Market Rx for Health Care Costs

Article excerpt

The Insider

Employers call on consumers, not big government, to fix the ailing system

At a time when premiums are rising inexorably and General Motors cites health care costs as a primary reason that it is hemorrhaging red ink, American companies could be forgiven for trying to find someone-the government, for instance-to shoulder the burden of health care benefits.

But, wary of any reform that might also impose mandates on private industry, few companies are seeking systemic change in the U.S. health care system.

Instead, companies like Starbucks, Verizon and Pitney Bowes are advocating market solutions. At a recent Capitol Hill health care cost summit sponsored by CNBC, company leaders called for innovation, improved quality, greater transparency and empowered consumers as the best solutions to the health care cost crisis.

"We have to put the power in the hands of the people," said Ivan Seidenberg, chairman and CEO of Verizon Communications. "Consumers will change the system and they will cause the alignment of the providers and the government and everybody else."

David Cote, chairman and CEO of Honeywell, said disparate results within the health care system add to rising costs. "A lot of benefit ... could come from focusing on quality outcomes," he said. "I'd like to see more of a sustained effort by businesses and the government to have better-quality data on hospitals, better-quality data on physicians and, as we put more of a burden on employees, give them the opportunity to have that consumer data."

One business leader asserted that a preoccupation with the financial aspects of the issue is misguided. "We have to deal with health rather than health care or insurance," said Michael Critelli, chairman and CEO of Pitney Bowes. "If we have a healthier population, then we will have lower costs."

"A MORAL OBLIGATION"

Although their solutions may differ, the fact that corporate executives are coming to Washington to address health care is a welcome development, says Howard Schultz, chairman and chief global strategist for Starbucks Coffee Co.

"I'm encouraged that the business leaders and CEOs that I speak to with regard to this issue recognize the crisis this country is in with regard to health care, and recognize the responsibility that we collectively have for our employee base," he says. "If you poll your people, this is an issue that's no longer on the back burner. It's front and center."

As he makes his rounds on Capitol Hill to talk to lawmakers, Schultz, emphasizes that providing health care benefits doesn't have to ruin the bottom line. He points to Starbucks' comprehensive health coverage and its strong profits.

"This is not a zero-sum game," he says. "Business should recognize that we have a moral obligation to do the right thing. And in doing so, it makes for good business."

Schultz says that the "humanity of the country is at stake" when more than 45 million people lack health insurance. But providing coverage is an increasingly expensive proposition.

A recent survey by the Henry J. Kaiser Family Foundation and the Health Research and Educational Trust found that premiums for employer-sponsored health insurance rose by 9.2 percent in 2004, a lower increase than the two previous years but a rate at which health costs outpaced inflation and wage increases. The average annual premium for a worker with single coverage is $4,024, with the employer contributing $3,413; for family coverage, the premium is $10,880, with the employer paying $8,167.

The survey also showed that the emphasis on consumer-centered health care hasn't lowered company bills because too few workers have signed up for personal accounts. About 20 percent of employers offer high-deductible health plans, which require deductibles of $1,000 for a single account and $2,000 for a family, but only 3.9 percent also make a contribution to health care reimbursement accounts or health savings accounts. …