Lotta buzz about Whole Foods CEO John Mackey's WSJ article on how to reform US healthcare.
I wish Mackey would stay out of the papers and just stick to groceries. I like shopping at Whole Foods, but he just makes it more and more difficult to do.
Despite the buzz it's generating, the article is mostly fluff -- "Enact Medicare reform," Mackey says, as if this were simple. "Eat better," he says, as if the answer to healthcare inequities is a matter of just not getting sick in the first place. And some of it is just common sense: insurance companies should be forced to compete across state lines and it is astonishing that they are protected in this way. Healthcare costs should be transparent, just as the tax code should not be inscrutable to anyone but a lawyer. Fine.
But the most pernicious bit is his argument for HSAs and high deductible insurance plans, the most concrete part of his argument and also the bit that might seem like the most sensible alternative Obama's healthcare plan. Except that it isn't. Not really.
In order to avoid "healthcare rationing" (which, in order to scare his readers, Mackey sees as all but inevitable under nationalized heathcare) Mackey thinks every employer should offer HSAs and high-deductible insurance plans. This sounds like a great idea, except when you look at what this actually means for individual employees, insurance companies, and corporations. Of the three, guess who gets the fuzzy end of the lollipop.
At Whole Foods, folks who work 30 hours per week, or near full-time, are entitled to $1800 per year to spend on healthcare. That's their HSA. It is unclear if this $1800 is just given to them by Whole Foods or if this is the maximum allowable pre-tax amount they can deposit into an HSA. In which case, they are still paying the $1800, but the money goes a bit further because they use pre-tax dollars and in theory can take advantage of certain economies of scale by participating in the HSA/insurance plan in the first place.
Regardless of where that $1800 comes from, the actual deductible is much higher. Mackey isn't clear about this in his article but it looks like the deductible is $2500 per year in addition to the $1800 in the HSA. So even Whole Foods employees on the top-of-the-line version of the plan must still cover their healthcare expenses to the tune of several thousands dollars per year.
Say you're making $10/hr, 30 hrs per week at WF. That's $1200/month gross, or a little less than $15K per year. Even if WF fronts you the $1800 in the HSA, you are still responsible for $2500 of your healthcare costs. Now, if you're young, white, single, and otherwise healthy, you probably won't need to spend more than what's in the HSA. But say you get sick -- not sick enough to go on disability, and not sick enough to lose your job, but sick enough to require a trip to the emergency room, where you'll need an MRI, blood tests and other labs, and possibly a prescription. That's $2500, right there.
And you make $1200 per month. Before taxes.
Now, say the person who happens to get sick and need the emergency MRI is your kid.
Mackey doesn't say anything about dependents. Nor does he talk about Whole Foods employees who are not working 30+ hours per week, which I expect would include all the single parents on his payroll. (Who can work at Whole Foods AND afford childcare for 30 hours per week?) A fair assessment of the HSA-plus-high-deductible plan would have to include some discussion of how these sorts of situations are handled. Not everyone is young and single, and young single people tend to require the least health insurance anyway. The members of Mackey's insured workforce may not be representative of the typical situation, and his solution may only work for young single people. Obama's plan needs to solve many more complicated problems, including what to do about common "exceptions" to this rule, like single-income families with dependents and people caring for older dependent adults who themselves need insurance.
Mackey says the HSA-plus-high-deductible structure makes people "careful" about how they spend their healthcare dollars. I would say this just is rationing, except that it is the sick person who is now burdened with the decision to seek care, knowing exactly how much that care is going to cost out-of-pocket. Gee, if I've got an infection but my kid needs soccer shoes and vegetables for the week, what am I going to do? I think I'm going to let that infection alone, to heal or fester as it will, and buy the kid what she needs. The whole point of healthcare reform is to minimize the situations where this sort of choice is unavoidable. Under the HSA-plus-high-deductible scheme, corporations will continue to enjoy tax relief for offering even insufficient healthcare plans to their employees (and then only to some of them), and insurance companies still enjoy the premiums paid by said corporations.
Mackey says, eat right, exercise, choose wisely and you'll live to be 100. What he means is: Sickness only happens to people who deserve it, and they should pay through the nose for failing to stay well.
