Wal-Mart backs Democratic plan to cut healthcare costs

Products are displayed outside a Wal-Mart Neighborhood Market store in Bentonville, Arkansas, May 31, 2012.

WASHINGTON (Reuters) - Wal-Mart Stores Inc, the largest private employer, endorsed a new Democratic proposal for controlling healthcare spending that would seek to keep the rising cost of medical services in line with wage growth.

The giant retailer said on Thursday that the plan co-authored by former Obama and Clinton administration officials contained "innovative methods" that could help slow healthcare spending and improve the quality of healthcare delivery.

With 1.4 million employees and retailing operations in all 50 states, the Bentonville, Arkansas-based company represents a major force on employer-related issues and was an early advocate of President Barack Obama's healthcare reforms.

Women who shop at its big-box superstores are also viewed as crucial swing voters in the 2012 election battle between Obama and his likely Republican challenger, Mitt Romney.

"These principles are a strong foundation that can set the U.S. healthcare system on a path of sustainable growth," Sally Welborn, Wal-Mart's senior vice president for benefits, said in a statement issued by the company.

"Businesses in particular have an immediate need for value and innovation so that we have a health care delivery system that rewards quality and efficiency," she added.

The proposal appeared in the New England Journal of Medicine, with 23 co-authors led by former Obama healthcare adviser Dr. Ezekiel Emanuel, and backing from the progressive think tank Center for American Progress.

In 2009, Wal-Mart joined with the Center for American Progress and the Service Employees International Union to urge the president to pursue reform partly to "remove the burden that is crushing America's businesses and hampering our competitiveness in the global economy."

Healthcare has become a major cost issue for employers in recent decades, with spending far outpacing economic growth and inflation until recent years.

The U.S. healthcare system, which is expected to generate $2.8 trillion in spending this year, is the world's most expensive at a cost of more than $8,400 a year for every man, woman and child.

While growth in healthcare costs has slowed in recent years, government forecasters warn that costs will accelerate to reach $4.8 trillion in 2021. Within 25 years, healthcare spending in the United States is expected to account for one-quarter of the economy and 40 percent of total federal spending.

Many U.S. employers have responded to rising healthcare costs by scaling back benefits and shifting a larger portion of the charges to their employees.

Wal-Mart trimmed some health coverage for its U.S. employees starting last January. The retailer no longer offers insurance to new part-time employees working less than 24 hours a week, charges tobacco users more for coverage and has cut in half the amount it puts in employees' healthcare expense accounts.

Obama's Patient Protection and Affordable Care Act includes provisions that aim to encourage lower-cost healthcare practices. But both Democrats and Republicans agree that new steps are necessary to contain costs.

The Emanuel proposal also calls on private insurers, Medicare, Medicaid and employers to negotiate statewide payment rates for healthcare providers that would limit per capita healthcare spending growth to local average wage growth.

It also calls for a more aggressive move away from fee-for-service medicine, greater price transparency, insurance plans that favor high-quality providers, wider use of non-physician professionals such as nurse practitioners and liability protections for doctors who practice low-cost, high-quality methods of delivering care.

The New England Journal of Medicine also published an article outlining proposals favored by Republicans that call for limiting tax advantages for employer-sponsored health insurance and moving the popular Medicare program for the elderly and disabled toward a premium support model that would help beneficiaries purchase private insurance.

(Editing by Dan Grebler)