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Wednesday, January 18, 2006

Wal-Mart vs. the Government

I read a local news story about a law that the governor of Wisconsin wants passed similar to the one recently passed in Maryland requiring Wal-Mart to provide employee health care. Governor Doyle claims that Wal-Mart is shirking its responsibility of health care to the state (and, therefore, taxpayers). He makes a point that could easily be brought up often in the future as health care costs rise. That being if someone else can afford to take care of you or if it is your choice to be unhealthy (through things like smoking, eating junk food, having unprotected sex) then the government will not provide health care. Of course, private industry has a perfect solution to that: increase the costs of health insurance to those that engage in particularly risky behavior. When the government tries to provide something for "free" that just means that they can't increase incoming money flow (it wouldn't be fair), except by raising taxes (let's get it all from the rich). Gov. Doyle also tries to assuage fears that Wal-Mart would have to raise prices by saying that the $4.75 million bill would result in a 0.000001 percent increase. Doing a quick calculation, with $4.75 million about 0.000001 percent of Wal-Mart's revenues, they take in $475 trillion (I assume over a year). Estimated US GDP for 2005 is about $12.37 trillion, while the entire world has an estimated 2005 GDP of $59.38 trillion.

Of course, the easiest and best solution to this is to eliminate government run health care altogether. Then the government won't have to spend money there and people will have more money to spend on things like...good privatized health care. Of course, that still leaves some people with minimal health care, but 1) that's the way of the world, not everyone can get everything and 2) it gives people very strong incentives to make more money. Besides, one reason health care costs are "high" is because many people don't pay the full price for procedures and drugs...and those companies have to get that money from elsewhere, namely those that can afford it.

One argument that they are making is that apparently employees are being directed to BadgerCare, the state's health care program. Well, is it surprising that a company that doesn't offer health care to its own employees would direct refer said employees to the cheapest available option if they qualify? No one said that their employees had to get health care. It is a personal choice, not a right. Of course, if this bill eventually passes, it just means that Wal-Mart will find it less desirable to do business in Wisconsin. Which, of course, means fewer jobs for low skill workers, more unemployment, and more people that qualify for government run health care.

UPDATE: George Will has a column up about the Maryland law just passed. In it, lists some stats: 86% of Wal-Mart employees have health insurance, most through the company. These include plans where you pay as little as $11 a month (as a graduate student at a state university, I am a state employee and my health insurance costs an astonishingly low $25 a month). Wal-Mart has paid over $3000 in benefits per employee over the last year. The company's $285 billion revenues (just 2000 times lower than Gov. Doyle's claims) amounted to 3.6% profit ($10.3 billion) and just $6,000 profit per employee...which is below the national average. Of course, the most important point, in my opinion, is that when Wal-Mart enters a market, retail prices drop 5-8%, saving consumers (read: everyday people, whether you shop at Wal-Mart or not) $16 billion a year. That means they save people more money than they actually make profits on. This savings gets to be passed on to other businesses and people, whether they be banks, homeowners, car companies, retail stores, gyms, food, etc.

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