AOL chief cuts 401k benefits, blames Obamacare and two “distressed babies”
washingtonpost.com
washingtonpost.com
Also, the fact that he's blaming two babies - I find it highly unlikely, statistically, that two such cases blew the cost of premiums for a group as large as AOL. I'm pretty sure they had more employees with cancer that year, for example, and that's also super-expensive.
This guy is despicable.
He should have said, "The cost of our medical benefits package was higher than expected." FULL STOP.
I can't, for the life of me, see how anyone could possibly think what that man did was appropriate.
In 2000 I worked at a relatively small company of 50 employees. One person had a baby that cost millions sic. Being a small group we all knew who it was and anticipated our insurance rates increasing.
Our rates went up some but not much, and the company president decided to cover 100% of the increase. I greatly admired the company for doing that and now 14 years later I find myself working with the same team on a new startup. The company president has been able to get back most of the top talent from a decade ago because we all respect and admire his leadership.
we've seen some crazy unprofessional behavior from armstrong before - the spot firing conference call is also classic amateur hour. not a good sign for AOL.
What an ass
I agree - it's completely disgusting to bring these costs up in that context.
A) AOL most likely self-insures... Why? Exactly because of catastrophic events like this increasing your premiums for all of your thousands of employees, even though most of them are probably healthy and low risk. Insurance companies don't care! It's usually better to self-insure until you run into these catastrophic insurance events. B) Agreed. It's disgraceful for any executive of any company to publicly share any type of individual insurance information. Also, borderline illegal.
I find it equally hilarious that everyone blames the 'singling out' as the criminal act here. Singling out only works if the mob (other AOL employees) actually target those two women, and how fucked up would that be? Are you really going to ignore the employees moral responsibilities to not target women with children in need but call out only the CEO?
French revolution mentality.
And hey, this is a for profit company, therefore they have no moral obligation to do anything other than make a profit. In fact they should refuse all healthcare obligations, remove pensions and outsource all their employees to gain more profits. There's absolutely no societal obligation toward a populace on a corporation's behalf. The company just pulled themselves up by their bootstraps and didn't benefit from society to get where they are today at all.
/s
One of the best ways for-profit, high-tech companies maintain profitability is to ensure that they have happy workers.
This is dumb, all-around: it doesn't save much cost, and it creates animosity.
Also they spent $405 million on an acquisition in August (8 months ago): https://en.wikipedia.org/wiki/List_of_acquisitions_by_AOL
the baby thing really bothered me.
If you want to make a political statement against Obama... fine... I get it.
But why drag two innocent families into this? What were these people supposed to do??? NOT try to help their children???
That was a very classless maneuver on AOL's part. Just state that your medical benefit costs were higher than expected this year. Don't be a douche about the whole thing.
I apologize for the rant... just rubbed me the wrong way.
Now instead of getting everyone outraged against benefit cuts for political action, you think that is fine but want reparation for the baby comment.
forgot the name of this discourse diatribe, but apparently it's effective.
The entire REASON we're outraged is because we REALIZE it was nothing more than political! If that is a technique they teach... all I can say is that it doesn't work very well here on HN. Benefit cuts for political action has lost A LOT of support around the tech industry today.
but you are missing the point. your words say you are not even condoning the political move anymore because now you are outraged by the asshole baby comment.
so, the baby comment served its purpose.
About 10 years ago I was in local government, we laid off teachers every single year in order to keep paying health insurance premiums for the rest of them. More money for less bodies.
[1]http://business.time.com/2009/09/16/health-insurance-premium...
[2]http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_...
(edit: fixed my numbers thanks to twoodfin)
Not even close[1].
CAGR of U.S. health care expenditures 1990-2012: 6.05%
CAGR of U.S. health care expenditures 2000-2012: 5.59%
And that's total spending, not accounting for population growth.
Health care expenditures have grown faster than inflation, but not anywhere near 15% annually.
