Orwell Watch: Wal-Mart CEO Wants Business to Influence Health Policy

How dare the CEO of Wal-Mart, the company that makes such a studied practice of paying workers so badly that taxpayers subsidize its prices, say he and big business should influence health care policy? The US has the most costly healthcare in the world while failing to produce materially better results than countries with varying degrees of so-called socialized medicine. Large corporations are the most powerful buyers in the health care system, yet their efforts to improve delivery and lower costs have been singularly unproductive. So why should a crowd that has consistently failed have any say in reform?

And Wal-Mart promoting this line is particularly heinous. The Bentonville giant is known for keeping workers just below the number of hours to qualify them as full-time, precisely to avoid giving benefits such as health care. Thus if workers are single or married to spouses who similarly lack coverage, the likelihood is high that they will upon occasion turn to emergency rooms for health care, which is an extraordinarily high cost delivery system that comes out of the collective purse.

And listen to this from CEO Lee Scott, quoted in the Financial Times:

I think government is going to be engaged after this election regardless of who wins, and I think business should be more involved in the discussion. I think it has long-term ramifications for our global competitiveness.

Hhhm. Most (read all) of our advanced economy trade partners have more generous public payment for health care. They also have lower current account deficits than we do. While correlation is not causation, tell me why I should believe the reverse is true, that a single payer system would be bad for competitiveness? There seems to be a dearth of evidence to support this view.

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  1. Anonymous

    The weird thing is that medical insurance is connected to employers at all.

    It was a reaction to government wage controls during WWII that companies tried to differentiate themselves with benefits. Hundreds of government programs and tax breaks have kept the system in place.

    But why in the world should the two be connected at all? It makes no sense.

    Secondly, look at the cost of cost of medical care over the 20th century. Note that prices really started escalating with the introduction of medicare and medicaid (IOW, incremental government socialization of the system). What we have now in no way resembles a free marketplace for medical care.

    Remove the government intrusion! Let us deal with our doctors directly and pay for our services. Develop co-ops if you want to be involved in large group programs.

  2. Francois

    “tell me why I should believe the reverse is true, that a single payer system would be bad for competitiveness?”

    No one should believe that. On the contrary, if small entrepreneurs in highly specialized fields would not have to deal with the health care morass, their costs of operation would be much lower.

    I was under contract in a small pharma company in 2003. While chatting with the CEO, he told me that one of his headaches was that, in order to attract very qualified people, he had to offer the same benefits that a Merck or Wyeth had. Needless to say this wasn’t exactly cheap, even excluding the non-negligible administrative overhead.

    As for Wal-Mart CEO’s comment, let’s say that society should be more involved, and business should be kept out. In return, business should not have to bear the brunt of offering health care.

    The more I read L. Kotlikoff’s book “The Health Care Fix” the more I think is on to something that deserve much more discussion than the ideological bromide and spin we get served all the time in the media.

    But asking for an adult discussion on health care reform in the US is like asking the ayatollahs in Iran to discuss secularization of their society. Not happening anytime soon.

  3. Anonymous

    There is no question that a single payer system is more cost effective for such an inelastic good as health care. The only cost we pay is that the advances in health care will slow down. However, under the current system, the US taxpayer acts to subsidize the advancement of health care for the rest of the world. It’s time for the US taxpayer to take a holiday and let the rest of the world take a role in paying for R&D.

  4. Anonymous

    anon at 3:06 are you serious? The problem with co-ops and every other private means is adverse selection. Unless you have complete mandatory portability (a gov’t regulation if you will), co-ops are a non starter. I’m also fairly skeptical of an economist designed health care system seeing as how well the economists have done right now.

    I think single payer is time. Let’s just take insurance out of the mix completely.


  5. Anonymous

    Health-care is a primary example of a market failure (see Robert Kuttner’s excellent “Everything For Sale: The Virtues and Limits of Markets”{ISBN 0394583922}). Incentives are not properly aligned (insurance companies make money by NOT paying claims), there are no subsitutions, etc.

    Market solutions only lead to avoidable deaths and rising costs. American health-care delivery has been inefficient and immoral for too long.

    It’s astonishing to me we have chosen profits over people. We are the only industrialized nation on earth to have such twisted priorities. The human suffering must end!

