Health insurance for $25

Wal-Mart Stores Inc., the nation's largest employer, is making lower-cost health insurance more widely available to its workers, a move that could affect the market for workplace health coverage across the country.



On Monday, the Arkansas retail giant introduced its new Value Plan, which comes in several variations. The company, which says its move is a response to the needs of its workers, will make the plan available to workers for an average of $25 per month. In some regions, it will be as little as $11 for individuals.



Wal-Mart has long been slammed for what union leaders and others say are the scanty health benefits it provides its 1.2 million U.S. workers.



The new initiative might not quiet those voices. The company's critics say Wal-Mart's plan comes with high deductibles, provides inadequate coverage and could encourage other large employers to reduce the quality of insurance they offer.



Wal-Mart's new coverage is an example of a growing trend among employers to lower insurance costs by offering plans that have affordable premiums but put a substantial burden on employees for paying medical costs.



"Wal-Mart has a tremendous effect on the market. What they do is looked at very closely by Wall Street and very closely by other companies," said Ken Jacobs, deputy chairman of the UC Berkeley Center for Labor Research and Education. "I suspect we'll see other companies follow their lead."



The debate over Wal-Mart's health coverage highlights a growing problem that U.S. companies face in maintaining their competitive position in the global marketplace, said Christopher Ohman, president of the California Association of Health Plans.



"Larger businesses that are exposed to severe price competition are limited in what they can pay for health care by the prices they can get for their products," he said. "This creates a particularly challenging problem for companies that rely on low-wage workers."



Ohman said health care woes are not going to be solved by businesses alone, and need to be addressed by public policymakers.



Increases in health care costs in recent years have been particularly tough on lower-wage workers, who account for many of the country's 45 million uninsured. An increase in the number of companies that do not offer health insurance or offer inadequate coverage is blamed in part for growing ranks of workers and their dependents on government programs such as Medi-Cal and Healthy Families.



Wal-Mart's new insurance will begin Jan. 1 and will cost its workers between 40 and 60 percent less than current options, the company said.



The new plan offers workers three doctor visits without having to pay a deductible, a feature that is designed both to encourage preventive care and appeal to people who rarely see their doctor. A $20 copayment for each visit is required.



One version of the plan will for the first time offer Wal-Mart workers health savings accounts, new tax-deductible savings plans linked to high-deductible health insurance policies that the Bush administration is promoting as a key approach to rising insurance costs.



But Value Plan still comes with cost-sharing features that could be significant for Wal-Mart employees, who reportedly earn about $19,000 a year. Deductibles are $1,000 for individuals and $3,000 for families, with "secondary" deductibles for pharmacy and hospitalization costs that do not count toward the primary sum.



The plan has a $25,000 cap for the first year of coverage, which is lifted in the second year. And only some workers in the South and Southeast will see an $11 premium. Most workers will pay about $25 for individual health insurance and $65 to cover a family.



Wal-Mart spokesman Dan Fogelman said the new plan is just one of many options the company offers its employees and it may not be the best choice for someone with ongoing medical expenses.



"Certainly it is a plan people will want to evaluate closely against their medical needs and against their financial priorities," he said.



Wake-Up Wal-Mart, a group formed by the United Food and Commercial Workers International Union, called Value Plan a publicity stunt.



"They basically repackaged their old bad plan and had their PR firm put a nice new name on it," spokesman Paul Blank said.



Jacobs of UC Berkeley, co-author of a paper titled "Hidden Cost of Wal-Mart Jobs," said increased popularity of high-deductible plans such like Wal-Mart's could reduce the number of uninsured, but increase the number of "underinsured" -- people who have insurance, but with large cost-sharing or coverage gaps.



"A large number of people will still go back to public hospitals and other public services to gain care when they discover the plans they have don't cover them," Jacobs said.



Wal-Mart has not changed its health insurance eligibility requirements, which critics say is one of the reasons less than half of the company's workforce has its coverage. Employees have to work 180 days, or about six months, before becoming eligible. Most Americans have to wait about three months.







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Wal-Mart's new health plan

-- Lowers health insurance premiums to an average of $25 for an individual, $65 for a family and $37 for a single parent.



-- Imposes deductibles of $1,000 for an individual and $3,000 for a family.



-- Pays most benefits at 80 percent of covered charges.



-- Caps payouts at $25,000 per person during the first year of coverage.