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Q: Wal-Mart offers health insurance to its employees but less than half take this up. Instead, many are covered as a dependent on a spouse's or parent's employment-based plan. What does this say about Wal-Mart and other employers facing similar dynamics?

Recently, Wal-Mart reported on the results of an internal survey that found that while 90 percent of its employees have health insurance coverage, less than half of its employees use one of Wal-Mart's health plans.1 Wal-Mart's critics cite these figures as evidence that Wal-Mart's coverage options are not affordable to its employees. It's possible, however, that Wal-Mart employees are simply finding better values elsewhere and that having 90 percent coverage means there isn't a problem.

While the percentage of workers covered by its plans is lower than the industry average, Wal-Mart is certainly not unique among retailers in having large numbers of employees covered by other sources. According to data from the March 2006 Current Population Survey, slightly more than half of the 18 million insured adult employees of the retail and wholesale trade sector had employer-sponsored insurance (ESI) through their place of employment. About 10 percent had some form of public coverage (most often Medicare or Medicaid), another 7 percent obtained insurance from a source other than an employer, and 27 percent had ESI coverage as a dependent spouse or child.

Other industries, including agriculture, leisure and hospitality, and professional and business services, also have large percentages of their workforce covered only through a spouse's or parent's employer (Short Takes Table 1 - Insurance Source by Industry of Employment, Adults). In most cases, the spouse or parent is employed in manufacturing, utilities, finance or information industries. Policyholders from these sectors account for more than half of the adult dependents working in the retail industry (Short Takes Table 2 - Industry of Employment for Adult Dependent and Policyholder).

Bottom Line: While Wal-Mart covers a lower percentage of its workers than the average for the retail industry, many employers face similar dynamics. Certain blue collar jobs and higher skilled service industries end up covering large percentages of workers as dependents of their employees.

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