Why Doesn’t Walmart Sell Health Insurance?

Now that the HCR bill has been passed and signed into law, I want to bring something up that I have been thinking about for a long time and something my dad raised with me this weekend:  Given its buying power, why doesn’t Walmart sell health insurance?  Currently, Walmart to sells many drugs for $4/30 day supply.  If any seller could drive down the cost of a product, it is Walmart.

And if Walmart sells health insurance, there is no reason that Target and Costco could not as well.  Each of these companies essentially has the same business with different models and different customer bases.  The three, together, could go along way in driving down the cost of health insurance which in turn will drive down the cost of health care.

I think one of the main reasons they do not sell health insurance is the fact that consumers of health insurance only get a tax deduction for premiums paid if they purchase the insurance through “CAFE” plans offered by an employer.  If you are an individual who purchases health insurance on your own, you cannot deduct that cost.  If we did away with that distinction or got rid of the deduction altogether (which is what I favor), I believe that retailers such as WalMart, Costco and Target would sell health insurance.  Costco already sells car insurance.

While I view myself as fairly liberal (one of my friend’s father even refers to me as the “Communist”) I also “supporter” of Walmart because I believe that its low prices offer great value to its customers.  The reason that it gets such bad press for paying such low wages and not offering health insurance to its employees is the fact these employees are identifiable and we know exactly how much of a short stick they are getting.  But the value from lower prices that Walmart provides to its customers is harder to see because it is so spread out over its customer base.  But that value  likely far outweighs these “costs” it passes on to its employees.


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