Wal-Mart Supports Health Plan That Will Destroy Small Businesses

Matthew Yglesias proudly announces that his employer the liberal thinktank centre for American Progress has convinced Wal-Mart (WMT) to support a law that would legally obligate employers to pay for their employees’ health insurance.

The centre for American Progress, the Service Employees International Union, and Wal-Mart joined forces today to release a letter (PDF) endorsing the dual ideas of an employer mandate to provide health insurance and “triggers” to automatically reduce costs if health care spending gets too high (more on that here).

The highly ideological behaviour of the business community, and high degree of class solidarity exhibited by the executive class, has been a hugely important element of the story of American politics over the past 30 years or so. The willingness of much of the business community to break with Chamber ideology on Waxman-Markey and now on health care is an important sign of change in the air.

Sorry Matt! We hate to bust your bubble, but you and your employer are being used for Wal-Mart’s agenda, which is as greedy and selfish as ever. Actually, it’s worse.

This is all about introducing a bill that will harm its competitors, particularly businesses of a slightly lower size that can’t buy health insurance on the same scale. The company already has a major price and sourcing edge over its competitors, and this law would allow it to exploit that even more.

This is similar to when liberals got excited about the fact that Wal-Mart came out in favour of a higher minimum wage, even though Wal-Mart employees almost all make well over the minimum wage, meaning that such a law would only reduce margins at their competitors. You could go on and on.

This is change, as Matt says, but it’s change for the worse. Whereas before, Wal-Mart always fought for the bone, now they’re enlisting government (and the centre for American Progress) to impose higher costs on the competition.

And be sure that they’re not just pushing for a law that would affect other big-box retailers:

Reuters: “We are for an employer mandate which is fair and broad in its coverage,” stated a letter addressed to Obama and signed by Mike Duke, the chief executive of Wal-Mart; Andy Stern, the president of Service Employees International Union and John Podesta, the CEO of the centre for American Progress.

Wal-Mart, the nation’s largest private employer, also said separately that the mandate should cover as many businesses as possible, and cover part-time and full-time employees.

Read that? They say “broad” and “as many businesses as possible.”

The other problem: Employer-based health insurance sucks! It’s terrible for worker mobility, creating economic stagnation by locking employees into their jobs, while discouraging workers from startups and other small businesses that don’t have the scale to buy healthcare in the beginning. Even Obama’s said he doesn’t think the scheme — which was developed as a way to get around WWII price controls — makes a lot of sense.

So really, why is CAP advancing Wal-Mart’s desire to perpetuate a broken system?

Update: Catherine Rempel at at the NYT Economix blog posts this chart from the Kaiser Family Foundation, which proves that the only way this kind of rule will have any effect is if it goes after small and medium-sized firms. The large firms on Wal-Mart’s scale are almost all offering health insurance to some degree.

employer based health insurance

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