Burdened by healthcare costs, US businesses seek a shift

The message comes from Wal-Mart, but it reflects a view that's increasingly common in corporate America: The US healthcare system needs to be fixed. Big business can help, but don't expect us to shoulder the whole burden.

That was a subtext when Wal-Mart chief executive Lee Scott took the stage last week alongside representatives of a major labor union to kick off a campaign called "Better Health Care Together." The aim of this unlikely partnership is to extend coverage to all Americans by 2012, and Mr. Scott emphasized that the responsibility must be shared by government and individuals as well as business.

His rallying cry doesn't represent any shared blueprint among employers, but it does symbolize an important shift over the past year.

Faced with surging healthcare costs and employees who want insurance coverage, businesses have become more likely to be advocates, rather than skeptics, of a major overhaul. At the same time, their motive is not just to see healthcare problems addressed. They also want to avoid shouldering more of the burden themselves.

"Clearly, we're going to start moving away from employer provided health insurance," says Richard Brown, director of the UCLA Center for Health Policy Research. "Employers are seriously looking for a way to get out of this."

The major role of employers in America's healthcare system is, in some ways, an unusual artifact of history. The practice of employers providing health insurance spread in the wake of World War II limits on wages, which prompted many employers to provide back door pay hikes by offering health insurance to employees.

Given that legacy, many experts say the nation will probably migrate toward hybrid solutions, which blend a major government role with responsibilities for individuals and employers.

"Whatever kind of reform we have will be a mixture of approaches," predicts Jack Hadley, a healthcare expert at the Urban Institute in Washington. In the process, he expects that employers will end up covering a smaller share of American workers.

"That's certainly what the trend has been, and I don't see anything that would reverse that trend," he says.

Last year, just 59 percent of US workers were covered by their employer's health insurance, down from 65 percent in 2001, according to research by the Kaiser Family Foundation. And health insurance premiums, on average, are 87 percent higher now than in 2000, compared with cumulative overall inflation of 18 percent during that span.

It's not that businesses don't want to offer strong benefit packages to their workers. Many, especially at small businesses, can't afford big health plans. Even large businesses are asking employees to pay more out of pocket.

"Wal-Mart is committed to high quality, affordable, and accessible healthcare," said Scott of Wal-Mart on Feb. 7. "But our current system hurts America's competitiveness and leaves too many people uninsured."

The company has come under fire for what critics say are skimpy health benefits. Wal-Mart, for its part, says that 9 in 10 of its blue-garbed "associates" have coverage, either through the company or another source.

In last week's push for universal coverage, Wal-Mart was joined by other major companies: Intel, AT&T, and Kelly Services.

"We feel a huge sense of urgency," says Maria Ghazal, public-policy director for a healthcare task force at the Business Roundtable, a group of large employers based in Washington.

The Roundtable itself, last month, joined with the Service Employees International Union (SEIU) to push for action on healthcare.

"Mostly it's a sense that the way the system is now, if you can call it a system, is not sustainable," Ms. Ghazal says.

She says the desire for discussion is very different from the atmosphere in 1993, when President Clinton's push for healthcare reforms foundered amid dissent, including from business.

"That's one of the fundamental differences between 2007 and 1993," says Sara Howard, a health policy expert at the SEIU. "What is remarkable about what's happened in the last few weeks is that, for the first time, major corporations are stepping up and saying that the time for change is now."

But all the calls for change don't create any clear mandate on policy.

"Right now the momentum is there. I just don't know where we can find common agreement," says Katie Strong, director of congressional and public affairs at the US Chamber of Commerce, a business group in Washington.

For one thing, the business world push doesn't settle a basic conservative-liberal divide over whether the key fix is a stronger role for government, or the introduction of more free-market competition in an industry where government has become the major purchaser.

"The status quo guarantees government dominance of the system," says Robert Moffitt, an expert at the conservative Heritage Foundation.

That's because government programs such as Medicare and Medicaid continue to grow, and some proposals envision government insuring workers who don't get coverage through their employer.

Many employers support at least the concept behind President Bush's recent proposal to let individuals have the same tax deduction for healthcare that business enjoys. Such a move might inspire greater competition in the health-insurance marketplace, something businesses generally support.

Employers also hope to see cost-control achieved through policies that improve the use of information technology in healthcare.

Many others are open to discussing requirements that they provide health insurance for workers, or pay into a government fund to provide such coverage. Such a system, often dubbed "play or pay," is under consideration in California.