  6. Anonymous

    Market failure? I don’t think so! The market has not been allowed to operate for over forty years. Already there is a huge amount of government regulation in the health care industry and you think the solution is more regulation and less choice?
    The primary reason that healthcare costs are less in other countries is that they have not accounted for the huge amounts of human suffering and the loss of economic production from citizens who need care. Lineups for healthcare are the norm. Treatable conditions too frequently become untreatable after a few months of waiting for service with death often the result. (I have seen this happen to two close friends in the past 5 years in Canada; death the result in both cases).
    Anyone who thinks that government will be their saviour is completely out of touch with reality.

  7. Steven

    I would say being “out of touch with reality” occurs when one looks at the US system by the statistics – where we spend far more than other countries on health and get worse or no better results – and assume that other health care systems are somehow disastrous.

    US has the second worst infant mortality rate of the developed world:

    A general view of the healthcare issue and the US’s issues:

    Personal stories do not the big picture make. And if one is looking for horror stories on health care, one can find quite a few right here in this country.

  8. minka

    This reminds of a story in the most recent Economist, on political and social attitudes of the UK and USA (compared). There were funny bits. The Americans by a large margin felt govt should not help out when a worker was laid off or fired, whereas the UK interviewees felt the opposite, that govt should help out.

    So, who did the ‘individualistic’ Americans think should help out? The employer. Of course. We expect our employers to supply health care, pensions, and what, unemployment insurance?

    What a crock. The business who likes you so much they fired you, or who is doing so well they laid you off, is supposed to ‘help’.

    What this shows is how our refusal to rely on our govt has resulted in this inane system of relying on private employers, who are not accountable to their workers. The business world is not a democracy, for heaven’s sake.

    Americans are worker-serfs. How many millions are stuck in jobs because they have health insurance? How many businesses don’t get started because the founder can’t risk no health insurance?

    Rant On: Americans are best in the industrialized west at one thing: kissing rich and corporate butt. You may end up on the street in your fifties with no pension or health insurance, but comfort yourselves with this: you’ve got a mouthful of rich ass. Leave in your will for your kids before you jump off that bridge. Rant Off.

  9. Anonymous

    With Congress protecting snake oil patents and setting aside specific funds with limits upon which can be drawn via a medical lawsuit just insures more of the same.

    Without caps in litigation or other forms of protectionism, a private economy would sort out the bad from the good in no time as doctor’s insurance premiums would assign risk adjustments for drugs and procedures.

  10. Thai

    “The most expensive thing of all is the loss of trust”…

    As an administrative physician for a large group of physicians, my gut tells me a single payor system ‘might’ help, but then again it also might not. The devil is in the details.

    But notice I only say ‘help’ and not ‘solve’, for I do think single payor systems are a kind of ‘smoke screen’ of both the left and right. My gut tells me neither approving not rejecting a single payor system will really deliver America to the promised land of lower healthcare costs.

    As I see it, there are really four main reasons healthcare costs are escalating in this country and they are pretty easy to understand (I just hope I am up to the task of explaining them :)

    1. The various players in the system no longer trust each other (in prisoner’s dilemma language– the players are beginning to ‘defect’) and they are increasing barriers within the entire system with the intent of improving things, but in totality making things far more expensive than they otherwise would be (at least from a cost standpoint). In this fashion, what we are witnessing is analogous to the credit crunch. Imagine a marriage with all kinds of regulations, would it really ever work? Yet the marriage must operate according to husband and wife ‘playing by the rules’ or it would fall apart for lack of trust.

    It is a circular problem without answer, except that it works when the participants trust one another.

    2. There are many well intentioned regulations which dramatically increase barriers to competition (this is really again the same thing as problem #1). The biggest of all of these ‘sacred cows’ were really past over 100 years ago and have to do with what a physician or healthcare practitioner is-should be and what skills they need before they can even practice medicine (think bariers to entry).

    As medicine become more and more proceedure oriented, this issue is becomming bigger and bigger. Since all of these laws are passed at the state level, they are often ignored in national discussions. This is the biggest ‘low hanging fruit’ of all.

    3. Most people do not understand the fractal nature of illness and healthcare spending (most people don’t even understand fractals!). This leads many people to MANY wrong impressions regarding who is ill, what is ‘bad medicine’, and where our healthcare money is spent.

