I was reading an article on CNN.com, Safeway CEO: No choice on health care, about how safeway had to stop paying the entire cost of healthcare and shift the burden to some of their employees. (this is what lead to the strikes in SoCal).
Safeway CEO: No choice on health care
http://money.cnn.com/2005/04/19/news/fortune500/safeway.reut/
I will include the main article below the fold. But main point is that b/c some companies like Wal-mart offer poor benefits, other companies have to adjust their benefits lower to compete...
What I think is sad about this is how the inefficencies of our healthcare system affect corporate profits, employees quality of life, and generally decrease market efficiency. If the cost of an insurance is based on the health of the participants in the pool, why not make the entire nation the pool... Also why do we have hundreds of insurance companies each with overhead and costs when a single provider model could drastically increase efficiency...
It just doesn't seem to make sense... But what do I know...
Article
Safeway CEO: No choice on health care
Steve Burd says shifting a portion of health-care costs to employees 'was a matter of survival.'
April 19, 2005: 9:55 AM EDT
BEVERLY HILLS, Calif. (Reuters) - Safeway Inc. headed off financial collapse by shifting a portion of health-care costs to workers last year, despite provoking a lengthy strike that paralyzed the grocery industry in Southern California, Safeway Chief Executive Steve Burd said Monday.
Speaking at the Milken Institute Global Conference, Burd said Safeway (Research) had been "six to seven years" away from bankruptcy if the chain had continued to shoulder the burden of a health plan that paid all health-care costs for workers.
"We did what we did because it was a matter of survival," Burd said. "You look at the airline industry: 40 percent of the airline industry is in bankruptcy, another 20 percent is on the verge of bankruptcy. They didn't deal with some basic issues.... I would say we were six to seven years away from becoming an airline."
Burd said the U.S. health-care system was "broken" and universal health care was the only remedy that would keep medical costs for the uninsured from being shifted to companies that provide benefits.
His argument for shifting part of health-care costs to workers during rancorous union negotiations in 2003 and 2004 stemmed from lesser benefits offered by non-union competitor Wal-Mart Stores Inc. (Research)
"I'm a big fan of universal coverage, and Wal-Mart is somebody that doesn't have the same kind of coverage that we have and it's all about price," he said. "We would love to have the playing field a little more level."
The company is now focused on containing health-care costs by using a "carrot and stick" approach to keep employees healthy and to encourage them to use their benefits wisely, Burd said.
For example, employees can be rewarded for quitting smoking by getting lower premiums, or penalized for seeking treatment in an emergency room rather than a doctor's office by having to pay a larger portion of the emergency room bill, he said.
"People who need health care are typically disconnected from the point of payment -- you don't really feel it's your money," Burd said. "When you talk about incentives, they have to be negative and positive if they're going to work."