Wal-Mart is back in the news, and it looks like it will be making headlines for some time to come. The fallout from the release of an internal Wal-Mart memo focusing on employee benefits expenses, health care costs and plans appears to be spreading, with potential problems for the firm pertaining to ADA issues. (thanks to a good friend in the insurance industry for the reference) In response, Wal-Mart has set up a “war room” (free subscription required) staffed by veterans of heated political campaigns to respond instantly to bad news and provide the company’s perspective on issues.
According to the LA Times, the internal memo authored by Susan Chambers, EVP Benefits will raise thorny issues for the company:
“The memo

Managed Care Matters is a year old. Starting with the first day’s posts on the use of oxycontin in workers comp and Coventry’s acquisition of First Health, the blog has covered topics ranging from international pharmaceutical pricing to the investment strategies of Ohio workers comp officials. We are up to just under 200 individuals signed up to receive posting notifications. Almost 5000 unique users visited last month, perusing the 320 entries posted to date. Over 120 comments have been posted to date, enriching the debate, educating me, and providing perspective sorely needed in today’s health care debate.
These are busy days for managed care bloggers. Proposals to cut Medicare and Medicaid by Congressional Republicans hit the nightly news shows, interrupted by ads for the $800 billion dollar Medicare prescription drug program passed by these same elected officials.
Mergers and acquisitions still happen, although the decline in frequency is balanced against the increase in the size of the deals.
Workers comp executives are indicted for illegal campaign contributions, bribery, and outright theft.
Managed care firms find themselves the subject of scathing audits alleging overbilling and lousy services.
Consumer directed health plans grow in popularity, while costs keep rising.
Health plan profits zoom, as medical inflation moderates and premiums climb.
Hurricanes affect the entire industry, forcing drivers in Alaska to help pay for wind damage in Alabama.
Huge companies, beneficiaries of state tax subsidies, are forced to offer health plans to low paid workers after news reports indicating 65,000 of their employees are covered by Medicaid.
I have enraged a few along the way (one executive at a workers comp managed care firm was heard to say he would rip my head off the next time he saw me) and look forward to continuing to perform that needed chore when appropriate. Hosting Managed Care Matters has made me more thoughtful, better read, and busier than ever.
Thanks for the insights, challenges, and news items, and please, keep it up.

More details are emerging about Wal-Mart’s internal debate on health care and benefits for employees (free subscription required). An internal memo from Wal-mart’s head of benefits notes that costs can be reduced by hiring younger workers, ensuring all workers get some physical exercise, and hiring more part time workers.
The memo was in response to the company’s soaring benefits expense, which has jumped 15% annually since 2002, driven in large part by a $1.4 billion increase in health care costs over that period. Wal-Mart, which employs 1.33 million people, provides insurance for less than 45% of employees, and 46% of their children are either uninsured or on Medicaid. Medicaid insures 5% of the company’s employees, or about 65,000 people (and probably more of their dependents).
Here are some interesting excerpts

The Senate Finance Committee has passed legislation designed to cut $10 billion over five years from Medicaid and Medicare programs. The vote was along party lines, with Republicans in favor and Democrats against the cuts.
The changes, which now have to be considered by the Senate Budget Committee and then the full Senate before passing on to the House, would reduce reimbursement to physicians for drugs dispensed ($6.4 billion), increase funding to incent health plans to participate in medicare programs (no $ figures provided) , and require pharmaceutical manufacturers to increase the rebates paid to the federal government by $1.4 billion.
Additional funds would be set aside for Katrina victims’ health care.
The House is considering a package that would cut $11 billion from Medicaid alone, even after adding $2.5 billion for Medicaid services for Katrina victims.
What will result is likely to be some cuts in Medicaid and Medicare, as well as the potential for increased costs for wealthier Medicare eligibles.
The last would have seemed highly unlikely jsut a few months ago, but the Republican base is outraged by the lack of financial discipline it perceives on the part of Republican leadership. The Washington Times notes:” Sen. John McCain (R-Ariz.), one of the group’s leaders, said, “I am totally confident that the Republican base is upset and angry about the fiscal indiscipline that we practiced here in the Congress and the mortgaging of our children and our grandchildren’s futures”
What does this mean for you?
Tweaking around the edges of Medicare and Medicaid will do nothing to address the underlying cost drivers, so the problem persists…