Whole Foods CEO: Yes, We Have No Obamacare

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Tue Nov-23-10 12:04 PM
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Whole Foods CEO: Yes, We Have No Obamacare

Whole Foods CEO: Yes, We Have No Obamacare

— By Josh Harkinson

Last August, John Mackey, the founder and CEO of Whole Foods, sparked outrage in the liberal blogosphere and a by publishing a full-throated critique of Obamacare on the op-ed page of the Wall Street Journal. He argued that the country should "move in the opposite direction—toward less government control and more individual empowerment," and held up Whole Foods' own health plan as an alternative: "Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction."

But it turns out that Mackey's claims, which also fueled conservative opposition to the Democrats' health-care bill, were misleading. In a memo that he sent to all employees last month, obtained by Mother Jones, Mackey concedes that Whole Foods is actually sinking under the weight of its health care expenses. In the past seven years, he writes, the cost of the company's health care plan as a percentage of its sales has gone up 60 percent. This year's tab is "equal to about 10% of the total Team Member compensation of $2 billion," Mackey complains. "On average over the past three years we have spent more on health care costs than we have made in total net profits!"

Far from being a model of do-it-yourself health care reform, then, Whole Foods' costly insurance plan illustrates why Mackey's opposition to the Affordable Care Act was misguided. Like other major grocery store chains, Whole Foods is facing rampant inflation in health costs. (Unlike Whole Foods, however, Safeway supported key parts of the ACA.) Experts blame this on a lack of incentives for doctors to control costs and the 44 million uninsured Americans who burden the system. The health care bill passed in March is meant to address those problems, in part, by mandating that everyone purchase insurance, subsidizing coverage for the neediest, and creating exchanges in which individuals can pool their resources to purchase affordable coverage. A report by the Business Roundtable, an association of CEOs from large companies, estimates that the bill could lower health care costs by as much as $3,000 per employee by 2019.

Yet Mackey, an avowed libertarian, appears to see only one upside in the passage of health-care reform: The opportunity to use it as a scapegoat for Whole Foods' increasing health costs. In the memo, he informs his employees that their insurance deductibles will be increasing to $2,000 for the company's medical plan and $1,000 for its prescription plan, a spike that he blames entirely on the federal government: "This is very important for everyone to understand: 100% of the increases in deductibles and out-of-pocket maximums in 2011 compared to 2010 are due to new federal mandates and regulations." (His emphasis.)

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A spokeswoman for Whole Foods confirmed the Mackey memo's authenticity but declined to answer any questions about the company's health care plan.

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