New Health Plan to Call on All Firms to Pay


An unusual coalition of major corporations, labor unions and consumer groups today will announce a radical plan for health care reform, including mandatory medical contributions by businesses and a national health care budget with tough cost controls on payments to doctors and hospitals.

Under the proposal, major segments of the big business community, where health insurance coverage is routine, are demanding for the first time that all companies--large and small--provide insurance to employees or else contribute to a public program.

The plan--likely to be opposed by doctors, hospitals, small business, the private health care industry and the Bush Administration--calls for all businesses to provide health insurance, or else pay a 7% payroll tax to finance the cost of covering their employees under a public program, according to a draft of the report obtained by The Times. Workers enrolled in this public program would pay an assessment of 1.75% of their salaries.

In addition, all firms would contribute another 0.5% of payroll, with a matching sum from workers, to help cover the cost of the public program. It would provide comprehensive medical insurance for the unemployed, those living below the poverty line, part-time workers, and employees at companies without insurance.


The plan, hammered out after 18 months of delicate private negotiations, was developed by the National Leadership Coalition for Health Care Reform. The plan emerged from discussions involving dozens of firms, unions and consumer organizations.

It is certain to prompt intense opposition from some of the most powerful interests in the medical care field. Hospitals and doctors will oppose any further controls on their fees and charges. Companies producing and selling medical equipment and technology will fight against any efforts to restrict capital spending.

The plan also will be opposed by many small business owners, who object to new taxes and the mandatory aspect of the program. In addition, the health insurance industry will fight the plan, considering it a prelude to a national health program that could wipe it out.

Numerous health care plans have been introduced in Congress, but no particular proposal has previously won significant support from the business community. The coalition’s plan is likely to give a major boost to the concept of “pay or play,” in which companies must offer private health insurance or else pay into a fund for a public program.


The Bush Administration refused to make an official comment Monday on the plan. However, “in the past, when the Democrats have put forth plans of this type, the Administration has been strongly opposed,” an official at the Department of Health and Human Services said Monday. “We feel these compulsory plans put too much of a burden on small- and medium-sized businesses. We feel they would force a lot of companies out of business.”

The Administration is now working on its own package, which is likely to focus on tax incentives to expand insurance coverage, and a possible expansion of Medicaid.

The coalition plan will be unveiled today by representatives of Bethlehem Steel, Dayton Hudson Corp., the United Steelworkers, the Service Employees International Union, the American Nurses Assn., and Families USA Foundation, an organization promoting expanded health care coverage.

Sources said other firms involved in the past discussions have included Southern California Edison, AT&T;, Eastman Kodak, Du Pont, Burger King, Chrysler, and Georgia-Pacific. The coalition expects to get formal approval of its plan and active support from each of the member companies and organizations.

“There is a growing consensus that America’s health care system needs to be overhauled--because, in plain words, it is not good enough,” the organization’s draft report says.

Perhaps the most significant aspect of the plan is not in the details, but the ability of influential groups from business and labor to find common ground in espousing drastic changes in the current health care system.

“Growing seriousness of America’s health care problems and public concerns have combined to create a new opportunity to effect major change in our health care system,” the coalition said in a recent “core message” to the groups involved in the discussions.

The draft report says its “proposal would help the majority of businesses--those that provide insurance and have had to compete with those who do not.”


The 7% payroll tax is less than the cost of providing a standard package of private insurance coverage for many small, low-wage businesses, according to the coalition. Thus, the public insurance program, financed by the 0.5% tax on all companies and the 7% tax on those without insurance, is expected to provide the coverage for millions of workers in small companies.

Many small business owners are likely to oppose the plan because of the cost and the mandatory aspect of such a pay-or-play program. For instance, John Galles, executive director of Small Business United, a trade group, met with the coalition but balked at the idea of compulsory coverage.

“We do not support pay or play,” Galles told the September meeting of the leadership coalition, a copy of its minutes said.

Health Care Reform

A coalition of major corporations, labor unions and consumer groups will announce today a major plan for radical health care reform. Here are some of the proposal’s highlights:

* Companies without health insurance must provide coverage or pay a 7% payroll tax into a public insurance fund. Workers at these firms would pay a tax of 1.75% of salary.

* All companies, with or without insurance, would pay an additional tax of 0.5% of payroll to help finance the public funds. Workers would pay 0.5% of salaries.

* Public insurance would cover all workers in firms without insurance, the unemployed, part-time workers and the poor.


* Business, labor, and government would create a national board to set a health care spending ceiling. Doctors and hospitals would receive uniform payments. If a ceiling is breached, payment schedules would be reduced the next year.