Doing The Right Thing

Our View: Faster Than You Can Say 'Roll Back Prices,' Wal-mart Shifts Strategy And Now Sees A Need For Government To Mandate Health Insurance Benefits

July 02, 2009

Four years ago, when Maryland legislators approved what became known as the Wal-Mart bill - a mandate that would have forced the retailing giant to either pay a minimum amount for employee health benefits or a hefty penalty to the state - it was derided by the company as both bad public policy and illegal.

The latter objection proved to be true. It was thrown out by a federal appeals court as a violation of federal law that limits states' ability to regulate employee benefits.

But the reasoning behind the proposal was sound: If companies are to compete on a level playing field, how can some be burdened with the obligation of providing increasingly expensive health care insurance while others are not? Nor does it seem fair when the rest of society (particularly taxpayer-financed Medicaid) ends up paying the medical bills for employees of companies that refuse to provide some minimum insurance coverage.

Turns out, the folks in Bentonville, Ark., have had a change of heart. The policy they and many of their allies once derided as a lethal blow to Maryland's business climate is starting to look pretty good.

On Tuesday, a letter signed by Wal-Mart Stores Inc. CEO Mike Duke informed President Barack Obama that the company now supports requiring employers to provide decent health insurance to workers. That could prove a big boost for the concept of an employer mandate that is central to President Obama's vision for health care reform in this country.

Amazingly, the company's reasoning is precisely what some of its competitors in Maryland were saying about the Wal-Mart bill just a few years ago: Even the world's largest retailer can't fairly compete with firms that don't provide health insurance.

That not only represents a 180-degree turn on Wal-Mart's part, but it's also a big break with many in the retail industry who claim that any form of employer mandate will hurt their businesses and the nip the U.S. economic recovery before it's barely begun.

Wal-Mart insists its support comes with a catch: that health care reform include cost controls. That's an entirely reasonable position - as is the company's insistence that the mandate be "fair and broad," although that doesn't necessarily mean it should apply to small businesses.

Some may insist that Wal-Mart is merely accommodating the politics of the moment and just wants a place at the negotiating table. But the decision also suggests that a company once criticized for its modest benefits and anti-union policies has seen the error of its ways.

Even as Wal-Mart was fighting Maryland's law, the company was improving (albeit modestly) its employee health care benefits. Whether that was a self-serving strategy to thwart unions or improve its battered image is immaterial. Rather than continue the mistakes of the past, Wal-Mart has chosen to do the right thing - and ought to be congratulated for it.

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