Image: Protestor
Jae C. Hong  /  Associated Press
Whole Foods, the high-end grocery store chain, has been facing heated calls for a boycott ever since the chain’s chief executive, John Mackey, wrote an editorial in the Wall Street Journal advocating for a high-deductible health care plan like the one it offers.
By Allison Linn Senior writer
updated 8/25/2009 2:27:08 PM ET 2009-08-25T18:27:08

The debate over health care reform isn’t just drawing heated viewpoints from town halls to the halls of Congress — it’s also a hot topic of public discussion at some major U.S. companies.

Experts say corporate executives, who may normally keep quiet about other controversial matters, are speaking out about health care reform for the same reason they do most things: the potential impact to the bottom line.

“They’re crying out just because they’re desperate to control costs,” said Paul Fronstin, director of the health research program at the Employee Benefit Research Institute.

It’s no secret that health care costs have increased dramatically over the past few years, and for many companies those higher bills have added to the financial burdens they are already facing because of the recession.

In turn, that’s pushed some companies to advocate for health care reform in the hopes that they can have a say in a plan that would provide them some financial relief, whether through broader coverage, electronic records or other new measures.

“We have worked very hard on our own, in the face of these rising health care costs, to provide quality, affordable coverage, and we know the challenge of trying to do that,” said Greg Rossiter, a spokesman for Wal-Mart, which has been vocal on the issue. “We think we have a pretty good idea of what has worked and hasn’t worked, and so we felt that we had something to say and it was based on pretty solid experience.”

Still, taking a public stance on such a hot-button topic as health care reform carries significant risks, especially if customers, employees or business groups disagree with a company’s views. Some have found it safer to stay on the sidelines.

“This is a train ride that’s verging on a roller coaster. Why get on the roller coaster at this point?” said Jon Oberlander, an associate professor at the University of North Carolina in Chapel Hill.

Companies’ views vary widely
While companies ranging from Starbucks to Safeway have advocated for health care reform, their views on what a final plan should look like vary widely.

Wal-Mart, the nation’s largest private employer, has thrown its support behind an employer mandate, which would require more employers to provide health care coverage. Some business groups, such as the U.S. Chamber of Commerce, oppose such a mandate.

Experts speculate that the company is pushing for such a mandate because it wants to level the playing field by forcing its competitors to take on the same cost burden it does.

The company concedes it has a competitive concern.

“Obviously if a competitor of ours is not providing health care to their associates, they’re able to run their business at a lower cost … and yet Wal-Mart and everyone else is picking up the cost,” Rossiter said.

Reputation issues
Many also see Wal-Mart’s efforts on health care reform as a way for the company to burnish its image. Wal-Mart has for years been dogged by complaints that its health care benefits weren’t good enough, and it has been working in the past couple of years to improve its plans.

“In part this was strategic, politically,” Oberlander said.

The stakes are also high for companies like Starbucks, which has built its reputation on being the kind of employer that provides health care even to part-time baristas earning low wages and now is struggling with the cost burden of such promises.

The company’s health care costs will total $290 million in 2009, a 30 percent increase over 2005, Chief Executive Howard Schultz said in a letter to the Obama administration earlier this year in which he generally supported health care reform.

The letter warned that such costs have been difficult to bear in the current recession.

“Like many businesses, the economic slowdown has forced us to re-examine how we provide health care benefits to our employees,” Schultz said in the letter.

Paul Ginsburg, president of the Center for Studying Health System Change, said Starbucks also may be pushing for health care reform in part because it is, at this point, also facing a competitive disadvantage to those coffee houses who don’t provide insurance.

“If you’re going to be a barista, of course you go to Starbucks if you have health problems,” he said.

Starbucks spokeswoman Deb Trevino said the company had no comment beyond its public letters on the topic.

While Wal-Mart and Starbucks may be seeing a public relations benefit to jumping into the health care debate, other corporate executives are finding that their efforts to insert themselves into the public debate are drawing controversy.

Whole Foods, the high-end grocery store chain, has been facing heated calls for a boycott ever since the chain’s chief executive, John Mackey, wrote an editorial in the Wall Street Journal advocating for a high-deductible health care plan like the one Whole Foods offers.

Under such plans, employees generally have to pay a certain amount out of pocket before insurance kicks in.

Mackey’s conservative-leaning views, including the theory that health care shouldn’t be considered an intrinsic right, drew considerable fire from some of Whole Foods’ liberal-leaning customers.

Whole Foods spokeswoman Libba Letton said that Mackey was expressing his own opinion, rather than the company’s.

Still, Letton said that, as a company, Whole Foods has expressed concern about health care reform that would threaten its current health plan.

“We are wary of any changes or mandates that would make it harder for us to continue providing the kind of health care plan we do now,” Letton said.

On Thursday, CtW Investment Group, which works with union pension funds who hold Whole Food shares, called on Whole Foods' board of directors to oust Mackey because of the op-ed piece. Whole Foods' workers are not unionized.

Drawing from experience
Other corporate executives also are using their own experiences as the basis for arguing how health care reform should look.

Safeway Chief Executive Steven Burd, also writing in the Wall Street Journal earlier this year, claimed that his grocery chain has been able to keep health care costs down by offering a discount on health care premiums if employees do things like stop smoking or maintain a healthy weight.

Burd argues that such a plan, which focuses on personal responsibility for good health, could be applied nationally and reduce health care costs significantly.

A Safeway spokeswoman said no one was available to comment beyond the public statements.

Ginsburg said executives who have seen success saving money for their own large workforce may be sharing those results in part because they truly believe that their on-the-ground experience can help shape a better health care plan.

"You want other people to know about it in the legitimate hope that they’ll learn from it,” Ginsburg said.

Still, Ginsburg said, it’s tough to say whether corporate efforts can translate on a broader level. For example, a plan like Safeway’s, which requires those who want a discount to provide information such as their weight, may be distasteful to people who don’t want the government or an insurance company to know such things about them.

It could also be a political landmine.

“It’s really hard to see politicians going out and being seen as beating up on the obese people,” Ginsburg said.

Corporate executives may also find that their plans have worked because of the demographics of their work force, and that such plans wouldn’t work for another employer, let alone an entire nation.

“Should politicians listen to what they’re saying? Yeah, they should certainly pay attention to what they’re doing and what they’re finding, but it doesn’t mean that politicians should take what they’re doing and nationalize it,” Fronstin said. “Just because it works for Whole Foods doesn’t mean it would work for FedEx.”

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