Durbin Calls on Wal-Mart to Distance Itself from Executive Report

DURBIN CALLS ON WAL-MART TO DISTANCE ITSELF FROM EXECUTIVE REPORT

U.S. Senator Dick Durbin (D-IL) called on Wal-Mart to "reject the harmful strategies" revealed in a secret internal memo that outlines a plan to cut health care expenses by discouraging people with less than perfect health from working for the retail giant.

The memo, written by Wal-Mart's Executive Vice President M. Susan Chambers, also discusses a possibility of forcing out long-time workers and refers to the "troubling" reality that "the least healthy" workers are "interested in long careers at Wal-Mart."

In a letter to Wal-Mart CEO H. Lee Scott, Durbin writes: "I was pleased earlier this week to read about your recent speech in which you acknowledged that an important part of 21st Century leadership is making quality health care affordable and accessible to working Americans." Durbin added, however, that he was disappointed by the recent confidential memo by Ms. Chambers where she outlined a strategy to push "out less healthy employees" and retain "only those who are less likely to need health care…"

Durbin also questioned policies outlined in the confidential memo that would increase the gaps in the company's health insurance coverage, saying, "Increasing the number of people who are underinsured is not a model of 21st Century leadership."

"The goals in your speech and the tactics outlined in Ms. Chambers' memo cannot co-exist. I urge you to disassociate Wal-Mart from Ms. Chambers' report and clarify Wal-Mart's position on health care benefits," Durbin concluded.

The full text of Durbin's letter to CEO Scott appears below:

Mr. H. Lee Scott
Chief Executive Officer
Wal-Mart, Inc.

702 S.W. 8th Street
Bentonville, AR 72716

Dear Mr. Scott:

I was pleased earlier this week to read about your recent speech in which you acknowledged that an important part of 21st century leadership is making quality health care affordable and accessible to working Americans. In that same speech, you discussed a sweeping new plan by Wal-Mart to conserve energy, as well as your personal support for an increase in the minimum wage.

I have since been disappointed to learn of the confidential, internal memo by Wal-Mart Executive Vice President M. Susan Chambers outlining a plan to cut Wal-Mart's health care expenses by discouraging people with less than perfect health from working at your stores and even forcing out some long-time, loyal workers. In her memo, Ms. Chambers refers to the "troubling" reality that "the least healthy" workers are "interested in long careers at Wal-Mart."

The goals in your speech and the tactics outlined in Ms. Chambers' memo cannot co-exist. I urge you to disassociate Wal-Mart from Ms. Chambers' report and clarify Wal-Mart's position on health care benefits.

Forty-six percent of the children of Wal-Mart associates are already uninsured or on Medicaid. And, as Wal-Mart acknowledges, 38 percent of your workers already spend more than one-sixth of their income on health costs. They can't afford to pay more for health care. Lower premiums cannot make up for significantly higher out-of-pocket expenses. Increasing the number of people who are underinsured is not a model of 21st century leadership.

Ms. Chambers is right on one point: "Growth in benefits costs is unacceptable." This problem is not limited to Wal-Mart, and it can't be solved by Wal-Mart alone. All American companies, large and small, are struggling under the weight of ever-escalating health care costs.

Faced with stagnant wages, declining benefits and skyrocketing energy and health care costs, Wal-Mart employees and other hard-working Americans can't afford to take on more financial risk or pay sharply higher health care costs.

Rather than cleverly packaged but damaging cuts in employee benefits, American workers need a rethinking of how health care is financed and provided. This may include an examination of utilization trends, hospital costs and consolidation, prescription drug spending, medical errors, information technology and other factors. However, at the root, what is needed is a new national commitment to providing affordable health care to all Americans. Ms. Chambers' strategies for pushing out less healthy employees and retaining only those who are less likely to need health care will only exacerbate the problem, not move us toward a solution. Wal-Mart, as a leader in the retail industry, can do better.

I strongly urge you to reject the harmful strategies secretly outlined in Ms. Chambers' memo and instead embrace the values you outlined in your leadership speech.

Sincerely,
Richard J. Durbin
Assistant Democratic Leader
United States Senate

http://durbin.senate.gov/record.cfm?id=247994&&