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Home > Blog > A Smudge on the White Hat
Out of Our Minds
Thursday, September 15, 2005 2:10 PM
A Smudge on the White Hat
Kevin Salwen on Business

Starbucks has long been one of my favorite companies -- an inspiration for the way it runs its business. It cares about the Earth, it cares about its employees, it cares about fairly treating its suppliers. A centerpiece of the Starbucks Way is its health-benefits program: The coffee retailer offers health insurance to any employee who works 20 hours a week, 10 hours less than the rest of the fast-food industry.

For decades, that policy was a main reason why employees came to Starbucks -- and stayed and stayed; treat people fairly and they'll want to work with you.

But now the Starbucks strategy appears to be pinching the company. Founder Howard Schultz appeared before the Senate yesterday with this remarkable statement: Starbucks will spend more on health insurance this year than on the raw materials for its coffee. Schultz was joined at the hearing by another employee empowerment star, Jim Sinegal, the CEO of Costco, as well as the CEOs of Verizon and Drugstore.com. All of them agreed that the crisis was crippling.

So, what are we to learn here? That companies must scale back their health benefits as they grow? That making sure your employees are covered is a game only for entrepreneurs? That the health-care system in this country is a disaster (duh!)?


3 comments

anita - 9/16/2005 8:57:40 AM
Clark Howard had a great commentary yesterday on the sad state of health insurance. The average health care premium paid by a large company for a family of four is about $1,000 a month. That's for large cos that can negotiate the best rates. Many if not most small firms can't afford to pay for health insurance costs.

A made a number of great points. One: health care represents about 15% of the U.S. GDP, but only 7-8% of the GDP of countries where the citizens get more comprehensive care and live longer.

Another point: why don't health care providers post their prices so that consumers can comparison shop? As most of us know, different insurers will negotiate different rates -- and self-pays pay the highest cost of all for health care.
Ted - 9/16/2005 12:36:29 AM
I think it's time for high-powered executives to discard their ideological aversion to government-based universal health care and lobby the Congressmen they've bought and paid for to institute that needed reform to our health care non-system. Whether it's a Canadian-style single-payer scheme or a German-style system of regulated private insurers, that's the only solution to the spiraling costs that are crippling companies of all sizes and putting the U.S. at a competitive disadvantage.

'Socialized' medicine will require an increase in taxes, but the bottom line will surely be reduced costs from avoiding all the current costs of duplicative administration, marketing, CEO compensation, and profit that are driving the system into the ground. It would make so much sense that I can't see why the nation's CEOs aren't clamoring for it.
Ted - 9/16/2005 12:35:56 AM
I think it's time for high-powered executives to discard their ideological aversion to government-based universal health care and lobby the Congressmen they've bought and paid for to institute that needed reform to our health care non-system. Whether it's a Canadian-style single-payer scheme or a German-style system of regulated private insurers, that's the only solution to the spiraling costs that are crippling companies of all sizes and putting the U.S. at a competitive disadvantage.

'Socialized' medicine will require an increase in taxes, but the bottom line will surely be reduced costs from avoiding all the current costs of duplicative administration, marketing, CEO compensation, and profit that are driving the system into the ground. It would make so much sense that I can't see why the nation's CEOs aren't clamoring for it.

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