Wal-Mart's recent decision to cut benefits for new, part-time employees may be part of a trend, as companies grapple with higher health costs.
That's the view of John Rother, the new president of the nonpartisan National Coalition on Health Care, who chatted with All Things Considered host Robert Siegel about the country's growing pack of part-time workers and why companies are rolling back their benefits.
"We're seeing health costs becoming a larger and larger expense item for companies," Rother told Siegel. And that poses a particular problem for firms "engaged in international trade, where they're competing against companies that do not have to bear that expense."
"Because they're in countries where the government probably bears that expense," Siegel said.
"Exactly, which is mostly all other countries," Rother said.
With full health coverage costing about $15,000 a year for a family, it's not economic for many employers to cover their part-time employees, he said. And there's no government provision requiring employers to pay a penalty if they don't.
Rother blamed the fee-for-service model for the spike in health costs. "[It] encourages more and more care even when it's not necessary or even sometimes when it's not productive," he said.
Many employers are feeling overwhelmed, according to Rother. Costs went up about 9 percent last year, and in these times revenues often don't keep up. Employees didn't see a 9 percent pay increase either.
"Health costs are taking a bigger and bigger bite out of both take-home pay and the employers' cash flow," he said.
So what are the options for part-time workers without insurance?
"I don't mean to be flip, but your best option would be to marry somebody who has good health coverage," he said. "Because if you don't, there are very few options. Under the Health Reform Act, you will be able to get affordable coverage, but that's not until 2014."
ROBERT SIEGEL, HOST:
Now, health insurance and part-time workers. Wal-Mart recently announced that it won't offer health insurance to new employees who work less than 24 hours a week. That's one of several cutbacks in health care benefits the big employer is making. And it raises this question: With so many Americans settling for part-time work, how common is it to get insurance if you don't work full-time?
Well, John Rother is the president of the National Coalition on Health Care, the NCHC, which advocates comprehensive health care reform. Welcome to the program.
JOHN ROTHER: Thank you.
SIEGEL: And let me ask you first, under the Affordable Health Care Act, the big health care law, full-time workers at businesses that employ over 50 people get coverage or their employers pay a penalty. What about part-time workers?
ROTHER: Well, there's no provision to require employers to cover part-time. And the reason, of course, is that with full coverage costing about $15,000 a year for a family, it's non-economic for many employers to cover part-time workers.
SIEGEL: I would assume that large companies getting hit up at $15,000 a worker can actually alter the look of their bottom line by withdrawing these benefits or make it look worse if they do offer these benefits. It would be a tremendous incentive to withdraw benefits from people in that case.
ROTHER: Well, that's exactly what's happening. We're seeing health costs becoming a larger and larger expense item for companies, particularly those engaged in international trade, where they're competing against companies that do not have to bear that expense.
SIEGEL: Because they're in countries where the government probably bears that expense.
ROTHER: Exactly, which is mostly all other countries. So, I do think we're going to see this as a trend that's going to continue. And with the coming of the Health Reform Act, then at least people with no employer-based insurance can be insured at an affordable price. But until then, these people are really going to have very, very few options.
SIEGEL: And what kind of a share of the workforce are we talking about?
ROTHER: Well, this is a growing part of the workforce. It's not a majority, but it's been very fast growing, especially recently when employers have been trying to cut back on hours to save labor costs.
SIEGEL: One question about Wal-Mart. The company was essentially shamed into covering more of its employees just a few years ago. Many Wal-Mart employees were qualifying for Medicaid at the time. This reduction of benefits comes very soon after they were extended. Is it fair to say that Wal-Mart is really getting overwhelmed by the cost of doing this?
ROTHER: Well, I think many employers feel overwhelmed. Costs went up about 9 percent last year, oftentimes revenues didn't come close to matching that. And from the employee point of view, their wages didn't go up 9 percent. So, health costs are taking in a bigger and bigger bite out of both take-home pay and the employer's cash flow.
SIEGEL: I know this is a question that you could spend an hour answering. But what's the nutshell version of why? Why did the costs of health insurance go up by so much?
ROTHER: The first thing I would say is that our reimbursement system, namely fee for service, encourages more and more care even when it's not necessary or sometimes even when it's not productive. So, we pay the price because we have more care delivered than often we need.
SIEGEL: Well, let's say that I get a new job working 20 hours a week at a Wal-Mart, which means I'm not going to be offered benefits. And I do some other odd jobs that carry no benefits for another 10 or 15 hours a week. What are my options? How do I cover myself? Or if I have dependents, my dependents.
ROTHER: Well, I don't mean to be flip, but your best option would be to marry somebody who has good health coverage because if you don't, there are very few options. Under the Health Reform Act, you will be able to get affordable coverage, but that's not until 2014. And most states, today the only thing that's available for people in the individual market are very high-cost, so-called catastrophic policies, not very attractive, very expensive.
SIEGEL: Well, John Rother, thank you very much for talking with us.
ROTHER: You're welcome.
SIEGEL: That's John Rother, who's president of the National Coalition on Health Care. Transcript provided by NPR, Copyright NPR.