[1] http://www.cms.gov/Research-Statistics-Data-and-Systems/Stat...
Paying a bunch of idiots to run around and generate paperwork isn't profitable, but the money's still gone.
http://business.time.com/2009/09/16/health-insurance-premium...
Healthcare premiums up 131% in 10 years.. that comes out closer to 9% than 6%. And doesn't include co-pays or anything that insurance doesn't cover.
EDIT: For the record, this kind of industry BS is why liberals support single-payer healthcare. It's not that we're commies or even that we don't understand the inefficiency of government bureaucracy. It's that we'd prefer the dumb public bureaucracy to our current even dumber private bureaucracy. Something being 'private' without pricing pressure isn't capitalism.
Sure, but that would show up in the CMS numbers, and it doesn't.
Insurers are absolutely price-conscious, both of what they pay for and what they charge. It's not as if businesses will accept year after year double digit increases without shopping around. If there were big money to be made undercutting existing insurers, someone would go after that market, but there isn't: Health insurance profit margins are low single digits at best.
Not with the ACA limits on share of premium costs not going to care they couldn't. Before the ACA, they certainly could.
> For the record, this kind of industry BS is why liberals support single-payer healthcare. It's not that we're commies or even that we don't understand the inefficiency of government bureaucracy. It's that we'd prefer the dumb public bureaucracy to our current even dumber private bureaucracy.
> Something being 'private' without pricing pressure isn't capitalism.
Yes, it is capitalism. Its not free, efficient, competitive market, but its certainly capitalism.
How does that cost-of-healthcare increase change the overall cost of employing someone? Clue: it's a lot less than 15%.
If you're laying off employees just for this reason, you're either doing something wrong or you're making political excuses.
Great article by Michael Lewis on how healthcare and retirement costs grow to consume such a large share of a city's budget that very little is left for actual public services.
Eighty percent of the city’s budget—and the lion’s share of the claims that had
thrown it into bankruptcy—were wrapped up in the pay and benefits of public-safety
workers... The public-safety workers thought that the city was out to screw
them on their contracts; the citizenry thought that the public-safety
workers were using fear as a tool to extort money from them... the police and
fire departments have been cut in half; some number
of the citizens ... say they no longer felt safe in their own homes. All
other city services had been reduced effectively to zero. “Do you know
that some cities actually pave their streets? That’s not here.”
http://www.vanityfair.com/business/features/2011/11/michael-...(Starting on page 4)
Health care is an issue where you _cannot_ ignore the low-probability worst case scenarios but instead must always be ready to respond to them. So the bigger the group of people that are insured together, the better, which obvious leaves one scenario as best: Every citizen of a state pays into and recieves from one single health care pool.
Anyway, I wish you best of luck. I hope you find a way to make things work.
As to the health insurance, yes, its going to go up for most and with higher deductible and premiums. All the rhetoric now meets the pavement.
edit: http://www.nytimes.com/2013/08/21/business/survey-finds-mode...
study: http://kff.org/private-insurance/report/2013-employer-health...
http://www.nationalreview.com/corner/353475/slowdown-health-...
Also, article points to same http://kff.org/health-costs/issue-brief/assessing-the-effect... - same group
It's not really the insurers that are causing the cost rise, its the systemic imbalances and cost shifting - by taking cost shifting out, we can reduce the cost for each person who is actually paying.
Related to the topic of Obamacare, cost inflation has actually slowed down the last few years. So that makes basically everyone complaining about Obamacare costs a big fat liar.
Here's a conservative blog for a source: http://www.nationalreview.com/corner/353475/slowdown-health-...
What about this jackass Armstrong's reasoning, in light of the current numbers? How about Papa John?
Armstrong is an ass, but that goes well beyond the whole health care thing and his excuse is foolish.
"However, would you be making the same point if the numbers were different? Fox News would be having a field day."
Well, no, I couldn't make the point if the numbers were different as my point relies on the actual numbers and not some made up crap.
