Welfare in the shopping trolley and online, the latest showdown between Walmart and Amazon

03 Apr 2018
Welfare started out as a state benefit providing recourse to essential services for all citizens. Corporate welfare schemes are more limited in scope, involving initiatives of a contractual or unilateral nature set up by companies to ensure the well-being of employees and their families. Walmart and Amazon are now competing over the healthcare sector, which has always been the most important part of any self-respecting welfare scheme. Last January, Amazon, Berkshire Hathaway and JPMorgan launched a joint venture to reduce the costs of the US healthcare system and improve the quality of services through technology. The aim is to provide employees and their families with “simplified, high-quality healthcare that is transparent and affordable”. Amazon has also launched its own line of over-the-counter medicines. According to the Wall Street Journal, Walmart has recently entered into preliminary talks for control of Humana, a medical insurance company valued at over 37 billion dollars. Humana would be the biggest acquisition to date by the retail giant, which is already one of the largest pharmacies in the US and could present itself as a one-stop-shop for Humana’s 14 million policyholders, and attract new customers with a focus on health and wellness. But there are also important strategic concerns behind Walmart’s interest. Walmart has 1.5 million employees in the United States alone. According to Larry Levitt, vice-president of the Kaiser Family Foundation, an important centre for research on healthcare provision, “acquisition of Humana could help Walmart reduce the costs of corporate healthcare for their workforce”. The deal would also allow it to control healthcare for its employees and defend itself against Amazon. For Neil Saunders, CEO of Global Data Retail, “healthcare is a major growth sector. Moving onto this turf would give Walmart a whole new arena in which to expand at a time when its retail margins are under pressure”. Humana’s policyholders include millions in Medicare-related plans. If Walmart take full control of Humana, it could push them to fill their prescriptions at Walmart stores and then go shopping for everyday products in Walmart’s 5,300 stores across the United States.