NEWS ANALYSIS : Big Business Ready to Swallow the Pill : Health: Companies appear to be ready to pay higher taxes to get ‘health care off the corporation’s back.’
Big business’s attitude toward the Clinton Administration’s forthcoming health reform program, for the most part, is: “Do something--anything--but get the burden of choosing and controlling health care off the corporation’s back.”
And that’s ironic considering that many large companies have begun to control rising medical bills through cost-containment programs. “We held the rise in our health costs last year to 3%,” the head of one large corporation said recently. “I’d say our costs are now going up 8%, rather than the double-digit increases of a few years ago,” another CEO said.
But on the whole, business leaders recognize that those victories may be temporary and superficial and that medical costs pose a grave threat to their companies and the economy. So they are even prepared to pay more in taxes for the massive health program the Clinton White House is expected to release next month.
A hundred corporate chieftains were just about unanimous in their admiration for Hillary Rodham Clinton when the First Lady told the meeting of the Business Council in Williamsburg, Va., last weekend of a plan to link medical insurance with workers’ compensation and auto insurance in a reform measure to be financed by a hike in payroll taxes.
“She’s a manager,” said General Electric Chairman John F. Welch of the First Lady’s performance. “She’s doing what you have to do--shake things up, put marketing together with production, don’t allow turf battles.”
“A lot remains to be seen as to specifics, but certainly she is right to open these subjects to consideration,” General Mills Chairman H. Brewster Atwater said.
To be sure, business is not a monolith. The U.S. auto companies, with large numbers of older workers and retirees, want a greater government role in health care. But young companies in high-tech and even traditional industries these days employ fewer people and are less eager to pay taxes for government programs. Most small businesses want government help in standardizing medical and workers’ compensation costs, but are also reluctant to pay new taxes.
And some big companies are suspicious. The chairman of one large company responded with an expletive when asked to comment on the plan Hillary Clinton outlined last week. “They want to load a lot of problems into a big sack and get the corporations to pay for it,” he said.
In Washington, analysts expect release of the Clinton program to set off a yearlong debate over health care and financing. And the reforms that become law after that debate may bear little resemblance to the President’s wishes, political analysts suggest.
Nor is reform likely to be the corporate restructuring that business leaders have in mind, with hospitals shut down rather than factories and care rationed to, say, one center per area for open heart surgery, another for cancer treatment and so forth.
“It’s pretty clear what the program will contain when it comes out next month,” said Michael Bromberg, head of the Washington office of the Federation of American Health Systems, which represents 1,400 hospitals. “Under the control of state governors, health purchasing authorities will be set up in each area. A governor can decide if there should be one health authority per state or 20. And a rise in the payroll tax, 7% for employers, 2% to 3% for employees, will provide financing.”
Bromberg could be talking about a lot of money. An additional 3% on the Social Security and Medicare taxes employees pay now would amount to $1,700 a year more in taxes for someone who now pays the maximum. That could slow the economy all by itself and thus may run into political opposition.
Also, say analysts, putting power over health care in the hands of state governors will arouse opposition. And how care will be rationed and hospitals closed or expanded are only some of the hundreds of questions that will be hashed out in the coming year.
But business leaders are ready for change. “Our health costs are growing about 8% a year now, but that’s partly because our employees are making more co-payments, so it’s less of a real gain on the problem,” said Chairman Lawrence Bossidy of Allied-Signal. “We have to get our hands around the whole problem.”
Despite the fact that it lumps together legal and medical issues, most see merit in combining workers’ compensation and auto insurance with overall medical coverage. “You can’t examine these questions in isolation,” said F. Mettler, retired chairman of TRW.
Basically, business supports change because the health care problem is social and political as much as economic. “It’s good to address these social problems,” said Chairman Harold A. Poling of Ford, which paid $1.35 billion for health programs last year--excluding massive amounts set aside in an accounting correction for retiree health costs.
New taxes would be in addition to Ford’s payments now, but the company looks for future savings. Meanwhile, a government health program would relieve management of the responsibility to make decisions about who gets care, duration of payments on chronic diseases--and what constitutes a family for health insurance purposes.
Also, a government program would reduce the competitive disadvantage of $500 a car in health costs between Ford, General Motors and Chrysler and the U.S. plants of Toyota, Nissan and Honda, which have younger workers and almost no retirees as yet.
A main concern of chief executives gathering last week was that the Clinton Administration has the courage to carry out reforms--as if the health system were a company being restructured. “If you want to reduce health care to 11% of the national economy, from 14% today, you’ve got to be tough,” said Chairman Robert Crandall of American Airlines. “You set goals and anything that interferes with those goals, you refuse. That’s hard but it’s the only way.”
