NEW YORK – Walmart Stores Inc., the nation’s largest private employer, is scaling back health care coverage offered to future part-timers and dramatically raising premiums for many full-time workers.

Industry observers say the shifts could have implications for millions of other workers, as more companies on the fence could replicate its moves.

Additional Photos

A customer service employee sorts through a clothing rack as patrons shop at the Walmart in North Richland Hills, Texas. . Starting next year, future part-timers will no longer qualify for insurance, and existing full-time employees will pay more of the cost. 2002 Fort Worth Star-Telegram file

The discounter, which employs more than 1.4 million workers, said the changes were forced by rising health care costs. All future part-time employees working less than 24 hours a week, on average, will not be covered under the plan, starting next year.

Premiums will rise for many existing workers, and the company will reduce by half the amount it contributes for each worker to help pay for health care expenses not covered under their plan.

SMOKERS HIT HARDER

Tobacco users will see premiums more than double compared with increases of up to 41 percent for single nonsmokers, according to Making Change at Walmart, a group backed by the United Food and Commercial Workers International Union, which has been pressuring Walmart on worker rights.

“Health care costs are continuing to go up faster than anyone would like,” said Greg Rossiter, a Walmart spokesman. “It is a difficult decision to raise rates. But we are striking a balance between managing costs and providing quality care and coverage.”

He said Walmart’s health care coverage remains “top tier” among its peers.

A number of companies have been looking for ways to cut health care costs and have been shifting more of the burden to their employees.

The costs of employer-sponsored health insurance surged 9 percent this year, according to a report released last month by Kaiser Family Foundation and the Health Research and Educational Trust. But Drew Altman, president and CEO of the Kaiser Family Foundation, said that a big package of cuts from one company is unusual.

OTHERS COULD COPY CHANGES

“While we do see increases in cost sharing, this is unusual and is outside the bounds,” he said. “I don’t think this will have a major impact on those who tend to do a little bit of everything to control costs, but it could provide more cover for other employers who are looking to move in that direction.”

Still, only about 42 percent of companies offer health care coverage to part-timers, according to Kaiser. About 28 percent of retailers don’t offer coverage for part-time workers, according to Mercer, a benefits consulting company.

Retailers, in particular, have been under more pressure to cut costs, particularly in labor, as they look to offset a slow recovery in consumer spending. Walmart and other merchants have scheduled employees on duty during peak sales times while reducing staffing during lulls, for example.

But the latest moves underscore the increasing pressure that Walmart is under as it works to reverse nine straight quarters of revenue decreases at stores open at least a year, though it is seeing the trend reverse in the last three months.

With the economy still challenging, the discounter is under the gun to cut more costs and put those savings into lower prices for shoppers to remain the low-price leader.

EMPLOYEE: ‘THIS IS DRASTIC’

That means Walmart’s associates, many of whom mirror their blue-collar customers – who live from paycheck to paycheck – will have to shoulder even more costs while grappling with higher prices in the food aisle and at the pump.

“This is drastic,” said Bonnie Shoaf of Blue Ridge, Ga., a smoker who works as a department manager in photos and toys and is paid $16.51 per hour. “There goes my food money. I don’t have any choice, but I will have to pay for it. I am 60 years old, and I can’t start over.”

Walmart defines full-time workers as anyone who works 34 or more hours per week. Rossiter declined to say how many part-timers it has, but he said a majority of its workers are full-time employees.

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