New proponents of overhaul for healthcare: CEOs

Big business has had it - at least, those that provide their workers with health insurance.

In an extraordinary gathering, the CEOs of some of America's largest companies - from Kellogg's to SBC Communications - called on Congress and the White House to stop dillydallying with band-aids for the nation's healthcare system and to come up with comprehensive, systematic reform.

That's usually the mantra of the nation's unions. Indeed, some top executives sounded almost radical, calling the current system "unsustainable" and the costs "staggering."

"To address these issues in a piecemeal or voluntary fashion won't work," said Dick Baird of Giant Foods, who was speaking on behalf of his parent company, Ahold USA, which includes Stop & Shop, Bi-Lo, and other national supermarket chains.

The event, which was put together by the National Coalition on Health Care, was one of two such meetings of business titans that took place last month, but got scant attention. That's in part because Washington is currently preoccupied with Medicare reform and finding away to provide prescription-drug coverage for seniors - just the kind of incremental reform the CEOs contend hasn't worked and won't work. Some pundits also dismissed the meetings as mere political posturing as the debate over healthcare heats up, particularly in the Democratic primary.

But many healthcare experts are taking notice. It was big business that helped kindle the flames of reform a decade ago. Then it jumped ship and played a key role in killing the Clinton administration's comprehensive reform, claiming the market could do better. "The fact that major Republicans in the business sector are actually talking about expansion in the government right now, that's news," says J.B. Silver, a healthcare expert at Case Western Reserve University in Cleveland. "I think this may change the political debate."

Other healthcare experts are also quick to note parallels with the late 1980's and early '90's. Then, a combination of pressure from unions, big business, and a middle class that was suddenly insecure about its healthcare coverage pushed the issue onto the national political agenda. Then, as now, healthcare costs were rising much faster than the rate of inflation.

And then, as now, companies were cutting back coverage and increasing costs, and the number of uninsured was growing.

Now, it's estimated that as many as 53 million Americans will be uninsured by 2006 if nothing is done.

But there are several significant differences between now and a decade ago.

Back then, the concept of managed care offered the hope that the market could bring healthcare inflation down by squeezing inefficiencies out of the system. Indeed, as more large companies shifted to managed care during the mid-1990s, medical inflation was tamed somewhat. But once many of those inefficiencies were gone, inflation went right back up into the double digits, draining corporate profits and fueling angry labor disputes.

So now, the problem is worse than a decade ago, and there are no simple market solutions on the horizon for big business to grasp onto.

"Like most good businesses, we have done many things over the years to try to control these costs ... but [it's] done little to slow the tide or fix the healthcare system that continues to drain resources at an alarming rate," says Bill Delaney, president of SBC Communications. "The present course we are following is unsustainable."

After the Clinton healthcare plan failed, the general consensus was that small incremental reform - such as making insurance portable from job to job or increasing coverage for uninsured children - was the best way to change the system. But after a decade of such steps, the costs are escalating far faster than they were a decade ago, quality is deteriorating, and millions more are uninsured.

"The evidence is that tinkering at the margins, which we thought politically might be an easier route, hasn't worked," says Ken Thorpe, a healthcare expert at Emory University in Atlanta, who helped craft the Clinton plan. "There's probably only one way to get at these problems simultaneously, and it is by some broad structural reforms."

Professor Thorpe heads up another major coalition of business, healthcare, and labor leaders called the White Mountain Group. It also held a press event last month outlining the four major principles its members support. On top of the list is universal coverage.

That's something most experts, regardless of political leanings, agree needs to be accomplished to start bringing healthcare inflation down. But some remain doubtful that there will be any kind of major reform anytime soon. In part, that's because businesses not offering health insurance - many of which are small - are still adamantly opposed to reforms that will cost them money. Then there's the cost of government, which most analysts agree could be huge. And with the current set of tax cuts, some hold out little hope for comprehensive reform in the immediate future.

"But there is an opening here, because the public prefers comprehensive health reform to big tax cuts for the wealthy, that's clear," says Theda Skocpol, a professor of government and sociology at Harvard University in Cambridge, Mass. "And if that message is ever delivered through elections to Congress, then you might get movement. And I do think business can help lead the way in setting the agenda for that."

Some experts point out the cost of doing nothing. Henry Simmons, president of the National Coalition on Health Care, contends that it's so high, the nation's leaders will be facing a far worse crisis unless they do act soon.

"Just the fact that within two years, the average family insurance premium is going to be above $14,000 [the bulk of which businesses pay], that's astronomic, that's double since 2001," says Dr. Simmons. "It's just not sustainable."