CEO of Starbucks, Which Supported Obamacare, Now Worried Mandate Will Hurt Small Businesses

March 22nd, 2011 5:17 PM

It seems Starbucks is regretting the health care Frankenstein it helped create. The company was a key corporate backer of Obamacare in its legislative stages, but its top executive has raised concerns about the law's economic damage.

Howard Schultz, the coffee company's CEO, recently told the Seattle Times that "the pressure on small businesses, because of the mandate, is too great" in the Obamacare law as currently written (h/t Mark Hemingway).

So why did he support the law in the first place? Schultz says he was enthused by the drive to insure the uninsured. So he likes that goal, he just doesn't how like it's being achieved.

That raises two questions: first, given that the mandate was integral to the legislation when it was under congressional consideration - and that the problems with the mandate were entirely foreseeable - why did he support the bill in the first place?

It may well be that Schultz believes the damage done to small business is a fair price for universal health care coverage. It's also quite likely that Starbucks will benefit from the mandate precisely due to its economic damage. As he noted, that damage will hit small businesses hardest. Starbucks can afford a bit more overhead. It's smaller competitors, not so much.

But giving Schultz the benefit of the doubt with respect to his motives, we then have to ask: if he wants universal coverage without the mandate, how does he propose we go about insuring the uninsured?

The logical answer is by lowering health care costs to allow more people to buy insurance coverage. But Obamacare also swells the cost of health insurance, an outcome President Obama conceded was likely even before the bill passed. Because the minimum coverage requirements for Insurance plans are much higher, the law will likely yield an increase in insurance premiums.

The law's backers are quick to point out that under Obamacare Americans get better coverage, though they may pay more for it. That's true, but if the goal is to insure as many people as possible without an economically burdensome mandate - that seems to be what Schultz wants - Obamacare is a failure.

Schultz is economically literate, of course, so it's a bit of a mystery why he supported Obamacare in its legislative stages, when some of these facts emerged.