Executives Call for Leadership on Health Care

By Staff Report

Nov. 11, 2005

When he announced a tentative deal with the United Auto Workers in October to reduce his company’s health costs by $3 billion, General Motors chairman and CEO Rick Wagoner called for more leadership from Washington on health care issues.

But GM and most other large corporations do not offer policy prescriptions for lowering health bills. They lay out themes–and leave the details to politicians.

“We believe that the federal government has a primary role to play in increasing health care quality and making the health care system more affordable and accountable,” says Chris Preuss, GM’s Washington spokesman. “We need to see a more purposeful, bipartisan discussion on how we as a nation are going to tackle this issue.”

Corporate leaders certainly highlight the bottom-line impact of health care. For two years in a row, the 160 CEOs who constitute the Business Roundtable have cited health care as the No. 1 factor hindering company growth.

When they come to Washington, executives tend to focus on incremental steps in health care reform rather than sweeping changes. In a seminar at the Brookings Institution last month, Eli Lilly CEO Sidney Taurel touted products designed to empower consumers, such as health savings accounts. He also recommended curbs on medical malpractice lawsuits and advocated improving health care information technology.

In an interview following the event, he said the complexity of health care has kept the issue out of the spotlight. “It’s not been very high in the list of national priorities,” he said.

Even when Washington does act, it cannot solve the problem alone. “We need a public-private partnership, and all the players have to take responsibility,” said Leonard Schaeffer, chairman of WellPoint Health Networks Inc., who also was at the Brookings event. “We need a culture of accountability.”

The government should facilitate innovation and help keep costs under control, while companies must acknowledge the effect of rich labor agreements, Schaeffer said. “Those costs going up are not the fault of somebody,” he says, noting that GM voluntarily entered into its agreements with the UAW.

In the past few years, employers have been ratcheting up premiums, deductibles and co-payments. The group being hit the hardest may be retirees, as demonstrated by GM’s $15 billion reduction in retiree health care liabilities. How older Americans react may determine whether broader health care reform gains political momentum.

“Those are the people who vote and those are the people who will say that we have to have some kind of regulation,” says Pat Schoeni, executive director of the National Coalition on Health Care, which advocates system-wide reform. “The tipping point occurs when enough people who are middle class suffer the consequences of rising health care premiums or having their benefits reduced because of rising costs, which is exactly what GM is doing.”

Taurel understands GM’s predicament. “It’s a question of survival,” he said. “This is affecting all companies.”

Mark Schoeff Jr.

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