Wal-Mart, long criticized for its health care coverage, unveiled a broad plan yesterday that is intended to cut employee costs, expand coverage and offer workers thousands of cheap prescription drugs.
Starting Jan. 1, Wal-Mart’s insurance will look a lot like that offered by many other American companies, but with some twists that even longtime critics described as innovative. Independent experts praised several features of the plan and said it could represent a turning point for the retailer, the nation’s largest private employer.
“On face value, this looks like a very significant change and improvement,” said Ron Pollack, president of Families USA, a health care advocacy group in Washington that has been critical of Wal-Mart.
Wal-Mart said it would give each employee or family that signs up for coverage a grant of $100 to $500 to defray health expenses while charging premiums as low as $5 a month. It will eliminate expensive hospital deductibles and make 2,400 generic drugs available to employees for $4 a prescription — about 1,000 more than it sells to customers at that price.
The plans with the lowest premiums would still charge annual deductibles as high as $2,000 — typical for American corporate health plans, but perhaps steep for Wal-Mart employees, many of whom work part time and earn less than $20,000 a year. And the company’s plans have other limitations, including waiting periods as long as a year for new employees.
Wal-Mart Watch, a group long critical of the company, said yesterday that “these plans are still unaffordable due to low wages or inaccessible due to waiting periods.”
It is unclear how many of the 125,000 Wal-Mart workers without health coverage would sign up. But industry analysts said the program represented an upgrade for the 636,000 employees who already receive health insurance through Wal-Mart. They said it could force the company’s discount-retailing competitors to offer more generous plans for their own workers.
Helen Darling, president of the National Business Group on Health and a former benefits consultant, called it “a very good plan,” saying that “parts of it, like the $4 generics, are game-changing for the industry.”
Mr. Pollack and others noted, though, that they had yet to see the fine print of the new program.
Wal-Mart has long been held up to ridicule for its health care programs.
Two years ago, the Maryland legislature took the unusual step of requiring Wal-Mart — and only Wal-Mart — to increase spending on health insurance. The law was later overturned.
Even before yesterday’s announcement, Wal-Mart had taken some steps to answer critics. It allowed part-time employees to enroll their children in the company’s insurance program, reduced the waiting period before a new part-time employee was eligible for benefits to one year from two, and created plans with premiums as low as $11 a month.
But critics contended that the company had not done enough, pointing to the still high deductibles and lengthy waiting periods.
The new program, for which workers can sign up starting this month, offers 50 ways to customize coverage, with varying trade-offs like higher premiums and lower deductibles.
In one plan, for example, an employee would pay premiums up to $79 a month, receive a health care credit of $100 and pay a deductible of $500. In another, the employee would pay premiums of $8 a month, receive a $100 health care credit, but pay a deductible of $2,000. Though many generic drugs will be available for $4, brand-name drugs will cost $30 to $50.
In an interview, Wal-Mart’s executive vice president for benefits, Linda M. Dillman, said the company hoped to persuade those workers without health coverage to sign up for it. About half of Wal-Mart workers have coverage from the company, while 40 percent more get their coverage elsewhere — through a spouse, a parent, a second job or a state program like Medicaid. About 10 percent have no health coverage.
“We are removing any barriers of entry” to the company’s health care plan, Ms. Dillman said. “When you are talking about $8 a month and a $100 health care credit, why would you not sign up?”
She said the program emphasized preventive care, paid for by the company before a deductible kicked in. Health care credits, for example, would make it possible for employees to see doctors and buy prescription drugs without paying anything out of pocket.
“If they need to seek care, they will do it, not forgo it,” Ms. Dillman said.