Health Care

Will Wal-Mart Sell Your Small Business Health Insurance?


Will Wal-Mart Sell Your Small Business Health Insurance?

Photograph by Joe Raedle/Getty Images

Will Wal-Mart Stores (WMT) soon be selling health insurance to small businesses? A report published Friday in the Orlando Business Journal quoted a Wal-Mart vice president saying the world’s largest retailer was exploring plans to work with insurers to sell low-cost coverage to small businesses:

“It would allow small employers to piggyback [on] Wal-Mart,” [Marcus Osborne, vice president for health and wellness payer relations at Wal-Mart Stores] said. “We haven’t got it all figured out, but it’s one of the things we’re looking at.”

When I asked Wal-Mart for more details, spokesperson Danit Marquardt e-mailed this statement: “Although we are evaluating the opportunity, Walmart does not currently have plans for a private health insurance exchange.”

Wal-Mart wouldn’t make Osborne available for an interview. The company has previously tried to dampen speculation that it’s planning to expand health-care offerings. Another report in the Orlando Business Journal last week, also citing Osborne, suggested Walmart primary care clinics were on the way in five to seven years. Later the company told reporter Abraham Aboraya that there’s no larger plan for primary care.

The world’s largest retailer has taken flak for rolling back the health benefits offered to its own workers, but Wal-Mart has hinted about getting deeper into the business of selling health care before. In an October 2012 meeting with investors and analysts, Sam’s Club Chief Executive Officer Rosalind Brewer got a question about how health-care reform would affect the company. She began her response by talking about how immunizations and health screenings offered at Sam’s Club get customers in the door. Then, from the transcript, she said:

“… so we know that we are probably in an opportunity to provide even more programs inside the club around health and wellness. Our business member is the one that we’re most concerned about because we know that small businesses are not able to really provide healthcare to their workforce. And so our discussion has been what could we do more to meet our business member halfway. These health screenings and the immunizations and the consultative work that we do from our pharmacists have really paid off. And that’s why we won that J.D. Power and Associates award [for pharmacy customer satisfaction], so more to come from Sam’s in that area.”

The American health-care system is loaded with unnecessary costs and inefficiencies. Wal-Mart squeezes costs out of everything it sells with huge economies of scale. It would be surprising if the company weren’t looking for ways to make money selling low-cost insurance or health care.

Still, selling health care and insurance is different from selling consumer goods, and it may be a trickier business for Wal-Mart. It’s not clear how Wal-Mart would make money running a private marketplace when states will have their own state-run health insurance exchanges next year, and insurers will be barred from charging small groups different premiums, notes Larry Levitt, senior vice president at the Kaiser Family Foundation, a nonprofit health policy group.

The retailer may have a bigger opportunity selling health care rather than insurance, Levitt says. “All the pharmacy chains, including Wal-Mart, are looking for ways to provide primary care in a way that’s more accessible and more affordable,” he says. Of course, Wal-Mart’s reputation for low prices may be a challenge in the health-care market: “It’s one thing to feel like you’re buying cheap toilet paper,” says Levitt. “It’s another thing to feel like you’re buying cheap health care.”

John_tozzi
Tozzi is a reporter for Bloomberg Businessweek in New York.

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Companies Mentioned

  • WMT
    (Wal-Mart Stores Inc)
    • $76.24 USD
    • -0.08
    • -0.1%
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