Monday, February 10, 2014

"Distressed babies" and AOL

The CEO of AOL is making headlines for a terrifically stupid decision - well, two stupid decisions.

The company decided to change the way they handle their contributions to employees' retirement plans - rather than depositing the match at each paycheck, they will do it as a lump sum payment at the end of each year. Presumably this will save them money because it would punish employees who leave before the year is up, as the company won't have to pay their match. Perhaps there are fees per transaction or something that they are also saving on.

Okay, well, I think this is kind of a dumb policy myself, or at least one that is not advantageous to the employee or prospective employee. But then the CEO went and blamed the decision on "distressed babies" - specifically, two infants who required more than one million dollars in medical care each.


First of all, that is a huge breach of privacy for those two families. Like, violating HIPAA privacy laws and being rude and insensitive beyond that. The mother of one of those infants responded beautifully here.

Secondly, the baby didn't ask for that kind of medical treatment. The parents might not have either - while there are sometimes decisions to be made regarding whether to resuscitate at birth, depending on the gestational age of the infant there might be a hospital policy or even a state law that all measures must be taken to keep the baby alive.

Regardless, medical treatment in general is not something that people "take advantage of" - you get it when you need it. The health care system in our country is very broken, but the idea is that insurance itself is designed so that everyone pays in and those who need care get it, subsidized by those who don't. AOL is likely self-insured instead of paying premiums to an insurance company the way we usually think of it working, and it sounds like they didn't take enough risk into account. If they have 3,000 employees plus spouses and dependents, it seems reasonable to think that more than two of their plan participants might have a catastrophic medical event in a given year - premature birth is expensive, yes, but so is cancer, heart attack, or a major car accident, all of which are more common. This was a case of a giant company not calculating risk effectively, and laying the blame on the backs of two-pound infants and the burden on their parents' retirement. For shame.

(Since I originally wrote this post, the CEO has apologized and re-instated the 401(k) matching policy. Good for him, but as Deanna Fei wrote, the damage to her family is already done. The Consumerist covered this story here.)


  1. I thought of you and yours when I saw this story. In addition to the privacy violation and financial weirdness of it, Armstrong showed an astonishing lack of compassion that seems to be cropping up more and more in the healthcare debate -- this "I don't want to pay for X, because it's my money" argument. As you said, it goes against the way that health insurance works, but it also makes him seem totally cold and cruel toward the families affected. If we all knew when medical emergencies would hit, they wouldn't be emergencies.

    I still hold out hope that the concept of the public good can be restored to health insurance/coverage and we as Americans see the value of protecting and helping the least of us, whoever that is at a given moment (because it could be me next).

    1. YES. I kind of hope that as things get worse and worse with the healthcare system, eventually there will be a legitimate overhaul that will do away with the kind of inequalities we currently see. It's about protecting everyone, not lining the pockets of insurance companies!


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