Wal-Mart, which has long been criticized for the benefits it offers to its workers, is introducing a cheaper health insurance plan, with monthly premiums as low as $11, that the company hopes will greatly increase the number of its employees who can afford coverage.
Jumping into a new area, Wal-Mart is also offering health savings accounts, which the federal government introduced last year. Few employers offer them.
The new benefits, which Wal-Mart calls the Value Plan, follow years of complaints that at Wal-Mart, the nation's largest employer, health insurance is out of reach for many of its 1.2 million workers in the United States, forcing thousands of them to turn to state-sponsored programs or forgo health coverage altogether.
"We are lowering the costs to make health insurance more affordable," said a Wal-Mart spokesman, Dan Fogleman, who declined to comment on how much the plan would cost the company. Asked if the new insurance plan was in response to growing criticism, he said, "It's fair to say we are listening, but more so to our associates than anyone else."
Health insurance specialists generally praised the new plan, saying its lower premiums were likely to attract more employees and thereby reduce the ranks of the uninsured. They also noted, however, that the plan's $1,000 deductible would be high for Wal-Mart workers, particularly older employees who are likely to visit doctors more often, and might not cover expensive treatments, particularly in its first year.
While the company has not yet formally announced the changes, workers have been given details to enroll in the plan starting in 2006, and Wal-Mart's chief executive, H. Lee Scott Jr. will discuss it in an address to company employees this morning. Currently, fewer than half of Wal-Mart's workers are covered by company health insurance, compared with more than 80 percent at Costco, its leading competitor. The company declined to estimate how many additional workers would be covered under the new plan.
The changes will be closely watched by Wall Street and Wal-Mart investors, who will want to know how the company can afford to offer lower-priced benefits at a time when soaring health care costs are pinching profits across the country.
Wal-Mart said that under the plan, monthly premiums would cost between 40 percent and 60 percent less than those for any existing Wal-Mart insurance policy, and that individuals could visit a doctor three times before paying a deductible, an arrangement aimed at encouraging workers to seek preventive care. In the past, workers have had to pay a deductible before their insurance kicked in.
Those who participate will pay a $1,000 deductible, the maximum under Wal-Mart's insurance for 2005. Monthly premiums will be, on average, less than $25 for an individual, $37 for a single parent and $65 for a family. The $11 premium, for individuals, will be available in a handful of areas, Mr. Fogleman said.
But the plan is unlikely to cover a complicated illness or expensive hospital stay during the first year, when there is a $25,000 insurance cap. (The cap is lifted for the second year.) Out-of-pocket payments range from $300 for prescriptions to $1,000 for hospital stays.
The company's health savings accounts will combine low monthly premiums with a requirement that individuals cover a substantial part of their own health care costs. Given its size, Wal-Mart's endorsement of the concept may prompt other companies to re-evaluate the accounts.
Several health insurance specialists questioned whether the company, which is working to burnish its public image, was trying to quickly increase the number of workers who use its health insurance at the expense of the coverage's quality.
"Is it the greatest health care plan in the world? Probably not," said Howard Berliner, a professor of health policy at the New School for Social Research. "But my concern is getting people health insurance so they can get health care when they need it. In that sense, anything that speeds that goal is for the better."
Uwe E. Reinhardt, a health economist at Princeton University, said that by allowing workers several visits to the doctor before requiring them to pay out of pocket, Wal-Mart had "removed a big financial barrier between doctors and patients," adding that critics "would have trouble attacking this plan."
But analysts cautioned that the new insurance plan would prove a better fit for workers who are young and healthy than those who are older and more vulnerable to illness. A 60-year-old Wal-Mart employee, they noted, might visit a doctor three times in a one month and then need to pay $1,000 before the company would share the cost of care. Given that many Wal-Mart employees are paid less than $19,000 a year, the deductible "is pretty significant," said Charles N. Kahn, president of the Federation of American Hospitals.
Tracy Sefl, a spokeswoman for Wal-Mart Watch, a coalition of community groups that has been highly critical of the retailer, had not seen details of the plan, but said that "a plan that is characterized as a healthy person's plan doesn't fully address the needs of a majority of their work force."
Ms. Sefl said the introduction of health savings accounts, which allow workers to make tax-deductible payments to a health care fund, was largely impractical for the chain's employees. "The majority of their work force will not be well positioned to contribute," she said.
Even as they commended Wal-Mart for offering a more affordable health insurance plan, some industry watchers expressed surprise that the company waited as long as it did to offer a more affordable option. "We have a health care system in this country that assumes people will be covered by their employer," said Mr. Kahn. "If the biggest employer in the country isn't providing some kind of affordable and meaningful coverage, that is a problem."