Steel, Coffee Beans, & Healthcare

“GM spends more on health care than steel, just as starbucks spends more on health care than coffee beans.” Dave Chase writes in his book The Opioid Crisis Wake-Up Call. “For most companies, health care is the second largest expense after payroll. This puts you in the health care business.”


It is incredible to think that major companies like Starbucks and GM spend more on healthcare than on the products they produce that make them stand out. It feels incredibly troubling and a bit counter to our American pro-business narrative for our companies to spend so much on something that is not a key part of their business and that is not part of their core competency. But as a quote from Warran Buffett that Chase uses to open the 11th chapter of his book says, “GM is a health and benefits company with an auto company attached.” 


I am among those who think that one of the greatest failures in America’s healthcare past was to allow businesses to provide health benefits with a tax break for the company. Rather than paying employees more money, which would come with higher tax rates, companies have been allowed to provide health benefits, which instead come with tax breaks. This is how we have fallen into a system where the quality of care, the structure of access to healthcare, and what you pay is largely determined by how well your employer does with navigating the complex healthcare landscape. You might work for someone like Harris Rosen who has figured out how to provide large amounts of preventative services with low costs, or you might work for a cash strapped organization with a random HR person trying to make healthcare plan decisions while also dealing with that employee who won’t take down the inappropriate calendar in their office and is simultaneously trying to review several applications for a new position.


The reality of healthcare spending by companies shows us that they cannot reasonably expect to have an inexperienced HR person handle healthcare benefits. The spending is too high for someone who is not completely focused on industry trends and changes, someone who doesn’t understand how insurance companies and PBMs work, and someone who has multiple other responsibilities to manage. If we want to keep private health insurance tied to our jobs, then we need to demand better from our employers and our public policy.


When we discuss the costs of healthcare in our nation, and when we consider whether a single entity (the Federal Government) should provide health insurance versus having everyone either buy private insurance through individual markets or receive health insurance through their employer, we need to consider the reality of business spending on healthcare. We need to ask whether GM should be producing cars and accountable to so many employees for their basic health needs. Maybe there is still a space for GM to be involved with the health of their workforce, but should they be the entire determining factor, spending more on healthcare than the steel that goes into the cars they produce? These are the questions I would like to focus on when we think about how we should access and pay for the care we receive.

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