The Left’s “Solution” To The Wal-Mart “Problem”

09 Mar, 2005 by John Hawkins

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If you want to understand how the left really thinks, read a column called “Tackling the Tyranny of Wal-Mart” by Joel S. Hirschhorn that’s currently the featured article on the front page (not the forums) of the Democratic Underground.

In many respects, the column is run-of-the-mill leftist fist shaking at Wal-Mart. Words and phrases like “cancerous growth,” “evil incarnate,” & “the more you know, the more you hate” get tossed around as the author’s seething rage at the inequities of ~~capitalism~~ Wal-Mart ooze out on to the page.

But the one issue that really makes Hirschhorn see red is the Wal-Mart health care “problem.” You see, Wal-Mart does provide health care for their employees, but it’s not fantastic coverage. Here are some more details on Wal-Mart’s health plan from the Wall Street Journal:

“Wal-Mart says part of its philosophy is that the company should pay for catastrophic health expenses — cancer treatments, organ transplants — that could financially ruin an employee. It typically pays 100% of medical charges above $1,750 a year in out-of-pocket expenses; in addition to the deductible and premiums, employees pay 20% of medical costs up to $1,750. And Wal-Mart has no lifetime caps on coverage — a benefit offered by just 42% of retailers and 47% of employers overall, according to Watson Wyatt Worldwide, a Washington-based consulting firm.

Tom Emerick, benefits vice president, says the company covers medical bills that exceed $100,000 each on at least 800 employees a year. A further 20,000 cases a year cost Wal-Mart more than $10,000 each. The company has paid for more than 300 organ transplants in the past five years, costing $1 million or more each.

Wal-Mart has been using a team of six people to scour every state for the lowest-cost networks of doctors and hospitals. In Colorado, for instance, Wal-Mart has contracted in the past two years with MMA, a Greenwood Village, Colo., managed-care provider that has a network of 7,000 doctors and 62 affiliated hospitals statewide. MMA calculates the cost of each medical procedure according to the market rates in 14 different regions in the state. Statewide rates tend to be higher.

…Wal-Mart executives say shifting routine-care costs to employees keeps premiums down. The company has raised premiums 50% during the past two years, but an employee still can join the plan for $13 every two weeks, well below many employer-sponsored plans. That rate, however, comes with a high annual deductible of $1,000.

Wal-Mart offers other plans with higher premiums and deductibles as low as $350. About 90% of retailers and of U.S. employers overall have deductibles of $310 or less, according to Watson Wyatt. Wal-Mart employee premiums covered about one-third of the $3,500 spent per employee on health benefits last year, a share that experts at Segal Co., a benefits consultant, say is typical for large retailers.

…About 60% of the roughly 800,000 employees eligible for coverage at Wal-Mart sign up, compared with 72% for the whole retailing industry, according to a 2003 survey by the Kaiser Family Foundation.”

So we’re talking about relatively high premium catastrophic coverage here and unsurprisingly, some people either aren’t eligible or choose not to get their health care through Wal-Mart. Then when misfortune strikes and they become sick, the states pick up the cost of their medical care. The author entirely blames Wal-Mart for this which unfairly takes the onus of responsibility off of the people working there. Consider that these people CHOSE to work at Wal-Mart and either knew they wouldn’t work enough hours to allow them to get health care or they simply CHOSE not to get it. Then, they CHOSE to turn to the state to pick up the bill which may be understandable, but certainly isn’t a laudable decision.

Furthermore, there are a number of ways you could address this problem, if you decided to address it all. One of them might be asking some people to pay the government back for covering their medical expenses. It could involve letting Wal-Mart keep more of their own money in the form of tax breaks in order to offset changes in their health care program. Heck, you could even push for things like tort reform, promote savings accounts, fight price controls on American drugs in other countries and cut the red tape in order to reduce medical costs overall.

But instead of suggesting any of these things, Hirschhorn unleashes the standard set of liberal answers for every problem in society: Increase taxes, create burdensome new regulations, and increase the power of government. Just read Hirschhorn’s “solution” for yourself and you’ll see that it would create a problem far worse than the one it purports to solve:

“Consider this thought experiment. Competitors to Wal-Mart buy products made in the U.S., and give their employees decent wages and good enough benefits to keep them from needing government assistance. American manufacturers also offer good jobs with decent wages and benefits. Competitors offer the same type products, but at higher prices.

Then, consider offsetting Wal-Mart’s unfair low cost, low price advantage by taxing sales at Wal-Mart by the cost differential to level the retail playing field. The “offset sales tax” can be split between local and state governments to supplement various social service programs, pay for infrastructure costs, such as more roads and police, required for stores, and assist start-up costs for new decent-wage retail and manufacturing enterprises.

For millions of low income Americans, their survival need for low Wal-Mart prices cannot be ignored. So the social equity question becomes: How to help those Americans who truly require and depend on Wal-Mart’s low prices? Only those consumers, not the ones who like those low prices, but can afford higher, unsubsidized prices.

Local or state government can provide to those requesting and qualifying for it a special offset sales tax exemption identification card. Low income individuals or families would present some type of evidence of their status. By using the tax exemption cards at checkout they would still take advantage of the low prices, while others would not. To determine the tax, government authorities could estimate from current databases what fraction of customers would likely qualify, including those receiving Medicaid, food stamps, welfare, unemployment insurance, or supplemental social security benefits. A great many Wal-Mart employees would qualify.

Wal-Mart’s unfair competitive advantage would diminish. Over time, those low income people currently in desperate need of low Wal-Mart prices would find more employment opportunities as competitors and their domestic suppliers expanded their operations.

Naturally, it sounds complicated, but this approach does not impose legal restrictions on Wal-Mart, yet serves the greater public interest by not causing taxpayers in general to pay the price for Wal-Mart’s low prices. Other retailers would also be put in the same category, based on a determination of their dependence on imports and whether their wage/benefit structure places burdens on government programs.

Doesn’t that sound great? To fix Wal-Mart’s “unfair low cost, low price advantage” we’re going to implement this byzantine scheme and everything will be all better!

It would be bad enough if liberals just wanted to do this sort of thing to Wal-Mart, but if you boil Hirschhorn’s plan down to its root essentials, it’s the left-wing answer to so many problems in America. Whether you talk about health care, education, the environment, the economy, the tax system, you name it, the liberals always want to increase taxes, create a morass of new regulations, and make sure the government gains more power over the people. That’s not a formula for success, nor is it good for the country…