Tuesday, February 08, 2005
Whole Foods CEO John Mackey addresses World Health Congress
[Stephen Miller, "Whole Foods: A Consumer-Directed Success Story," Compensation & Benefits Forum News, The Society for Human Resource Management, February 2005.]
While Governor Sebelius attended the National Health Policy Conference in Washington D.C. on February 2nd to tell the world about her Kansas Health proposal, she should have arrived in town a couple of days earlier. Then she could have attended the World Health Care Congress and heard what the market she denigrates is already doing about health care:
In another session at the World Health Care Congress, John Mackey, CEO of Whole Foods Market, called his company's adoption of a consumer-directed health plan a major success story. "In 2002, our claim in our self-insured health insurance plans exceeded our premiums collected by $7 million," Mackey said. At that time, his firm offered a cafeteria plan with three health plan choices and, Mackey said, "no incentives to economize."
To keep his existing plans solvent, "we were going to have to raise premiums 30-35 percent," said Mackey. The companies switched to an HRA plan in January 2003, eliminating the cafeteria plan "to minimize adverse selection." Whole Foods now pays:
• 100 percent of premiums for full-time employees.
• An increasing portion of family premiums based on service hours, and 100 percent of family premiums after 10,000 service hours.
The plan's deductible is $1,000 per year for medical and $500 for prescription drugs, with $3,500 maximum out-of-pocket expense per year for deductibles and co-payments for individuals and families.
In addition, the company deposits $300 to $1,800 into each employee's personal wellness account (PWA), depending on length of service. Any money not spent in one year can roll over, tax free, to be used in the future.
In the plan's first year, reports Mackey, medical cost per employee fell 42.8 percent from $2,795 to $1,599. Including PWA dollars, the new plan resulted in a 25.53 percent total decrease (to $2,082) in annual dollars spent per employee.
[Stephen Miller, "Whole Foods: A Consumer-Directed Success Story," Compensation & Benefits Forum News, The Society for Human Resource Management, February 2005.]
While Governor Sebelius attended the National Health Policy Conference in Washington D.C. on February 2nd to tell the world about her Kansas Health proposal, she should have arrived in town a couple of days earlier. Then she could have attended the World Health Care Congress and heard what the market she denigrates is already doing about health care:
In another session at the World Health Care Congress, John Mackey, CEO of Whole Foods Market, called his company's adoption of a consumer-directed health plan a major success story. "In 2002, our claim in our self-insured health insurance plans exceeded our premiums collected by $7 million," Mackey said. At that time, his firm offered a cafeteria plan with three health plan choices and, Mackey said, "no incentives to economize."
To keep his existing plans solvent, "we were going to have to raise premiums 30-35 percent," said Mackey. The companies switched to an HRA plan in January 2003, eliminating the cafeteria plan "to minimize adverse selection." Whole Foods now pays:
• 100 percent of premiums for full-time employees.
• An increasing portion of family premiums based on service hours, and 100 percent of family premiums after 10,000 service hours.
The plan's deductible is $1,000 per year for medical and $500 for prescription drugs, with $3,500 maximum out-of-pocket expense per year for deductibles and co-payments for individuals and families.
In addition, the company deposits $300 to $1,800 into each employee's personal wellness account (PWA), depending on length of service. Any money not spent in one year can roll over, tax free, to be used in the future.
In the plan's first year, reports Mackey, medical cost per employee fell 42.8 percent from $2,795 to $1,599. Including PWA dollars, the new plan resulted in a 25.53 percent total decrease (to $2,082) in annual dollars spent per employee.
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