Let's face it: The health-care system is broken. There are very few arguing that we can continue with the status quo, and nearly everyone seems to have an opinion on how to fix this high-priced wheel that's spinning out of control. And that includes Whole Foods Market (Nasdaq: WFMI ) CEO John Mackey.
In an editorial in The Wall Street Journal last week, Mackey, who's no stranger to controversy, broke down his eight-point plan to fix the health-care system. I've listed those points below, along with a few comments of my own. Frankly, he's got a couple of good points, but I don't agree with all of them.
Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). How much did your doctor bill for your last office visit cost? You probably don't know (I don't) because you don't pay the bill. Most people would drink a Starbucks' (Nasdaq: SBUX ) venti when they only need a tall if all they had to pay was the same small deductible for both -- and if their "caffeine-intake" insurance provider picked up the rest of the tab. Changing over to high-deductable insurance, where the consumer foots more of the bill, forces consumers to make wiser choices. That would likely lower health-care costs. But in my opinion, this'll only work if combined with another of Mackey's points.
Make costs transparent so that consumers understand what health-care treatments cost. To work, this has to be combined with the point above. Without the higher deductible, the consumer has no incentive to change his or her behavior. After all, the cost to the patient is the same for the "venti" and the "tall." In other words, I don't see how just handing the customer a copy of the bill is going to decrease costs.
Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Sounds good in theory, but giving a tax break for individually owned health insurance will cost the government money. Going the other direction, removing the tax benefit for employer-provided health insurance probably won't fly politically.
Repeal all state laws which prevent insurance companies from competing across state lines. I'm sure the smaller insurers won't be too excited, but larger players like UnitedHealth Group (NYSE: UNH ) , WellPoint (NYSE: WLP ) , and Aetna (NYSE: AET ) might be able to turn higher volumes into lower margins, which might lower costs somewhat. Cigna (NYSE: CI ) and Humana (NYSE: HUM ) could do the same.
Repeal government mandates regarding what insurance companies must cover. I want to agree that consumers, not the government, should regulate what conditions companies should cover. But society can lower the total health-care bill by insisting that some preventative care be insured, even though insurers may not want to do so because the patient might not be a customer when the cost savings are realized later in life. By requiring all insurers to cover certain procedures, everyone wins, even the insurance companies.
Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. No one likes the idea of not being compensated for a doctor's mistake, but tort reform may be a necessary evil to keep costs under control.
Enact Medicare reform. Well, duh. You can't pay out more than you bring in for very long. But, just like Social Security reform, I don't think Americans are going to like what reform looks like.
Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren't covered by Medicare, Medicaid, or the State Children's Health Insurance Program. This solution to a government-sponsored public plan -- and Mackey's diatribe about how no one has an intrinsic ethical right to health care -- may have gotten Mackey in trouble.
Not with me, but with customers. There are reports of people boycotting Whole Foods because Mackey's opinion didn't sit well with progressive shoppers. Only time will tell how bad the damage is.
More trouble than it's worth?
I'd say so. It's not like Mackey was actually going to solve the health-care issue with his proposal, and he must have known there was potential for damage to his company from the fallout. During a recent visit to Fool headquarters, Mackey said as much when asked what he'd learned from using an anonymous name ("Rahodeb") to post on message boards: "I am a public figure. And I've got to assume that everything I say and do could end up on the front page of The Wall Street Journal or New York Times, so I can't do or say anything that would be embarrassing to the company or harmful, so I'm much more careful about what I say now."
If the Journal op-ed piece is being "careful," I'd hate to read what you really think, John.
I've had my say. Now it's your turn. What do you think of John Mackey's health-care reform policy? Is it a good solution to this complex problem or is it junk food inside Whole Foods? Or somewhere in the middle? Please take a moment to leave us a thought or two about Mackey's views -- or your own -- in the comments section below.