AOL chief cuts 401(k) benefits, blames Obamacare and two “distressed babies”
washingtonpost.com
washingtonpost.com
I had a friend die to leukemia a year ago (she had just turned 27). 6 months prior to that, her first month in Stanford Hospital for chemo led to a bill to the insurance on the order of one million dollars.
I don't know how much the insurance billed the company (a small one without AOL's income), but they upheld it.
Tim Armstrong is the same CEO who last year fired Abel Lentz, chief creative officer of Patch, on the spot during his company-wide layout call [1]. I'm inclined to label him a Gordon Gekko-level psychopath.
[1] http://www.forbes.com/sites/susanadams/2013/08/14/aols-chief...
my understanding that AOL self-insures for medical.
My twins spent six weeks in NICU in a large hospital and then three more in a smaller regional hospital. The actual hospitalization cost for the NICU stay was about €25k each. Granted, there were no complications, but I can't imagine how even with multiple surgeries how you can add that up to a million dollars.
It doesn't reflect too well on this guy's people skills if something in his brain didn't say, "I'm about to blame sick children for cutting my employees' benefits, maybe I should shut up."
AOL does something like $2 billion in revenue per year. This cost would have been a fraction of one tenth of one percent of revenue. What. a. shithead.
It's a tradeoff, and morally it looks like the right one to me. Pay less to people who left to the company so you can continue paying more in health benefits to those who remain.
That was the choice being made here.
However it's their right to make it. If they want to run their company into the ground like that, why not.
From WaPo:
"In other words, employees will have to stay through the end of the year to get the match, and then the contribution won't even come during 2014. In a year like last year, where the stock market was roaring, the difference for an employee who left in December could amount to thousands of dollars in pay and added savings."
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/02/04/a...
Why would anyone voluntarily work with someone who's obviously such a shitty human being? The board of directors must be as bad at their jobs as he is.
Or calculate how much you lost by the decision and go ask for a raise for 4 times as much. Tell them you gave $100 to someone down the street because their baby was sick and so now you need more money because your wife doesn't like the way the quarterlies are going to look after you spent $200 million at the bar getting drunk.
Armstrong pissed away $200 million on Patch, and is still blaming the $7.1 million in Obamacare costs for reducing employee benefits.
When a CEO of a company becomes so petty as to point out the medical problems of a few employees (exactly two), he deserves zero respect or loyalty from his employees.
In general, if a law like the Affordable Care Act, or a product, has an adjective in its name, you won't find that adjective anywhere in the law or product except right there, in the name.
Where are you getting this stuff? It ensures a lot more than that... Coverage minimums, no policy maximums, pre-existing condition coverage, free annual checkups, etc etc. Pricing is also fixed within age groups except for smoking (which comes at a standard premium to your age group).
Another part is guaranteed affordability based on income. If you don't make a lot of money or live in an area where the plans are higher cost you will quality for a subsidy which brings the price down to an affordable level. If you make a lot of money the good news is the plan is already affordable.
Before the ACA I could only get a high-deductible plan that never covered a single thing in the half dozen years I had it. It would have been handy if I had gotten hit by a bus, but I would run into problems even then because it had a maximum policy outlay and they had the ability to drop me (then leaving any remaining medical problems as a "pre-existing" condition for a future insurer). The only good part about it was the Health Savings Account that allowed me to pay the exorbitant rates for medical care with pre-tax money. Without a subsidy I'm paying about the same now (hard to do an exact comparison without the HSA), but I can actually use the insurance. It won't be $150+ every time I walk into a doctors office, eye clinic, dentist or pharmacy.
That means, in effect, there's only one employer in the tech industry. So the labor market in tech is not an example of a perfectly competitive market. It actually follows a monopsony model.
In a monopsonistic labor market, raising wages/benefits doesn't reduce employment, it actually increases employment, increases output and lowers prices...all good things! See my comments here for a fuller explanation: https://news.ycombinator.com/item?id=7185717
Therefore, Obamacare did not hurt the tech labor market. Tim Armstrong is full of $hit. They should take away his degree in economics if he really believes his own bullcrap. He was just covering his own a$$. Maybe what's hurting his employees, stockholders and customers is his own overblown $3,216,534 salary in 2011. Source: http://www.forbes.com/profile/tim-armstrong/
Previously, though, he was head of advertising at Google (1999-2009), and I don't remember him causing much negative publicity in that role.