    Further, since people don’t understand fractals, they don’t understand how to reconcile issues of scalability and ‘power laws’ with issues like trust.

    3. America continues to avoid a values discussion on when it is ‘OK’ for our healthcare system to ration care and who should be empowered to ration. Indeed the very notion of rationing or tiage (so fundamental to medicine once apon a time), are completely anathema to most Americans.

    Yet whomever empower as a society to ration healthcare (just as we empower judges to administer justice), still we must decide this issue. For rationing SOMETIMES requires override the wishes of individual patients and families (like judges must sometimes override plantifs or defendants), in order to protect ‘our collective finances’.

    AND, if you have the power to ration, you must also have the power to be wrong (just as judges are allowed this privledge), or rationing will never work.

    You may not have ever thought of how physicians in America were once the guardians of your healthcare resources (and they still are in countries like England and France) but in America today, with its diminishing trust, SOME of the physicians who once guarded your resources are loosing faith in their patients, and prescribing care as if it were a blank check (this is on top of an besides the point of any financial motive they may have)– physicians fear character assaults or errors in their judgement leading to malpractice.

    …While this point can be overstated, there is a strong kernel of truth to it.

    If any of you want further elaboratino on 1, 2, or 3 (or all), let me know, I can easily provide further details.

  11. Elizabeth

    I think getting the Walmarts of this country on the universal health care bandwagon is the only way to make this happen. I also think that it should be tied to a large increase in minimum wage so that employees can afford the 10% payroll tax that national health insurance will cost, plus a little more to compensate the treasury for the money it has to spend on EIC subsidizing low wages.

  12. Anonymous

    Is our priority in reforming healthcare going to be global competiveness, or providing the best quality care to our citizens? If left to politicians and business leaders, as it seems it will be, I think we can count on a decrease in access to and quality of care, all the while cloaked in metrics “documenting” CQI, gamed by a whole layer of healthcare system bureaucrats.

  13. Anonymous

    The US healthcare system is simply not a market system. It has the worst aspects of socialism and free enterprise associated with it.

    In the US, 55% of healthcare is paid for by state and federal government (Economist Magazine). Medicare and Medicaid is the lion’s share of that. Every analysis I have read indicates that no matter how underfunded Social Security may be, these programs dwarf it by comparison and threaten US finances for the next several generations. How can anybody argue in that light that the governements should take on more responsibility?

    The people who get employer benefits are also on a socialized system. I am lucky enough to be in one and therefore I know first-hand that I have no motivation whatsoever to contain costs. There is no penalty for me when avoiding preventative care, no incentive to shop around for doctors, or even bother avoiding the emergency room. The guy in the cube next to me is my age, my height and 100 lbs heavier than me! He pays the same premiums as I do. In this light, is 3rd party payment (government or employer) a good idea in keeping prices down?

    In the US, we fight until the end against death and are willing to pay (rather have somebody else pay) for every conceivable treatment even if it prolongs life as little as a week. 80% of a person’s lifetime healthcares costs are at the end of their lives (Can’t remeber where I heard that, but it makes sense) NPR had a story on England’s healthcare. The government has a list of allowed treatments that it pays for and that is it. Hospice takes over and tries to ensure a good end of life. The Brits interviewed seemed OK with that. Good for them, but I am not sure Americans would be.

    As a matter of fact, I bet Americans would sue the government if they had a one-payer system and told Americans that to cut costs, you wouldn’t be able to try every treatment out there. That brings me to the next point of out of control lawsuits. Malpractice insurance is tens, even hundreds of thousands of dollars a year. I dated a doctor who worked in a Public hospital in Chicago and she spent more time in court testifying for fellow doctors against abulance chaser lawyers than she did treating patients. Our judicial system needs repair if any progress is to be made here.

    I can go on about the way the AMA certifies schools based on nice facilities and not training doctors and how the medical industry has not embraced IT like the rest of society, but what amazes me most is that people are so sure that the medical industry should not make money. When I need a doctor, I personally hope he/she is being well paid. When the researchers are finding the cure for cancer or some other disease that I might yet get, I hope they are well paid. When an evil rich guy invests in a big pharma company and they create drugs that save me later, I hope he gets a good return on his investment. I might even be willing to pay something for that.

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