Starbucks announced Monday that it will give its U.S. workers a raise
that will boost compensation by 5% to 15%. That’s very cool.
The
coffee giant also said it will offer employees more affordable health
insurance that will cut costs by being less comprehensive.
That’s not so cool.
What it represents is the ongoing trend
of tiered healthcare in this country – strong coverage for those who can
afford it and high-deductible, primarily catastrophic coverage for most
others.
“This is great for Starbucks’ healthier workers and for
shareholders,” said Peter Hilsenrath, a healthcare economist at
University of the Pacific. “But sicker workers likely will have to pay
more.”
The problem, he said, is that without healthier employees helping to
subsidize the company’s more comprehensive health plans, rates will go
up for those desiring (or requiring) more coverage.
“You could say
Starbucks is exacerbating a problem that we’re also seeing on the
insurance exchanges” under the Affordable Care Act, Hilsenrath said.
“Costs keep rising for people who need more coverage because the
healthier people choose cheaper, high-deductible plans.”
Champions
of free markets will argue that Starbucks is simply giving workers more
choices, and that’s true. Why should younger, healthier people pay
higher premiums for more extensive health coverage?
In a letter to workers, Starbucks Chief Executive Howard Schultz
said the company is “evolving” its benefits program so that employees
(or “partners” in Starbucks-speak) “may shop, compare and choose health
coverage with the similar convenience and personalization people
experience when they shop, compare and choose airlines and airfare.”
“The new healthcare options allow partners to only pay for the coverage they want and will actually use,” he said.
Starbucks
estimates that the lower-cost, less-comprehensive insurance plans will
save individual workers up to $800 a year, or $2,600 for those with
family coverage.
That sounds good in theory. In reality, however,
it undercuts the basic premise of health insurance – that the
potentially huge costs of healthcare can be minimized on an individual
basis by spreading risk evenly among as many people as possible, healthy
and sick.
“Employers have been looking to manage the growth in
healthcare benefits for a long time, so increasing deductibles and
reducing benefits are two common methods,” said Gerald Kominski,
director of the UCLA Center for Health Policy Research. “The Affordable
Care Act establishes relatively minimal standards for larger employers,
so this could be a trend.”
Reggie Borges, a Starbucks spokesman,
declined to elaborate on the company’s plans. “We will have more
benefits news to share in the weeks ahead, including more choice and
savings potential, which means more money in our partners’ pockets,” he
said.
Kominski said the move represents “an erosion of benefits”
and a segmenting of a company’s workforce because it can “lead to higher
premiums among those older or sicker employees who stick with the more
generous coverage.”
Think of it like this: It’s the healthy, in looking out for themselves, unintentionally sticking it to the sick.
Free marketeers may not fret about that until they, too, require healthcare. And rest assured, they will.
Unless you’re Superman, you will, at some point in your life, need medical attention.
Americans
spend about $3 trillion annually on healthcare, an average of nearly
$10,000 per person.
But actual costs depend in large part on how old you
are.
People between the ages of 65 and 84 spend roughly 3.5 times
as much annually on healthcare as people between age 19 and 44,
according to the Centers for Medicare and Medicaid Services.
According
to the Health Care Cost Institute, Americans age 65 and older can
expect to pay about $146,400 out of pocket for healthcare until their
dying day – and that’s for the relatively healthy ones. Those with a
chronic medical condition can expect to spend more than $300,000 above
what Medicare will cover.
This is the fundamental idea behind
proposals for a Medicare-for-all insurance system, or the single-payer
approach that’s favored by almost all other developed countries. They
typically spend about half what the United States spends on per-capita
healthcare for the same if not better results.
The genius of the
single-payer approach is that by pooling the healthy and sick over the
long haul, comprehensive coverage costs for all can be brought down to
affordable levels.
Don’t blame Starbucks for looking after its
own. The company’s first obligation is to its employees. And Starbucks
deserves credit for embracing a variety of socially conscious policies,
such as a commitment to environmental protection.
But healthcare
is unique. Unlike other goods and services, it’s something that
represents enormous importance to the entire public. The more we focus
on tiered coverage for individuals, the more we harm the broader
interests of society.
Ideally, we’d all have Venti or Trenta coverage. But the way things are going, many of us will have to settle for Tall.
And that’s just a sneaky way of saying small.
http://www.latimes.com/business/lazarus/la-fi-lazarus-starbucks-health-insurance-20160711-snap-story.html
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