HEALTH PLANS: Tracing this all back to the vine….

Eric Schlosser, author of Fast Food Nation, has an op-ed in the NY Times about how Burger King has basically singlehandedly scuppered a meager pay rise for some of the poorest immigrant workers in America. It’s searing stuff and he relates it all back to the owners. Who are they?

Three private equity firms — Bain Capital, the Texas Pacific Group and Goldman Sachs Capital Partners — control most of Burger King’s stock. Last year, the chief executive of Goldman Sachs, Lloyd C. Blankfein, earned the largest annual bonus in Wall Street history, and this year he stands to receive an even larger one. Goldman Sachs has served its investors well lately, avoiding the subprime mortgage meltdown and, according to Business Week, doubling the value of its Burger King investment within three years.Telling Burger King to pay an extra penny for tomatoes and provide a decent wage to migrant workers would hardly bankrupt the company. Indeed, it would cost Burger King only $250,000 a year. At Goldman Sachs, that sort of money shouldn’t be too hard to find. In 2006, the bonuses of the top 12 Goldman Sachs executives exceeded $200 million — more than twice as much money as all of the roughly 10,000 tomato pickers in southern Florida earned that year. Now Mr. Blankfein should find a way to share some of his company’s good fortune with the workers at the bottom of the food chain.

Why is this appearing in a blog about health care? Because the same kind of corporate bad behavior happens here too, and the same type of private equity groups are behind it.

Who’s the worst behaved actor in the list of not exactly angelic characters in American health insurance? THCB regulars know that I’m talking about: Mega Life & Health.

Who owns HealthMarkets, Mega’s parent company? Yup, the biggest and richest private equity group, Blackstone, and Lloyd Blankfein and his colleagues at Goldman Sachs.

I’m delighted that they’re being called out personally in the NY Times, and somewhat frustrated that neither Paul Krugman nor Bob Herbert has taken up a similar cause on the health care side. (Incidentally Mitt Romney owes his huge fortune to Burger King’s owner Bain Capital, but that’s another story).

But it’s time to make these connections and to call out some of the richest people in America on what they’re decisions and the behavior of companies they own is doing to some of those significantly less fortunate than themselves.

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4 replies »

  1. Yeah, these major companies continue to do things such as raise medicare premiums for the elderly who are on fixed incomes and cant afford them!!! This is why AARP has set up http:// http://www.thisissoridiculous.com so that we can sign a petition to make our voice heard. They also have updated news, video and while your there you can e-mail your congressman to let him know how you feel! Medicare is an important issue in the US right now, and we really need to be heard on this, or it’s just going to get more and more out of hand!

  2. Yea, the free market system will free us, like it freed the slaves. I do wonder if the minor (very minor) stance on the treatment of chickens and hogs is a result of bad press on animal cruelty in farming. Seems the consumer looks at animals a little (just a little)kinder than farm workers. Here in NC Smith Foods slaughters above 32,000 hogs a day. Can you picture that? I’m glad I’m a vegetarian and never go in any fast food place; I buy local when I can and pay a premium for it. My food choice is not subsidzed like the corn/soybean industry is.
    A little organized boycott of BK might work, question is who’s going to organize it. Maybe the Florida farm workers can take a little time off to picket some BK outlets. I bet the execs at the private equity firms will be toasting a lot this Christmas.
    Have to agree with MG that the money in politics will not get us much when/if the Demos control the white house. Who’s your sugar daddy?

  3. Fat chance. The private equity guys and hedge funds are denoting in a big way to the Democrats to keep the status quo on the way the income generated from these type of companies is taxed. They have a ridiculously sweet deal that allows to pay a much lower tax percentage than if the revenues were recognized as personal income. Buffet been very vocally critical of this point but he is talking to the wind.
    Rangel and some other Democrats in the House want to close this loophole but Reid has put a hold on it. Given that the Republicans certainly won’t do anything to close this loophole and some powerful elements in the Democratic party are putting a hold on it, I doubt anything will be done in the next session of Congress either.

  4. “But it’s time to make these connections and to call out some of the richest people in America on what they’re decisions and the behavior of companies they own is doing to some of those significantly less fortunate than themselves.”
    Amen!! As a patient who spent 80% of my AGI last year on out-of-pocket medical/pharmaceutical expenses for routine treatment of Multiple Sclerosis. During the year, knowing that I couldn’t afford the expenses, I looked exhaustively for assistance but was deemed to not be ‘needy’ enough since I had earned ~ $26K in 2005.
    Do the CEOs and investors of the insurance/pharma companies really need that much of my meager earnings to survive and prosper?

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