Friday, August 14, 2009

I will now shop at Whole Foods whenever possible

If this guy ever runs for any office I will vote for him. His list of things to do is partly recycled (who isn't in favor of Medicare reform?), but it is complete and the commentary after the list is especially good.

From the Wall Street Journal:

The Whole Foods Alternative to ObamaCare

Eight things we can do to improve health care without adding to the deficit.


"The problem with socialism is that eventually you run out
of other people's money."

—Margaret Thatcher

With a projected $1.8 trillion deficit for 2009, several trillions more in deficits projected over the next decade, and with both Medicare and Social Security entitlement spending about to ratchet up several notches over the next 15 years as Baby Boomers become eligible for both, we are rapidly running out of other people's money. These deficits are simply not sustainable. They are either going to result in unprecedented new taxes and inflation, or they will bankrupt us.

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment. Here are eight reforms that would greatly lower the cost of health care for everyone:

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

• Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

• Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.

• Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor's visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren't covered by Medicare, Medicaid or the State Children's Health Insurance Program.

Many promoters of health-care reform believe that people have an intrinsic ethical right to health care—to equal access to doctors, medicines and hospitals. While all of us empathize with those who are sick, how can we say that all people have more of an intrinsic right to health care than they have to food or shelter?

Health care is a service that we all need, but just like food and shelter it is best provided through voluntary and mutually beneficial market exchanges. A careful reading of both the Declaration of Independence and the Constitution will not reveal any intrinsic right to health care, food or shelter. That's because there isn't any. This "right" has never existed in America

Even in countries like Canada and the U.K., there is no intrinsic right to health care. Rather, citizens in these countries are told by government bureaucrats what health-care treatments they are eligible to receive and when they can receive them. All countries with socialized medicine ration health care by forcing their citizens to wait in lines to receive scarce treatments.

Although Canada has a population smaller than California, 830,000 Canadians are currently waiting to be admitted to a hospital or to get treatment, according to a report last month in Investor's Business Daily. In England, the waiting list is 1.8 million.

At Whole Foods we allow our team members to vote on what benefits they most want the company to fund. Our Canadian and British employees express their benefit preferences very clearly—they want supplemental health-care dollars that they can control and spend themselves without permission from their governments. Why would they want such additional health-care benefit dollars if they already have an "intrinsic right to health care"? The answer is clear—no such right truly exists in either Canada or the U.K.—or in any other country.

Rather than increase government spending and control, we need to address the root causes of poor health. This begins with the realization that every American adult is responsible for his or her own health.

Unfortunately many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese. Most of the diseases that kill us and account for about 70% of all health-care spending—heart disease, cancer, stroke, diabetes and obesity—are mostly preventable through proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices.

Recent scientific and medical evidence shows that a diet consisting of foods that are plant-based, nutrient dense and low-fat will help prevent and often reverse most degenerative diseases that kill us and are expensive to treat. We should be able to live largely disease-free lives until we are well into our 90s and even past 100 years of age.

Health-care reform is very important. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health. Doing so will enrich our lives and will help create a vibrant and sustainable American society.

Mr. Mackey is co-founder and CEO of Whole Foods Market Inc.

Very good stuff. And extra good because he is causing reactions that, at least to me, color his opponents as not too bright. Says one pissed off former Whole Foods customer:

"While Mackey is worried about health care and stimulus spending, he doesn't seem too worried about expensive wars and tax breaks for the wealthy and big businesses such as his own that contribute to the deficit," said Lent.

So diversionary. If a supporter of Obamacare, or even Obama himself, can't come up with a more reasoned response to the points put forward by Mr. Mackey and others, this attempt at reform will cease soon. Earlier today I thought about making a post saying that the Obama administration was already sewing the seeds of blame for the failure of health care reform (insurance companies mobilizing armies of bought and paid for mercernaries to show up to town hall meetings, those vicious viral emails that spread lies unchecked, accusations of astroturfing) with its actions over the past few days. If you look at that first link, you will notice that the first part of the story is confirmation there were not lobbyist funded buses outside the meeting.

Obama's approach to this whole topic was a serious overestimate of the magnitude of his electoral mandate.


Justin said...

