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Originally published Thursday, September 15, 2005 at 12:00 AM

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Crisis in health care brewing, Schultz says

Starbucks will spend more on health insurance for its employees this year than on raw materials needed to brew its coffee, Chairman Howard...

The Associated Press

WASHINGTON — Starbucks will spend more on health insurance for its employees this year than on raw materials needed to brew its coffee, Chairman Howard Schultz said yesterday as he decried a health-care crisis that soon could overwhelm U.S. businesses.

Schultz, whose Seattle company provides health-care coverage to employees who work at least 20 hours a week, said Starbucks has faced double-digit increases in insurance costs each of the last four years.

"It's completely nonsustainable," he said, even for companies such as his that "want to do the right thing."

Schultz made the comments yesterday at a meeting with Sen. Patty Murray and Rep. Adam Smith. The event was one of several organized by Schultz and other executives to call attention to what they called a growing health-care crisis.

"I would hope congressional leaders put this at the front of their agenda," Schultz said.

Later, Schultz and other executives, including Costco CEO Jim Sinegal; Dawn Lepore, president and CEO of drugstore.com; and Ivan Seidenberg, chairman and CEO of Verizon Communications, attended a health-care summit at a Senate office building.

Schultz said his passion about health care dates to his youth in New York City, when he watched his father struggle to hold down several low-wage jobs — none of which included health insurance. "I wanted to try and build the company that my father never got a chance to work for," Schultz said.

The rising cost of health care has made that dream increasingly difficult, he said. The company expects to spend about $200 million this year for health care for its 80,000 U.S. employees — more than the total amount it spends on green coffee from Africa, Indonesia and other countries.

Schultz declined to endorse any specific legislation, saying his goal was to raise awareness of the problem. But whatever solution is adopted, he added: "Every single American needs to have access to health insurance — full-stop."

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