The Whole Foods Alternative to ObamaCare: Eight things we can do to improve health care without adding to the deficit.
By John Mackey
"The problem with socialism is that eventually you run out of other people's money." – Margaret Thatcher
Michael King: Judging from his choice of epigraph, Mackey thinks Social Security and Medicare are both "socialist" programs and considers the British National Health Service a bad example of such programs. It's worth noting that when former Prime Minister Margaret Thatcher recently fell ill, she was treated in National Health Service hospitals, and her Conservative 1979 government won office partly on the promise that it would protect the National Health Service, founded by Conservative Winston Churchill and still considered sacrosanct by all major British political parties.
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.
MK: The presumption that the federal deficit is largely a consequence of social spending – and not a decade of aggressive war – is shortsighted at best. In fact, the best way to protect Medicare (a highly successful single-payer program) is effective health care reform along the same lines; and Social Security long-term revenue problems are readily resolvable with sufficient political will (not requiring "unprecedented new taxes"). These dire and misleading warnings have simply become reflexive weapons in the political attack on health care reform. More to the point of "bankruptcy," health care expenses are now the leading cause of personal bankruptcy in the U.S., a crisis to which Mackey is apparently blind.
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.
MK: In general, health savings accounts work adequately for young, healthy workers operating under one general rule: Don't get sick. They are also cheaper for employers than full-benefit health insurance. Most importantly, they do not address at all the millions of Americans without employer-provided coverage.
• 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.
MK: The entire principle of insurance is to broaden the pool of risk so that everyone shares the burdens and the benefits. This "individual" tax break would do little more than lessen the burden on employers while moving even more of that burden to inevitably higher-cost, individual coverage, available only to those who can afford it – worse than where we are now.
• 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.
MK: The bulk of the current insurance market is an effective monopoly among a handful of major companies, and state lines are not the problem. Health insurance should indeed be "portable" – meaning you don't lose it when you get seriously ill or leave a job, not that the insurance companies can find you anywhere. Deregulating the banks and the hedge funds and the investment companies certainly worked wonders – at imploding the economy – doing the same with insurance companies would be an equally great folly.
• 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.
MK: It's not "special-interest lobbying," but patient needs, that drive insurance coverage regulation. Without that regulation, the companies would return to selling "coverage" so full of exclusions as to be largely useless, as indeed has happened in weak regulatory states such as Texas. Similarly weakened regulations and oversight on agribusiness have recently produced a series of tainted food scandals; the same would be true of insurance.
• 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.
MK: Tort reform, rigidly enacted in Texas in 2003 (at the demand of the insurance lobby) to limit lawsuits, has not resulted in lower medical costs nor lower premiums; in fact, the opposite has occurred, with premiums more than doubling. "Tort reform" is a gold mine for corporate defendants, a disaster for wronged consumers.
• 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?
MK: "Transparency" is one battle-cry of market enthusiasts, although they underestimate the difficulty of transparent pricing in an extremely complex health care market. In any event, transparency will not automatically bring costs down, without structural reforms, and health care customers don't "choose" to get sick. It would be similarly useful to know the costs of "organic" labeling and CO2 emissions, not to mention that of farm labor (and the level of worker wages) reflected in Whole Foods prices; but those aren't posted in the produce section, either.
• 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.
MK: Despite Mackey's hysterics, the sky is not falling on Medicare, which is both more efficient and less expensive than most privately managed care, precisely why the private insurers do not want to compete with any similar single-payer plan. If Mackey were seriously interested in costs, he would be asking why the British health care system produces similar medical outcomes to the U.S. at roughly 40% the per capita cost. (U.S per person annual cost, 2007: $7,290; United Kingdom: $2,992; France: $3,601; Italy: $2,686. Source: Organisation for Economic Co-operation and Development.)
• 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.
MK: If private charity could conceivably insure the millions of people who need it, it would have already done so, and more tax breaks for voluntary donations would not make a significant dent in the need. Health insurance (like firefighting or public roadways) is a mutual, public, shared burden that should involve the entire community; not an arbitrary handout for randomly selected charitable cases.
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.
MK: Since the medical culture of 18th century America bled George Washington to death with leeches, it may not be the very best source for modern health care wisdom. Nevertheless, both the Declaration of Independence ("inalienable" right to "life") and the U.S. Constitution ("promote the general welfare") have historically been interpreted to recognize broad, general rights to the entire citizenry, not just the wealthy. The U.S., under its Constitution, is also signatory and bound to international agreements – such as the Universal Declaration of Human Rights – which explicitly grant rights to food, shelter, and medical care to all people. Certainly public resources are not unlimited, but Mackey's position amounts to a health care variation on, "The rich and poor alike are forbidden to sleep under the bridges of Paris" – or are equally free to seek urgent health care in emergency rooms.
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.
MK: Mackey's caricatures of national health care systems elsewhere are badly misinformed and seriously misleading. Whatever their limitations, these systems cover all citizens, are demonstrably more efficient, deliver comparable or better health outcomes, and are substantially cheaper than U.S. health care (see OECD statistics cited above). As for "rationing," the U.S. system substitutes for government employees insurance accountants, who ration care directly for reasons of revenue targets, or indirectly by preventing millions of the uninsured from "waiting in line" altogether. Instead, they shut the door.
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.
MK: It's difficult to take seriously statistics offered by Investor's Business Daily, as its editors are campaigning furiously against health care reform and with such reckless mendacity that they recently claimed scientist Stephen Hawking, because he is disabled, could never have survived in England under the NHS. In fact, Englishman Hawking lives and works at Cambridge University and credits the NHS with a lifetime of good care. In any case, even if the "waiting list" in Canada and England for certain kinds of specialized care is on the order of two or three million – by comparison, beyond those millions of us waiting or appealing for insurance approvals, 70 million Americans do entirely without adequate health insurance, including 20% of Texans.
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.
MK: If, according to Mackey, Whole Foods' Canadian and British employees receive supplemental health-care dollars over and above their guaranteed comprehensive national health care, why would he seek to deny to U.S. workers what his Canadian and British employees take for granted? Alas, none of the health care proposals pending in Congress remotely approach British or Canadian single-payer systems – they instead have become simply a caricatured "socialist" boogeyman to frighten the gullible, while reformers struggle to defend any minimal form of public option at all. And all this despite the fact that U.S. corporations persistently cite health care costs as a significant disadvantage in international competition. With friends like Mackey, who needs enemies?
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.
MK: No one objects to "healthy lifestyles" – but the notion that any amount of "health food" and exercise can prevent all serious disease and injury is simply magical thinking. Fully half of heart disease patients previously exhibit no risk factors; other than smoking, the risk factors for many cancers are simply unknown or uncertain. The offhand contempt for the "overweight" is little more than a currently popular prejudice, more to do with fashion than health. To blame the victims for their illnesses is a virtually medieval approach to treatment, and to call on "recent scientific evidence" to defend that arrogant condescension is no more than cant. May Mackey be so lucky as to never be seriously ill or considered the cause of his own misfortunes.
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.
John Mackey is co-founder and CEO of Whole Foods Market Inc. His longer version of this essay is available at his blog: www2.wholefoodsmarket.com/blogs/jmackey.