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News of the Day ... in Perspective

7/5/2004

Whole Foods goes for consumer-driven health care

One of the nation’s largest grocery-store chains, which has 30,000 employees, is the first company of its size to adopt consumer-driven medical insurance without any other options. The plan has a $1,500 deductible. Whole Foods deposits from $300 to $1,800 per year in an employee’s account, depending on length of employment, to help cover the deductible. Unused funds carry over.

In the first year, overall medical claims fell 13%, hospital admissions per 1,000 employees fell 22%, and about 90% of employees had money left over. About 95% of the employees are enrolled, compared to 65% with the previous plan, to which many employees preferred more vacation days. That plan was essentially insolvent. While nationwide, medical insurance premiums went up an average of 13.9%, the company spent about the same amount per employee on health costs in 2003 as in 2002, including deposits into employees’ accounts.

CEO John Mackey, who considers himself a libertarian, learned of the law permitting large companies to offer plans similar to Archer Medical Savings Accounts while hiking the Appalachian Trail. Management was startled when 83% of workers, of the 80% who voted, chose this option.

It is expected that many other companies will follow this example (Ron Lieber, Wall Street Journal, June 23, 2004).

Additional information:

Down with Health Plans! AAPS News, Jan 2004

Free-Market Crisis and Opportunity, AAPS News, Feb 2004

Which consumer-driven health plan is right for you? www.cahi.org

Center for Consumer-Driven Health Care www.galen.org

News of the Day Archive