Already, Big Business' Health Plan Isn't Feeling So Hot

Some of Corporate America's biggest names have been quietly working on a national health insurance proposal that would make most capitalists blanch. On Nov. 12, the National Leadership Coalition for Health Care Reform is expected to endorse a plan that calls for more taxes, government price controls, and mandatory coverage of workers. But chances that big business will unite behind the plan seem to be slipping. As announcement day approaches, some corporations are becoming queasy -- and quitting the coalition.

Few executives deny the health care system needs fixing. And the central role that Pennsylvania Democrat Harris Wofford's advocacy of national health insurance played in his Nov. 5 election to the Senate has raised the issue's political profile. But the split in the coalition underscores business' ambivalence. Big companies are divided over what role government should play in controlling costs and expanding coverage. Small business opposes any proposal that includes mandated coverage. The coalition, says John J. Motley III, a National Federation of Independent Business lobbyist, "does not represent the thinking of the vast majority of business owners."

The National Leadership Coalition, comprising about 60 large companies, unions, and special interest groups, began working toward a comprehensive proposal in March, 1990. The goal was a plan that would provide all Americans with health coverage and contain costs. Members included such notables as Xerox, Lockheed, Southwestern Bell, and General Electric.

HERETICAL. According to a draft report obtained by BUSINESS WEEK, the coalition will recommend that all employers either provide coverage to their workers or contribute to a payroll tax that would finance a public health plan called ProHealth. The plan would cover everybody with a minimum package of benefits. Annual premiums per family would start at an estimated $3,720. Companies choosing to cover their employees would pay at least 80% of the premiums. Companies choosing not to join would pay ProHealth a tax of 7% of their payroll, with workers chipping in an additional 1.75% of pay. The government would subsidize low- and moderate-income people.If that's not heretical enough for business, the plan also calls for uniform fees for physician and hospital services. This, along with the employer mandate, would end what's known as "cost shifting" by doctors and hospitals. Hospitals could no longer levy higher fees on insured or wealthy patients to make up for lower fees required by medicare and medicaid and for the free care given to patients without insurance. "There's no other way to guard against cost shifting than by regulation," says Chrysler Corp. lobbyist Walter B. Maher, a plan supporter. "You can't do it with scout's honor." Chrysler, Ford, and Bethlehem Steel -- all unionized companies with staggering health care costs -- are the big movers behind the plan. Others, such as Southern California Edison and Dayton Hudson, also have signed on. "It's the first business effort to put together something that is far-ranging," says SoCal Edison Vice-President Jacque J. Sokolov.

DROPOUTS. That's exactly what scares some corporations. AT&T, Du Pont, Arco, Eastman Kodak, 3M, and Burger King have all dropped out of the coalition. They can't stomach such a large dollop of regulation. "Maybe someday we can look at prices and mandates, but we have not exhausted all of the less radical solutions yet," says David B. Helms, senior benefits consultant at Du Pont Co.

Although the coalition won't present a united corporate front, its recommendations are sure to be taken seriously on Capitol Hill next year. Senate Majority Leader George J. Mitchell (D-Me.) already has introduced a similar bill to mandate insurance.

Small-business opposition will be a hurdle to all but the most modest action. Nearly 300 companies and groups representing small businesses have created their own coalition, the Healthcare Equity Action League, to fight any attempt to require employers to provide coverage. Small companies want action limited to reforms that would make it easier for them to buy group health coverage.

The gap between big corporations and small business will be tough to bridge. Organizers of the National Leadership Coalition had hoped they at least could present a broad front of large corporations behind a single plan. That dream is fading. The political debate over health care is sure to intensify next year. Unless business finds a way to push a unified approach, it may miss its best chance to shape the outcome.

Before it's here, it's on the Bloomberg Terminal.