
Wal-Mart's health-care expenses have risen 19 percent in each of the past three years, Scott said Sunday. Citing the toll that rising medical costs have taken on the U.S. automobile industry, he said businesses and government must work jointly to come up with ways to reduce the burden.
Contributing: Rachel Katz
E-mail: schandra1@bloomberg.net