Recently, however, I read a summary in a trade newspaper written for family physicians. That coverage was more intriguing, it suggested the Walmart memo had very broad implications for workers and health care providers. Reading that coverage I speculated that Walmart was merely transferring the well developed risk selection techniques used by managed care entities to the employer setting. (Payors do not develop and market their "wellness" and "alternative medicine" programs for noble reasons -- these programs help them select for healthy customers who don't use expensive resources.)
I decided I'd blog on this, but I needed something to link to. Looking for a link, I came across the actual memo. (Link is to a Google search rather than memo source, I don't employ the lawyers of the New York Times.)
I read the memo. Wow. The newspaper coverage was truly awful.
This "memorandum" is a 27 page white paper prepared by McKinsey (famously ruthless consulting company) and 16 highly compensated Walmart employees for the board of directors of one of America's largest companies. There's not much dissembling, though there are a few euphemisms. It was written for an audience that probably dislikes euphemisms, and is so removed from the "associates" that it can think about them the way a farmer thinks about their valued cattle.
The memo is not particularly cruel, but it's dispassionate and ruthless. It's also very well done. If you receive healthcare in America, you should read it. Did you realize that the feared coverage expense is not the employee, and not the employee's children, but rather the employee's spouse? Yes, that's obvious in retrospect, but it never occurred to me.
Did you know that the economic advantage of Walmart's 'defined contribution' plans (aka 'medical savings accounts', health savings account, employee driven healthcare) is not the global cost savings, but rather that they're a better deal for employees with healthy spouses? (So that overall the benefit biases the workforce towards employees with healthier spouses?)
I'm not done with the memo. There's a lot there that I may yet comment on. Read it yourself. I recommend starting with the last 3 pages.
Don't imagine this is in any way unique to Walmart -- they're merely slightly ahead of the curve. This document is "free" consulting for every employer in America, and anyone who works with McKinsey will receive the same advice.
Personally, I think this is a great thing. The inexorable engine of capitalism will force all but the healthy and the genetically gifted out of employment and out of heatlhcare coverage. Sometime in the next decade, sooner than I'd anticipated, this will lead to a political revolt, and we will get to the place the world has been heading for over the past twenty years:
- Second tier health coverage for the entire population that includes medications and procedures whose R&D cost has been fully recovered (depreciated). This second tier system will use less costly health care workers and will be extensively industrialized. Medicare, the VA system, the Indian Health Service, and Medicaid will go away.
- Lexus care for the wealthiest 10-20% of the population. This will include life-extending technologies who's R&D costs have not yet been fully recovered. Black market versions of these technologies will be available illegally in India, China, and Thailand.