NCPA - National Center for Policy Analysis

FOOD RETAILER ADOPTS CONSUMER-DRIVEN HEALTH CARE

December 21, 2004

Food retailer Whole Foods has adopted health reimbursement accounts, a consumer-driven health care plan that has successfully reduced costs and pleased its employees, says Sally Pipes of the Pacific Research Institute.

How the Whole Foods health plan works:

  • The company pays all insurance premiums for long-term employees with a $1,000 deductible for medical claims and a $500 deductible for prescription drugs; total employee out of pocket spending is capped at $3,500.
  • The company deposits $300 to $1,800 in employee "personal wellness accounts," depending on length of service; any money not spent in one year can roll over, tax free, to be used in the future.

The impact has been noticeable just after one year, says Pipes:

  • After only one year, costs have dropped by 42 percent and a total of $14 million of unused money has rolled over for future use.
  • Whole Foods now spends $2,998 on health care per employee; the average retailer spends $5,804 per employee and Wal-Mart spends $3,500.

Whole Foods is expected to adopt health savings accounts, a new program authorized by the federal government that has similar characteristics with the added bonus of allowing employees to keep the money if they leave the company, says Pipes.

Source: Sally C. Pipes, "How Whole Foods Can Help Wal-Mart Beat Scrooge Rap," Investor's Business Daily, December 14, 2004.

 

Browse more articles on Health Issues