By Ylan Q. Mui
Washington Post Staff Writer
Wednesday, January 23, 2008; D02

Half of Wal-Mart employees have signed up for its health care plan, only a slight increase from last year but a gain for the company as it continues to battle labor unions over its treatment of workers.

The Bentonville, Ark. retailer said yesterday that 50.2 percent of roughly 1.4 million U.S. employees enrolled in its health plan last fall, up from 47 percent last year. The company estimated that about 43 percent of its employees receive health insurance from another source, such as a spouse's plan or Medicare. About 7 percent had no insurance, down from nearly 10 percent last year.

"They liked the fact that they had choices, lots of choices," said Linda Dillman, executive vice president of benefits and risk management. "They really got to configure what they wanted."

Wal-Mart has been at the center of a national debate over ways to make health care more accessible and affordable. Labor groups claimed it provided shoddy benefits to save money and accused it of pushing workers into state-funded programs. Wal-Mart Watch, a frequent critic, funded by the Service Employees International Union, said yesterday that too many of the company's workers remain uninsured.

"Wal-Mart needs to focus its attention on making substantive changes to its plans rather than manipulating numbers to tell the public relations story it wants," said David Nassar, the group's executive director.

Wal-Mart had been the target of several bills -- including one in Maryland -- that attempted to force it to spend more on health care. The Maryland law was overturned in federal court in 2006 because it violated the federal Employee Retirement Income Security Act.

The company has since rebounded with several initiatives aimed at improving health care nationally. It unveiled $4 generic prescription drugs in 2006 and partnered with the SEIU to create the Better Health Care Together coalition a year ago.

In recent years, the retailer has made changes to its benefits package, including reducing the waiting period for part-time employees to become eligible for insurance from two years to one year. This year, Dillman said, the company created a benefits package that employees can customize in more than 50 ways, such as by choosing deductibles, pre-deductibles and out-of-pocket maximums.

Wal-Mart's health plan covers about 1.1 million people -- including more than 690,000 workers and their dependents -- making the retailer one of the largest private providers of health care in the country. The company reported that more than 30,000 employees who enrolled in the fall were previously uninsured.

Wal-Mart said that its health care costs are expected to rise by single digits this year, a slower pace than previous years and less than the industry average. Dillman connected the slowdown to the increase in the number of insured workers, who are more likely to receive care before they are in critical condition.

"It's costing them and us less money," she said. "It's the way the model is supposed to work."

The company is commissioning an independent study of why uninsured employees did not enroll in its plan.

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