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The Way Ahead: Placing Health-Care Options in the Hands of Private Companies

Companies like Wal-Mart and Toyota are loosening the rules for employee health-care enrollment and offering insurance options that workers find attractive.

by
James Capretta

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February 24, 2009 - 12:29 am
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Until recently, Wal-Mart was the corporate giant universal health-care advocates loved to hate. As a recent story in the Washington Post recounted, for years the company kept its costs down by limiting the number of workers who would qualify to sign up with the employee health plan and by passing on much of the premium to those who did.

That kind of tight-fisted management worked to a degree and for a time, but eventually Wal-Mart’s executives recognized it was not a viable long-term strategy for a company dependent on employee morale and loyalty. So the company’s executives changed direction. Instead of avoiding the health problems of their workers, they put the company’s business savvy to work to solve them.

That meant loosening the rules for enrollment and offering insurance options that the workers would find attractive. Some in-house research determined that many of Wal-Mart’s younger employees didn’t want expansive and expensive insurance. Rather, they wanted protection against high costs with a low premium.  So the company offered a high-deductible option, with a cash credit of $100 to $500 per year to cover some or all of the non-emergency costs the workers or their families might need. Insurance enrollment jumped.

Not surprisingly, Wal-Mart also started taking a hard look at costs and what could be done to keep workers healthy with better care management. Today, Wal-Mart employees can receive any one of 2,500 generic drugs for $4 per prescription. All expensive transplant cases go to the Mayo Clinic to ensure top of the line care and prevent unnecessary procedures. And pregnant women receive nurse counseling to prevent premature births.

Wal-Mart is just one of the many companies that are bringing innovation to health-care arrangements. Toyota is known for its relentless attention to production detail. In recent years company executives have turned some of their analytical prowess toward health-care costs and outcomes. Like management at other large companies, Toyota’s leaders were frustrated. Why, if they were spending so much, were the company’s workers still so unsatisfied with their insurance plan?

What Toyota discovered was not at all unique. Health-care arrangements in the U.S. are often not convenient for the patients. The paperwork is maddening; there are no electronic records that can be accessed later from home; physician office hours are too short; and parents with sick children must often wait until Monday to get an appointment. Communication with practitioners is cumbersome and difficult for no apparent reason.

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