Randy asked me to blog, so here is a blog:

A response to John Mackey
First the bullet points:
1. High deductible health plans (“HDHP”) coupled with health savings accounts (“HSA”) sound like a good thing in theory. Basically, when you go to the Doctor you pay from money held in your HSA rather than having the insurance company pay for your visit. The insurance company only starts to pay for your health care if you’ve spent more than your deductible in a given year—$2,500 for whole foods employees. Proponents argue that this sort of system encourages individuals to shop around and spend that first $2,500 “more carefully” because they will actually see money taken out of their account. While that sounds good in theory, it’s unlikely that this system will work. There are only two ways for a consumer to try to spend that $2,500 “more carefully:” (1) shop around for cheaper alternatives; (2) forgo healthcare. Ignoring the obvious potential for a race to the bottom with this system, it seems unlikely that an individual consumer can do a better job shopping around than an insurance company which can negotiates prices on behalf of a large pool. The only real option an individual has is (2) forgo healthcare. While this may be a sensible option in the short term, it can be disastrous in the long term.
Consider this hypothetical: Suppose a doctor prescribes heart medication for two months. The patient dutifully pays $250 to fill the prescription for the first month. By the end of the first month he feels fine and decides not the fill his prescription for the second month—he wants to spend his money “more carefully.” For 9 out of 10 people that decision may work out just fine, but one individual may suffer a preventable heart attack five years later as a result of the decision. It is unlikely that the insurance company cares about this heart attack because that patient is probably employed elsewhere at this point and covered by some other plan or not covered at all. Even assuming that this individual does currently have coverage, the healthcare system as a whole now has to cover $150,000 for the price of a surgery that could have been prevented five years ago for $250. Reasonable people could disagree as to who is to blame for this situation, but we should all be able to agree that, if this sort of hypothetical plays out in the real world (and it looks like it does, at least for people without employer contributions to their HSAs) then HDHPs fail at their stated purpose—reducing overall healthcare costs.
Employers could help avoid this problem by contributing to individuals’ HSAs. Mr. Mackey states that Whole Foods contributes “up to $1,800 per year” into employees’ HSAs. While this is a start (assuming Whole Foods contributes that maximum for every employee), that still leaves each individual potentially paying $700 per year out of pocket. I tend to think that this strikes a good balance, but this amount could be enough to cause some employees to forgo needed care. A more likely problem is that other employers will contribute little or nothing to HSAs.
While HDHPs may lower healthcare costs slightly for some individuals, those savings may be outweighed by drastic increases for other individuals. In short, a massive switch from traditional plans to HDHPs could actually increase healthcare costs in the long term unless we carefully consider the effects these plans have on preventive care. While I think it could be good to experiment with these sorts of plans, I think it would be premature and very risky to recommend this sort of system for the country as a whole

Wow that was really long for point one. I think I will end here and maybe pick up later.

Justin said...

Response part II
I just have a few comments on some of the other bullet points:
Allowing consumers to purchase insurance across state lines: Currently, insurance companies are largely regulated at the state level. Consumers in different states can buy policies from the same company, but that company may need to tweak the policies or its practices to comply with the laws in each state. If consumers could buy policies across state lines, every insurance company would set up shop in the state with the least regulation (ever wonder why so many companies are incorporated in Delaware or why all your credit card bills come from South Dakota?). The tax dollars and jobs created by the influx of all of these insurance companies would be a huge boon to the winning state, which would create a large incentive to minimize regulation. If buying policies across state lines is really a goal, the only prudent way to achieve it is to shift the regulatory burden from the states to the federal government. This is the only way to ensure consistent regulation without creating a race to the bottom.

Tort reform: This could be part of a solution but we should be clear about what this entails. By and large, the doctors and hospitals that actually get slapped with large judgments deserve what they get. Often times, press reports of exorbitant jury awards fail to mention the facts presented at trial which justify those amounts, or the fact that there are numerous checks and opportunities to lower that amount. One of the most common recommendations for tort reform is by putting a cap on damages. If under current law an individual who is permanently blinded is entitled to $1M, those damages could be capped at $100K. The purpose is to lower damages awards, obviously, but more importantly, to deter victims from bringing lawsuits in the first place. If the blind patient (or the attorney who takes the case on a contingent fee basis) would need to pay $150K to get that case to trial, he won’t bother now. Tort reform can lower the financial burden for the rest of us, but it will necessarily shift the burden onto those unlucky few who are harmed by negligence. That could be fair, but tort reform is not some magical well of free healthcare savings.

Justin said...

Response part III

Now on to the more controversial part of the article:
Do we all have an intrinsic ethical right to health care? It’s an interesting question, but not one we need to address right now. We can all agree that, in one sense, we all have a basic legal right to health care. If a heart attack victim shows up in the emergency room, the hospital does not check his wallet, credit rating, or citizenship status before administering treatment. Hospitals are required by law to treat people in life threatening situations.

