NEW YORK -- Wal-Mart Stores Inc., responding to criticism that it has failed to provide adequate health benefits, said yesterday it will expand coverage for workers and open more than 50 health clinics in its stores.
The world's largest retailer will allow more workers to become eligible for the lowest cost health plan, cut the waiting period for part timers, and allow their children to be covered. Wal-Mart will more than quadruple the number of clinics this year after opening nine in Arkansas, Oklahoma, Florida, and Indiana last year.
Wal-Mart chief executive H. Lee Scott also called for lawmakers to work with companies on the rising cost of healthcare. The initiatives come a month after Maryland became the first US state to legally require large companies to pay a set amount for employee healthcare benefits, a measure that states including California are seeking to adopt.
''It's either an olive branch to acknowledge that they need to do more or others might view it as throwing down the gauntlet for government and business to work together," said Don Gher, chief investment officer at Bellevue, Wash.-based Coldstream Capital Management, which holds Wal-Mart shares among $900 million in assets. ''Are there going to be additional costs? Certainly."
Labor groups, US lawmakers, and advocacy organizations including Wal-Mart Watch have criticized the company's pay and benefits, saying the offering is so poor that many Wal-Mart workers are on public assistance programs including Medicaid. According to a Wal-Mart memo, 5 percent of the company's workers are on Medicaid and 19 percent are uninsured. The company had more than $300 billion in revenue last year.
Wal-Mart, the country's largest private employer with 1.3 million workers, said it will expand the availability of the lowest cost ''Value Plan" health benefit to at least half of all associates. The option costs $11 per month for individuals and 30 cents more per day for children, the company said yesterday.
As he called for government and corporate America to work together on rising healthcare costs, Scott said yesterday that during its most recent enrollment period the company signed up 70,000 associates who didn't have Wal-Mart's health insurance. More than half of them were previously uninsured, he said.
''The soaring cost of healthcare in America cannot be sustained over the long term by any business that offers health benefits to its employees," Scott said in the statement. ''We have to solve the healthcare challenges facing America. We have to do it together. And we have to start now."
Scott will discuss health benefits issues Sunday during a speech at the National Governors Association winter meeting in Washington, the company said.
Wal-Mart's plans and Scott's speech may reflect a renewed effort by the company to try to boost its image. In November, the New York Times reported Wal-Mart had hired former presidential advisers Michael Deaver and Leslie Dach to handle some public relations matters. Deaver worked for President Reagan and Dach for President Clinton.
Shares of Bentonville, Ark.-based Wal-Mart rose 22 cents to $45.70 in New York Stock Exchange composite trading. Last month, Maryland passed a law that requires companies with over 10,000 workers to devote at least 8 percent of their payroll to healthcare. Wal-Mart employs almost 17,000 people in Maryland.
A California bill, introduced by Democratic State Senator Carole Migden, would also require firms with 10,000 or more workers to spend at least 8 percent of their total wages on healthcare or reimburse California's state-run medical program by a similar amount.
Efforts to pass similar laws faltered in states including Washington, Indiana, and Wisconsin this year. A group representing Wal-Mart and other ''big box" retailers this month challenged the law in Maryland.
The company on Jan. 1 introduced a new health plan that costs some employees as much as $23 a month. In some markets, it costs about $11 a month. On Oct. 26, the day after the plan was disclosed, Wal-Mart released a memo in which an executive said the retailer could limit health costs by hiring fewer unhealthy workers and reducing subsidies for spouses.