Whole Foods’ John Mackey Out To Alienate Core Customers

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Most consumers and investors would not view Wal-Mart (WMT) as being a more compassionate company than Whole Foods Markets (WFMI) when it comes to healthcare reform, yet Wal-Mart is more attuned to the anxieties as well as the spiritual needs of its customers than Whole Foods. Yet “Holy” Foods slapped their customers in the face when CEO John Mackey wrote an op-ed piece in The Wall Street Journal (“The Whole Foods Alternative to ObamaCare”).

Mr. Mackey is not shy about expressing his opinions, but after facing an SEC investigation for posing on a Yahoo message board as “Rahodeb” while seeking to takeover Wild Oats, he has once again stepped over the line in neglecting to separate his personal opinions from the “core values” of the public company he co-founded.

Whole Foods has built their business around the aura of not being any old supermarket, but a place for better educated more health conscious consumers to shop. These target customers have been sold on the value of paying extra for organic, “fair trade,” and more environmentally friendly products. These customers are more likely than the average supermarket customer to be sympathetic toward those who have either been rejected by private health insurers or cannot afford private health insurance premiums. These target customers are more likely to be repulsed by Mackey’s call for a pure Darwinist health insurance system where only the “fittest” would survive medical underwriting.

While reading my analysis of the hypocrisy of Mackey’s proposals, please consider if or when the company can reconcile with its alienated customers. These core socialistic customers will surely put the Darwinist to the test. The hard fighting, extremely successful CEO may have picked one fight too many and might even be unprepared to defend his already proven unsuccessful Republican sound bites.

Now let’s dissect Mackey’s “eight reforms” that sound like copies of daily editorials from the pages of The Wall Street Journal and Investors Business Daily:

Since Mackey states that “equal access to doctors, medicines, and hospitals” is not “an intrinsic ethical right” since it is not found in the Declaration of Independence and the Constitution, why would Mackey proudly proclaim that he offers health insurance to his employees? (Oops, I forgot that Mackey refers to employees as “team members.” This is no different than comrades.) After all, a true “free market” libertarian would say an employer has no obligation whatsoever to their employees beyond pay for services rendered. And it’s not the nature of a Darwinist to show paternal instincts toward anyone other than their own offspring.

The real reason why Mackey provides health insurance to his team members is as a competitive advantage to keep them entrapped at Whole Foods. “ObamaCare” would create a free and open healthcare system that would allow team members the freedom and choices to obtain the insurance plan that best suits their personal needs rather than the healthcare choice made by Whole Foods. This is true “personal empowerment.”

Yet the combination of Whole Foods $1,800 annual HSA contribution and the plans $2,500 deductible only leaves employees with a potential $700 out of pocket expense without considering co-pays. Whole Foods also pays 100% of the premiums for the 89% of company team members who work 30+ hours per week. This tiny “doughnut hole” provides little incentive for Whole Foods employees to be cost conscious about medical expenditures. In fact, major private insurance companies have stated in their earnings calls that employer contributions toward the deductible of high deductible plans have actually discouraged any cost savings. Insurance companies have admitted that this disincentive of employees to reduce their medical expenses is causing them to raise premiums. To break the myth, high deductible plans only work when employees actually forgo medical treatment entirely.

Mackey’s point to “make costs transparent so consumers understand what healthcare treatments cost” will only work if employers stop subsidizing high-deductible HSA plans AND doctors and medical providers are freely transparent in disclosing prices.

I agree with Mackey the tax laws should be equalized so individuals receive the same tax benefit purchasing insurance as employers do, but Mackey does not want to equalize the law so individuals are guaranteed access to health insurance the same as employees are.

Mackey and his free market comrades believe people should be able to cross state lines to purchase policies offered in other states by out of state insurance companies. This already exists now through United Healthcare’s (UNH) Golden Rule Insurance Company and United’s plan for AARP members 50+. However, buying an out of state plan usually provides less consumer protections than purchasing a plan from a health insurance company licensed to sell policies in your state.

I agree with Mackey that we need tort reform which could eliminate a lot of the wasteful costs associated with doctors practicing defensive medical care for fear of malpractice suits. Yet for years Republicans have complained about the need for tort reform, yet did nothing even when they controlled Congress and the White House.

The same goes for Mackey complaining about the spiraling federal deficit. I don’t recall any op-ed pieces from Mackey about the costs of the wars in Iraq and Afghanistan that far exceed even the most anti-ObamaCare cost estimates, the tax cuts that were not “paid for,” the billions in bailouts for Wall Street and the auto industry, etc. that all began during the Bush Administration.

Mackey “wants to repeal government mandates regarding what insurance companies must cover.” I’m assuming Mackey means you shouldn’t have to purchase a policy with excessive benefits, but healthcare reform should create minimum federal standards to ensure consumers have catastrophic coverage.

Mackey wants to “enact Medicare reforms that create greater patient empowerment, choice and responsibility” but fails to describe what that would entail. Mackey, the Republicans, and some Democrats talk about the need to lower the cost of Medicare, yet these are the hypocrites who are getting the seniors to oppose healthcare reform by telling them in TV commercials that they won’t be able to get as many MRIs and CT scans as they want and that if more people get healthcare seniors will have to wait longer to get a doctor’s appointment. Essentially, the opposition is screaming to reduce costs but fights every attempt to do so.

And what’s John Mackey’s solution “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”? Mackey wants to “revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation” so these people can purchase insurance. Most people want to be self-sufficient and would prefer reforms that make healthcare regulations a level playing field than accept charity. Besides, Mackey conveniently forgets the millions of people who cannot obtain a policy at any price due to the discrimination of medical underwriting.

Mackey believes that “70% of all healthcare spending is mostly preventable if individuals take responsibility for their health through proper diet, exercise, and other healthy lifestyle choices.” While I wholeheartedly agree with him, there are many other ailments and medical situations that can arise in spite of living a healthy lifestyle. Do you deny care to the baby born with Down syndrome, the teenager with cancer, or a person with motor neurone disease such as scientist Stephen Hawking, who despite Mackey’s assertions about healthcare in England said he wouldn't be here today if it were not for the NHS.” If healthcare in Canada and England was a bleak as Mackey and his free market friends describe, the dead bodies should be littering the streets there.

As Mackey himself admitted on last week’s earnings call, the majority of items that Whole Foods sells are “a bunch of junk.” Which means that John Mackey’s company is contributing to that 70% of healthcare spending he states is “mostly preventable.”

Disclosure: I made a nice profit selling my WFMI shares August 5. The profit will more than cover the extra gas and extra cost to purchase the items at other stores I used to buy each week at Whole Foods.

Related Posts: “The Healthcare ‘Haves’ Don’t Realize Their Risks” and “Healthcare Reform: President Obama vs. Blue Dogs, Elephants, Six Hypocritical Senators, United Healthcare, and a Fraudulent Former Hospital CEO”.

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