NCHC | News – Media Statements

Carlos Gutierrez
National Coalition on Health Care press conference
Washington, D.C.
May 19

THE HEALTH CARE CRISIS AND KELLOGG

Glad to be part of this important forum today and pleased to see our colleague from Giant Foods in attendance.

At Kellogg, our health care costs were up by nearly 30 percent (about $39 million) last year alone.

Costs have risen from $120 million in 2000 to an estimated $212 million this year.

Our costs are rising faster than our earnings, 10 times faster that our U.S. sales and are 20 times higher than the projected increases for our raw materials and packaging materials.

We cannot sacrifice quality for cost savings. Cost savings are only effective if we can show that we never compromise our product quality.

We’re cracking down on health care costs by using the same quality-control techniques we use in our business:

• We’re working with our health care providers to make sure we’re getting the best services at the lowest possible cost. Discounts, alone, are projected to save around $9 million annually.
• We’re lobbying Congress for improvements in our national health care system to help drive costs down.
• We’re working with groups such as Business for Affordable Medicine, Leapfrog Group, The Washington Business Group on Health and the American Benefits Council and the National Coalition on Health Care.
• We’re focusing on prevention and making it easier for our employees to stay healthy by offering health screenings and early intervention programs.
• For every dollar of prevention we spend, we project a $3 saving in future health care expenses.
• We’re working with our employees and retirees to help them become smarter health care consumers. We are committed to providing our people with the information they need to make smart health care choices.

Compounding Kellogg’s challenge is that fact that we’re not competitive with our food company counterparts in what we pay for health care benefits.

We’ve made some tough decisions and developed cost-savings initiatives implemented in 2002 and 2003:

• We’ve adjusted our salaried retiree plans to include maximum amounts on what we will pay for their health care plan premiums.
• Our largest group of union-represented employees recently approved a new contract which stipulates that they will receive health care from our most cost effective provider – Blue Cross Blue Shield.
• This will significantly lower costs when compared to the more expensive indemnity plan previously available to the union-represented employees.

We have asked all of our employees to do their fair share to help alleviate the health care cost burden.

The more involved we are in our own health care choices, the easier it is for us to be smarter health care users. That’s better for everyone and for the health of Kellogg Company.

I am confident that we will come out of this crisis a stronger company.

We will continue to provide affordable health care coverage without sacrificing quality of care for our employees.

We will gain competitive parity with our industry counterparts.