The Next Bubble to Burst

In late October, Walmart sent a document to potential vendors with the proposal to become the largest primary care distributor in the nation. Walmart. Selling. Healthcare. In mid-November, Walmart stated that the claim was incorrect and that they were not looking to build a national healthcare platform. No, the plan they sent to vendors who would be chosen to sell healthcare was actually a huge mistake and they did not know how such a blunder could have been made. I am skeptical of such backpedaling. Considering Walmart’s girth in terms of retail domination and unfairly low prices, they could very well sell healthcare at a rate no other company could ever match.

I am also skeptical considering in 2007 Walmart announced they would open 400 more retail clinics. Granted, they only opened 140 of them, but that may be because their fleet of 3,500 stores and counting is growing at a rate in-store clinics cannot keep up with. These 140 clinics currently offer only basic care, such as curing ear infections, and flu vaccinations. However in the report that Walmart did not actually mean to send to vendors, they hope to expand the clinics’ care to managing larger issues such as diabetes, hypertension disorder, HIV, and even giving pregnancy tests. They have already instated an astoundingly low $4.00 prescription plan that other big box stores have had to match or go below. Some Walmart competitors don’t even charge for prescriptions anymore to keep up. This just goes to show that Walmart, out of anyone, can bring purchasing power and retail comptetition to anything.

The basic clinics Walmart has now are not exactly the golden ticket to big money in the healthcare industry. I see these primary clinics as a stepping-stone to the big bucks within the industry: specialty care. The more services the clinics can offer, the more money they can make. Interestingly, in 2010, Walmart teamed up with Humana Inc. to create a Medicare prescription drug plan specialized for seniors. This is not normal retailing, but packaging and selling to people who, for the most part, cannot afford insurance on their own.

And what a perfect time to package and sell low cost health plans when in 2010 16.3% of the population was uninsured! And when 62.1% of those who filed for bankruptcy in 2010 had high healthcare costs! But on what market could Walmart sell such packages? As part of the Patient Protection and Affordable Care Act (Obamacare), there is a health insurance exchange marketplace, where buyers can compare policies and premiums across the country. This sounds a lot like the stock market for health insurance to me. Only in this system big box stores like Walmart are the banks. Like in the stock market, there are economic indices that reflect the monthly rate of change in components within insurance packages. Like the goods within the stock market, healthcare is unpredictable in its “cost, timing, and duration.”

 

Unpredictability…sounds like someone might be able to bet on how well one package does over another. Sounds like health insurance is about to become the next closed private sector where stores like Walmart sell specialty insurance to people who may not actually need it.

Sounds like another bubble may be around the corner…

 

-Julia Kingsley

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About rowlanda12

This is a blog about the 2012 presidential election. Content is generated by students in Professor Heldman's Politics 101 class. She does not necessarily endorse the views expressed here.
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