I don't watch Fox News nor MSNBC or CNN as I am not fond of pundit television, so I have no opinion or trend on what they are saying.
Given what has been happening with Medicaid, I don't see this a temporary phenomenon.
Seriously, this sounds like another 'top notch tough businessman' appointed at immense salary.
My experience has been the first person normally claiming they are top notch is none other than themselves, and otherwise prosperous companies with generally good prospects seem to bleed money shortly after their arrival (normally into their pockets) and end up as burned out shells being sold off piecemean with some golden parachute to the outgoing top notch guy before he repeats the performance or retires to a recently purchased, by a tax haven based company, island in the Carribean.
And as proof of true sexual equality, there are examples where the he is a she.
The guy used a term that the writer of the article took offense to and you guys are making a huge deal of it. Get over it. Imagine yourself having to tell the same story to 100 reporters 100 times over two days. You'd try different ways of saying it and, no doubt, at least one of those times you'd use a word or phrase you wished you could take back.
If you're unhappy that he's bitching about paying for healthcare, fine - let that be why you complain. But stop falling for the buzzfeed/linkbait BS titles and "tricks" that authors use to try to make stories facebook-worthy.
I'm just really sad that we, the programmers and engineers, keep letting people like him climb up the ladder.
http://michaelochurch.wordpress.com/2012/11/18/programmers-d...
Serfs, not Morlocks.
AOL's insurance would cover it and rates might rise slightly, but it is disingenuous to blame the women.
AOL might be self-insured, but I doubt it.
What a shitty company.
Also, my read is that Armstrong thought he was going to sound like a great guy ... doing everything they could to help the distressed babies.
I think AOL is one large moral-free zone.
http://www.nytimes.com/2005/08/29/technology/29link.html?pag...
I think they might have changed things in recent years, but it's still not easy to cancel your AOL subscription.
Are you 100% on top of your every bill? Do you know everything going in and going out of your bank account? Have you made any mistakes in looking over something? My friend's dad is a CFO of a Fortune 500 company (and is a generally well-reputed guy) - I recently found out that he's pretty bad at managing his home finances - forgets to pay credit bills and all that.
This shit just happens. I'd rather that I deal with a company that doesn't try to actively exploit me on my weaknesses. The companies that do this have a bad character and I wish they just didn't exist.
If I wasn't, I sure wouldn't blame anyone but myself for it. I wouldn't blame the company I willingly gave money to due to my own oversight. And I wouldn't be surprised if they didn't call me and ask me to stop paying them.
If AOL's logs show that a customer hasn't used their service in more than a year, it would be trivial to send out a 'are you sure you still need us?' letter to each of them.
Tim then publicly regurgitated much of the internal deck logic. Obamacare may have been his own (questionable) addition - but the two distressed babies was definitely in the deck.
Whichever consulting firm it was obviously need's to coach those CxO's better on implementation.
Or a smaller but not insignificant number for whom a 401k at all is something dreamt of.
Actually I'm in that boat, too, but of my own doing. At where I work (a large utility in the midwest), we match 75 cents on the dollar up to 6%, so essentially 4.5%. I stopped contributing a few years back to try to get out of debt faster, but kept finding creative ways to add new expenses: wife, new daughter, another new daughter, repair that leaky roof, etc.
Still, my point was obvious: 3% is free money that shouldn't be turned down if it's available, but to laud it as something to brag on is really grasping at straws. 6% was the industry standard in my area... and I once worked for a company AOL bought out.
I'd like to think AOL has made a meteoric turnaround with HuffPost and Patch especially (the content is better than the local papers in my suburban hellhole, which isn't saying much) but maybe I spoke too soon.
I can't imagine what must be at the top of the list if "no healthcare" is a the bottom.
Sounds like even the CEO agrees that AOL is a shitty, shitty place to work for.
And that's how I know that AOL, somehow, is still kicking.