The Public Face of Wal-Mart's Health Care Program

November 13, 2007

By REED ABELSON and MICHAEL BARBARO

Linda M. Dillman, who oversees the employee health care program at Wal-Mart, did not ask for the job. Indeed, when the chief executive of the company, the world's largest retailer, told her of the appointment, she wondered, "Did I make somebody mad? Are they trying to tell me something?"

For much of the last decade, labor groups and state governments pilloried the health care Wal-Mart offered its 1.4 million workers - and the executives who oversaw it. But Ms. Dillman, who took over the company's health care program in April 2006, has managed to win over some of Wal-Mart's traditional critics by aggressively reaching out to health care experts (at Microsoft, I.B.M., Starbucks, Union Pacific and S.C. Johnson, to name a few) and expanding the coverage Wal-Mart provides to workers.

A former information technology manager at Hewlett-Packard and then at Wal-Mart, Ms. Dillman, 51, has become the public face of Wal-Mart's health care changes.

"There is hardly a big health care conference where you do not see Linda Dillman on the speakers' list," said Mark D. Smith, the chief executive of the California Healthcare Foundation. "That surprised people."

What follows are brief excerpts from a lengthy interview with Ms. Dillman, conducted in her office near Wal-Mart's headquarters in Bentonville, Ark., in October. Questions have been edited for clarity.

Q. Can you summarize the new approach to health care at Wal-Mart?

A. The discussion we're having internally is how you view benefits as an investment. And that's saying if you look at an associate [Wal-Mart's term for its employees], a total associate, and you say, if they are healthy they'll do a better job at work, they'll be more productive, they'll be happier, nicer to our customers, we will have less absenteeism, our turnover will be better. All of those things have a benefit, a return to the company. So we're really saying, instead of just trying to manage a benefit cost, we're looking really at returns and saying we think we can impact all these other things.

Q. Before making changes this year, you surveyed workers extensively about what they want in a health care plan. What did they say?

A. They said, we want to be able to select what's right for us. We don't want you to - because where we were headed in the past was really to simplify, thinking it was too complicated. And what they said was, no, I don't want you to decide; I want to have the choice and you give me, you know, help me understand what they mean so I can choose. And I want to make sure that I have that emergency everyday health care covered.

Q. What is your goal with the new plans?

A. My goal is to not move everybody to Wal-Mart's health care plan. It's to make sure everybody has health care that needs it. And to make sure if somebody's choosing not to, that there's - we can try to eliminate the reasons for them not to come onto our plan.

Q. Would you like the number of uninsured workers at Wal-Mart to hit zero? Would you like to see it 5 percent? What is a reasonable goal?

A. Obviously I'd like to see it zero. Do I think we'll get there? No. There's still a group of people who don't think they need coverage. And even at $5 a month, they aren't going to pay for it.

Q. The average Wal-Mart worker earns less than $20,000 a year, making the company's health insurance difficult to afford. What do employees say about that?

A. That was part of the open enrollment question - if you're eligible and you didn't take Wal-Mart coverage, why? Is it because you have another source of health care or is it because I can't afford it? Or I believe I can't afford it. And that 10 percent [who are uninsured] were just about evenly split between, I think I can't afford it, and I think I don't need it.

Q. So affordability is not the major big issue that comes up in company surveys?

A. No.

Q. When you think about solving the American health care crisis what are the roles of an employer like Wal-Mart, the government and the individual worker?

A. Clearly, we need to do something differently. And I don't believe it's going to end up being voluntary and actually work.

In an ideal world, that would happen, but I don't know that we can get there. We believe there is always a role for the employer, as well as the individual and the government. So it's shared responsibility.

The question is - and that's why I say I think everything has to be examined - is when you look at employer-based health care, I don't know if it's the right answer or not, but I think we need to look at it just because it happened by accident.