Starbucks Corp. will spend more on health insurance for its employees this year than on raw materials needed to brew its coffee, the company's chairman said Wednesday.
Howard Schultz, whose Seattle-based company provides health care coverage to employees who work at least 20 hours a week, said Starbucks has faced double-digit increases in insurance costs each of the last four years.
"It's completely non-sustainable," he said.
Schultz made the comments Wednesday at a meeting with Sen. Patty Murray, D-Wash., and Rep. Adam Smith, D-Wash. The event was one of several organized by Schultz and other executives to call attention to what they called a growing health care crisis.
"I would hope congressional leaders put this at the front of their agenda," said Schultz, noting that a majority of the estimated 45 million uninsured Americans have jobs.
Later, Schultz and other executives, including Costco CEO Jim Sinegal; Dawn Lepore, president and CEO of Drugstore.com; and Ivan Seidenberg, chairman and CEO of Verizon Communications Inc., attended a health care summit at a Senate office building.
Meanwhile, the Kaiser Family Foundation reported Wednesday that the growth rate of health insurance premiums failed to reach double digits this year, the first time that's happened since 2000.
Still, premiums rose much faster than overall inflation and wage growth, the report said.
The foundation, which specializes in health care research, said premiums increased 9.2 percent between spring 2004 and spring 2005. Such an increase could devour much, if not all, of the 2.7 percent increase the average employee saw in wages.
"There is some good news, I suppose. The rate of growth is slightly lower than last year," said Drew Altman, the foundation's president and CEO. "The bad news is that's the only good news, because premiums are still going up 3 times faster than wages."
Schultz said Starbucks expects to spend about $200 million this year for health care for its 80,000 U.S. employees — more than the total amount it spends on green coffee from Africa, Indonesia and other countries.
Starbucks has about 100,000 employees worldwide, Schultz said, including about 65 percent who work part-time. Increasingly, the company is hiring older workers, who are attracted in large part by the company's generous benefits, he said.
Schultz said Starbucks' benefits policy is a key reason it has low employee turnover and high productivity.
He declined to endorse any specific legislation, saying his goal was to raise awareness of the problem. But whatever solution is adopted, he said, "Every single American needs to have access to health insurance — full-stop."