After the 2004 election, SEIU joined with environmentalists, women’s groups, and community activists to form Wal-Mart Watch, hiring seasoned Democratic operatives and jumping into the public debate. The new group focused much of its efforts on the company’s health-care programs, with considerable success. Wal-Mart, despite investing heavily in public relations and making slight improvements in its plans, was unable to stop the Maryland law or quiet the growing chorus of critics.
The company appears to have no clear idea of how to stop the fallout. Some Wall Street analysts believe the “headline risk” associated with the negative publicity is one reason for Wal-Mart’s sagging stock price. The company topped Fortune’s most-admired list in 2003 and 2004—but slipped to twelfth place this year.
Stern seemed to take a Bart Simpson– like delight at the spectacle of a flummoxed symbol of authority whose current chaos he’d helped devise. Spending around $5 million annually, Wal-Mart Watch has pushed anti-Wal-Mart laws in dozens of states, leaked damaging internal documents, and helped make the company known as much for its exploitation of government health plans as for its business acumen. Over the last year, and very much against its will, Wal-Mart has been moved to the center of the national debate over health care, and Stern has drawn one step closer to what he’s really after.
In Stern’s thinking, if the world’s largest company could be coaxed or bullied into publicly favoring a national health-care policy, here’s how things might play out: a rush of other companies already beset by health-care costs and accustomed to mimicking Wal-Mart would fall in line, putting business on the same side as labor. Governors burdened with soaring Medicaid costs might also join in. The pressure on the federal government would be overwhelming. Stern, in other words, is seeking to turn the Wal-Mart effect to his own ends, harnessing it to transform health-care policy just as it routinely transforms business policy. It’s an audacious plan.
In late February, Wal-Mart CEO Lee Scott gave a speech to the National Governors Association in Washington, D.C. The group’s chairman this year, Arkansas Governor Mike Huckabee, chose health care as the focus of the annual meeting. (Huckabee is an able governor and possible Republican presidential nominee, but he’s most famous for losing a hundred pounds and writing a diet book, Quit Digging Your Grave With a Knife and Fork, and he extols the virtues of healthy living just about any time he can.) In one sense Huckabee’s invitation to Scott was natural: Wal-Mart is based in Bentonville, Arkansas. But it promised a certain drama, too, because fewer than half of Wal-Mart’s American workers are covered through the company’s health plan.
Scott’s audience was also significant. Governors are caught in the middle of Wal-Mart’s health-care crisis. The company is believed to be the largest employer in at least two dozen states, so its well-being is important to them. But in many of those states, Wal-Mart workers correspondingly top the list of Medicaid recipients. The program itself has exploded, adding 8 million Americans between 2000 and 2004 and putting enormous strain on state budgets, which fund about 40 percent of Medicaid. What’s especially troubling is that so many new recipients aren’t jobless—their employers simply don’t offer health care, or not cheaply enough to keep them off public assistance. Many of these people work for Wal-Mart.