Saturday, August 22, 2009

More about Whole Foods CEO

Here are several additional comments related to my last blog about John Mackey, CEO of Whole Foods.

1. Mr. Mackey agreed several years ago to work for a salary of $1.00/year. Of course, as he himself has said in public interviews, he has plenty of money. Only 1/2 cheer: rah/2.

2. Mr. Mackey's description of the Whole Foods healthcare plan can be found here: I encourage readers' comments on this. To be fair, I've seen worse and, of course, better (at least from an employee's perspective).

One important point that Mr. Mackey leaves unsaid in the above document is what happens when an employee actually has to use the "major medical" component of Whole Food's plan. He claims that after the first $3,500 in employee out of pocket expenses, the plan covers 100% of expenses afterwards. But what about a serious illness that requires, say, a month of treatment? What prevents Whole Foods from simply firing that employee after, say, two weeks? When they do, the insurance lapses and the sick employee loses all further coverage. Fortunately, the worst of this kind of outrageous behavior is forbidden -- at least for a maximum of 12 weeks and only for companies with more than 50 employees -- by the Family Medical Leave Act. This bit of "federal interference" was opposed bitterly by George Bush, the WSJ, and the Republicans. I wonder what Mr. Mackey's position is on it?

Also, what about things like pregnancy coverage and sick days?

3. The average age of a Whole Foods employee is about 33; they are, as Mr. Mackey points out, generally quite healthy because they are young. Consequently, they are willing to bet they won't get sick -- a bet they usually win -- and so they are relatively happy with his plan. But if one of them does get sick they lose their $3500 very quickly. If the illness is debilitating, like MS or cancer, 12 weeks go by and they have no coverage. Too bad.

4. Mr. Mackey and a lot of other people seem to misunderstand what insurance is about. Insurance is a means of sharing risk. The healthy people of necessity must pay enough to make up for the costs of those unfortunate enough to get sick. The whole point is that we don't know the future and so we hedge our bets. If you buy insurance, you have no right to complain that you paid but didn't use it. If you need the insurance you have every right to collect on it. The more insurance companies can charge people for getting sick -- by setting high rates for selected groups and high copayments and deductibles -- the less they are taking a risk and the less profit they are entitled to. High deductibles and copays combined with loss of insurance upon termination of employment is really not selling insurance, it is closer to betting on a sure thing. Because they can get away with this without regulation is why insurance companies make lots of money and why they object to true sharing of risk via national universal coverage.

5. Before leaving Mr. Mackey, I'd like to mention his use of the term "entitlement". This is another example of the right wing setting the terminology. It makes it sound as if someone collecting Social Security or Medicare is a spoiled rich child demanding something that they haven't earned. It goes with phonies like "death tax", "rationing of care" and "death panel." The fact that conservatives really hate to face is that Social Security is a shared compact in which one generation agrees to help members of the previous generation retire with some financial dignity when they get old. They expect that the succeeding generation will do the same for them. It should not be called an "entitlement" but a fair and humane social compact. Medicare is similar: it is paid for by a tax and is a form of insurance. You are entitled to it not because you are petulant and demand it, but because you have paid for it through a fairly heavy tax. Our better instincts (something conservatives are loath to acknowledge except as they apply to entrepreneurs) tell us that older people should be able to obtain medicines they need to make their lives worthwhile. Funny how conservatives worry about phony death taxes and death panels, but don't seem to acknowledge that unaffordable medicines result in real deaths. It's the same lack of introspection that makes them think that we don't have healthcare rationing of the worst kind right now.

Finally, I quoted the cost of healthcare coverage as about $1000/month. According to today's Boston Globe, Massachusetts leads the country with an average annual premium for a family plan offered by a private sector employer of nearly $14,000. Nationwide, the figure is closer to $12,000, which is what I suggested. Individual coverage, of course, would be much lower than family plans. On the other hand, these figures are for memberships in employer plans. If you try to buy insurance on your own, without belonging to such a "plan", the cost would be more.

Yesterdays blog comments on Mr. Mackey's WSJ article still stand.

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