Walmart Looking at Health Insurance Exchange
Jan 14th 2013 10:40AM
Updated Jan 14th 2013 5:05PM
Retail behemoth Wal-Mart Stores Inc. (NYSE: WMT) is exploring the possibility of offering health insurance to small-business owners by setting up a health insurance exchange. The exchanges, which were created under the provisions of Obamacare (officially the Affordable Care Act), provide employers with the option of providing employees with a defined contribution rather than a defined benefit, and an insurance exchange would give employees a place to shop for affordable health insurance.
If Walmart were to establish an exchange, it would be consistent with the company's long-standing practice of searching out a large - and largely underserved - market and making an offer to that market that is within its ability to pay for. Traditional health insurers like Humana Inc. (NYSE: HUM), Aetna Inc. (NYSE: AET), Cigna Corp. (NYSE: CI), and UnitedHealth Group Inc. (NYSE: UNH) could also elect to enter this market, but so far have not indicated any plans to do so.
Walmart could be looking at one of the problem patches in Obamacare. Young (21-29), single adults with incomes higher than about $25,000 will pay more for insurance beginning in 2014 than they do now. For a very modest fine (or, as Justice Roberts has it, "tax") of $95, this relatively very healthy age group can skip paying for health insurance. If that happens, the big insurers will have to raise rates to cover their relatively sicker older customers and the rate increase will fall hardest on these young adults.
Coupled with the high cost of health insurance to small-business owners, this could be a very good opportunity for Walmart to do well by doing good.
Filed under: 24/7 Wall St. Wire, Consumer Product, Healthcare, Law, Regulation Tagged: AET, CI, featured, HUM, UNH, WMT