Tuesday, August 01, 2006


Let's go Krogering

Kroger, one of the nations largest grocery stores, is in a bit of a fight with a North Carolina Union regarding health insurance costs. Kroger is home-officed here in my hometown, Cincinnati, OH. They have about 300,000 employees nationally and pull in more that $60 billion in annual sales.

One thousand employees from the United Food and Commercial Workers Local 204 are preparing to strike over proposed increases to their health insurance. According to a US Newswire release the NC Kroger health fund has a balance of over $4 million. Driven by "corporate greed" Kroger wants to increase employee cost sharing by $1 million annually.

Sounds like a lot of money right? Let's do some math. Assuming the increases only effect union employees, we divide $1 million by 1,000 employees. That comes out to $1,000 annually per employee or $83 and change a month. So 1,000 employees are going to strike over $83 a month? Certainly it's possible their existing health insurance costs may already be steep. If so they have a valid complaint.

However, in my experience most union members pay little to nothing for their health insurance. For example, take the recent transit worker strike in New York City. It provides a rare look at the total disconnect between the cost of health insurance and employee perception. Prior to the strike the transit workers paid nothing for their health insurance. The MTA wanted workers to pay a whopping 1% of their annual salary for health care. According to KFF's annual survey the average employee cost in 2005 was $50/month for single coverage and $226/month for family coverage. The average pay rate for an MTA bus driver in NYC is $63,000 a year. Essentially the entire Big Apple was locked down because the "average" bus driver didn't want to pay more than the national average for health insurance. (Note: The workers had other complaints and demands, but their stance on health insurance was certainly far fetched)

Whether it's Kroger employees or MTA workers, virtually every day we hear about another union threatening to strike over rising health insurance costs. Human Resources and the insurance industry need to shake things up and bring expectations back down to earth. Is it really too much to ask that employees contribute as much to their health insurance as they pay for satellite or cable? The golden years have passed. If employees want quality healthcare today they just might have to give up HBO and settle for 200 channels of basic cable.

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