For individuals without health insurance, their only option is to rely on this basic legal right to an emergency room visit. This system dramatically increases costs for everyone. Consider the hypothetical from part I: an individual forgoes $250 worth of heart medication and suffers a heart attack as a result. Suppose he makes it to the emergency room, but he cannot afford to pay for the $150,000 surgery that saves his life. The hospital is forced to pass that $150,000 loss on to individuals that pay their bills--those with health insurance. While it may make sense for the individual to pay for his own carelessness in forgoing medication, that won’t happen because he can’t afford to pay. It is likely that almost two million Americans will wipe away their debts through bankruptcy this year, and for 60 percent of those individuals, the cause will be medical bills.

Mr. Mackey argues that, “We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health.” While this is great advice, the simple fact is that many people don’t make wise choices. I am not trying to offer an excuse for poor decisions (e.g. they can’t afford to make wise choices, they are misinformed, etc.) I am just recognizing that, currently, insured individuals already pay the healthcare costs for the uninsured via increased costs for emergency room visits and unpaid bills. Because those costs are currently paid at the back end, when the uninsured suffer serious, costly problems, rather than at the front end, when they just need to fill a prescription, the costs are magnified for everyone. The best way to solve this problem and to get costs under control is to provide everyone with a reliable, basic level of healthcare.

Whether you agree with Mr. Mackey’s answer to the ethical question or not, it seems clear that providing basic health insurance to every American is financially beneficial for all of us in the long run, and it can help the government save money. Whether this coverage is provided by insurance companies or by a public option, the goal should be to shift healthcare costs from the back end to the front end. We shouldn’t think of universal healthcare as some new entitlement program, but rather as a means to make the entitlement program that currently exists more cost effective and rational.

Justin said...

Response IV
Responding to the ethical question:
To start, the phrase “right to healthcare” is misleading. We currently have many healthcare-related rights. I have a right to receive payment if I successfully sue a doctor for medical negligence, an insurance company for insurance fraud, or a hospital for refusing to administer life-saving treatment without a valid reason. If I were in prison, I would have a right to receive basic medical care from the prison facility. If I qualify for social security or medicare I have a right to payment. By stating that there is no "right to healthcare," I am not sure whether Mr. Mackey is suggesting that these rights should be eliminated, or just that no additional rights should be created.

If he is simply arguing that the free market should play some role in health care, I don’t think that position is very controversial. Even in countries with government run universal healthcare systems, individuals are generally able to purchase supplemental health care coverage. Mr. Mackey concludes that there is no intrinsic right to healthcare in the UK or Canada because his employees in those countries ask for additional benefits. I suppose his argument is that no country in the world provides perfect healthcare to every individual as a matter of right. That argument seems perfectly reasonable to me, but I doubt that is all he is trying to say.

Because the phrase right to healthcare is so confusing, I’ll offer an alternative: an obligation to provide healthcare. As prudent citizens we should all feel obligated to pay for health insurance. Without it, we may end up imposing costs on everyone else if we suffer a serious affliction and can’t afford to pay for treatment. Refusing to buy health insurance is really just a way to gamble with other people’s money. Thus, I think it makes sense to require everyone to pay for health insurance.

Of course, some people just can’t afford it. As a country we should all feel obligated to provide coverage for these individuals. I think this is where Mr. Mackey would disagree. While some people are impoverished because of their own foolish decisions, many are not. While the US has flourished by rewarding innovation and hard work, basic healthcare should not be one of those rewards, it should be the starting point. I recognize that this basic fairness argument probably won't win over many libertarians like Mr. Mackey. So here is a different approach:

Consider a country without any healthcare-related rights (e.g. no guaranteed treatment if you call 911 or show up in an emergency room, no right to sue a doctor who negligently causes harm). In this country, doctors and hospitals would always require payment up front and 911 operators could only respond to calls placed by those who have a steady job. The system could be stream lined so that hospitals can immediately foreclose on patients’ homes, cars, or any other belongings. Healthcare would be "de-regulated"--can’t afford to pay for heart surgery? Have a friend google the procedure and charge you $50 for it. Indentured servitude awaits those who avoid paying medical bills through bankruptcy. In this country, healthcare is rationed and only offered to those who can pay in full up front. Those that can't die.

As I’ve explained in the preceding posts, we live in a country which has helathcare-related rights. I hope the above example shows why it would be unacceptable to abolish those rights. If we can agree on that much, than we should also be able to agree that every American should be able to reliably receive basic healthcare.

Because we are currently obligated to pay for people in critical need of healthcare, it makes more sense to pay for people before they are in critical need. Universal health care would allow all of us to benefit from living in an increasingly, healthy, productive, and humane society. In short, I think the more ethical position is for all of us to pitch in to provide basic healthcare to all Americans, even if they are currently unemployed or impoverished.