Adverse selection at WalMart

According to this article in the New York Times, WalMart has a novel approach to dealing with the rising costs of health care for its employees: hire healthier employees!



"An internal memo sent to Wal-Mart's board of directors proposes numerous ways to hold down spending on health care and other benefits while seeking to minimize damage to the retailer's reputation....The memo noted that Wal-Mart workers "are getting sicker than the national population, particularly in obesity-related diseases," including diabetes and coronary artery disease. The memo said Wal-Mart workers tended to overuse emergency rooms and underuse prescriptions and doctor visits, perhaps from previous experience with Medicaid....The memo proposed incorporating physical activity in all jobs and promoting health savings accounts. Such accounts are financed with pretax dollars and allow workers to divert their contributions into retirement savings if they are not all spent on health care. Health experts say these accounts will be more attractive to younger, healthier workers. 'It will be far easier to attract and retain a healthier work force than it will be to change behavior in an existing one," the memo said. "These moves would also dissuade unhealthy people from coming to work at Wal-Mart.'"