The politics and attitudes of business toward health care reform can be summed up in two words — fragmented and disunity. Unlike the insurance and drug industries, American business is by no means monolithic. There are big differences between the interests of big business, with its many multi-national corporations, and small business, which employs the majority of Americans. And there are also big differences within the large and small business sectors that put many members at odds with each other over health care reform.
Again, the driving factor driving business attitudes toward health care reform is money, and whether any bill in Congress will cost them more or less than they are now paying. Business of any size needs a healthy work force, but the costs of providing employer-sponsored insurance (ESI) have become an unsustainable burden for those employers providing coverage as well as unaffordable for many, if not most small businesses.
While important details are still in flux in Congress, we can expect that the House bill, as represented by H. R. 3200 will introduce an employer mandate requiring employers to offer health coverage to their employees and contribute at least 72.5 percent of the premium cost for single coverage (65 percent for family coverage) or pay 8 percent of payroll into the Health Insurance Exchange Trust Fund. This is the so-called “pay or play” approach. Small business employers with annual payrolls less than $400,000 would see reductions in their payments to the Exchange and would be exempted entirely if their payrolls are less than $250,000. Amendments by the House Energy and Commerce Committee (E & C) would provide hardship exemptions for employers adversely affected by job losses because of this requirement, fully exempted employers with annual payrolls of less than $500,000 and would reduce the payment schedule for those with payrolls from $500,000 to $750,000. Meanwhile, over in the Senate, under pressure from many business interests, the Finance Committee is considering dropping the employer mandate altogether or just requiring employers to pay for those workers receiving government-subsidized coverage.
Big business, as expected, is wary of the costs of the employer mandate and threatened by new requirements likely to be imposed by the government on their coverage plans. Large employers have long been protected by a little-known 1974 law, the Employee Retirement Income and Security Act (ERISA), which exempts all self-funded employee benefit programs from government regulations. Fearing weakening of ERISA protections, a coalition of large corporations, ranging from American Airlines to Xerox, are objecting to new federal “one-size-fits-all” standards after a five-year grace period.
But Wal-Mart, as the world’s largest private sector employer in the county as well as the world (1.4 million employees in the U. S. and 2 million overall), recently threw a bombshell into the large business community by coming out strongly in favor of an employer mandate. This is a surprise turnabout for Sam Walton’s non-union company, with its long history of avoidance of minimum wage laws and its track record of offering high-deductible health insurance that less than one-half of its low-income labor force can afford to buy.
Reacting to Wal-Mart’s endorsement of the employer mandate, the National Retail Federation (the primary lobbyist for the retail industry) strongly urged its members, which includes 1.6 million businesses and employs about one in five working Americans, to oppose Wal-Mart’s action. Within the retail industry, only 45 percent of retailers provide ESI. Wal-Mart’s break from the retail pack was seen by industry observers as a shrewd tactic to gain political advantage over its competitors.
Other big lobby groups that represent the interests of small business, including the National Federation of Independent Business (NFIB) and the U. S. Chamber of Commerce have long been allied with Republicans and lobbied hard against both an employer mandate and a public option. The Chamber of Commerce, for example, sent more than 50,000 letters to Capitol Hill expressing serious concerns with the pending legislation in Congress. Other new, less conservative groups, such as the Main Street Alliance, took the other side in support of the employer mandate. (Small business owners deliver mixed messages to Capitol Hill. Kaiser Daily Health Policy Report, July 9, 2009)Since the current cost to employers of providing ESI is about $5,000 for individuals and $13,000 for family coverage, most small employers cannot afford to provide coverage. They may have a lot to gain from a government-subsidized individual mandate. The non-partisan Congressional Budget Office has recognized that some employers would likely reduce wages to compensate for the costs of providing new health benefits, but has concluded that most non-exempt small businesses would see little adverse impact on employment or profits. But many employers still worry that they may have to pay more for coverage than they do now, and that health care reform may be a job-killer.
Although lobbying efforts of the business community concerning health care reform are energetic and well funded, they are conflicting and incoherent. While many business groups were generally in favor of reform, as more details emerge in bills taking shape in Congress, many fall into internecine warfare. As an example, although an early coalition had been formed in favor of reform, including the National Federation of Independent Business, the Business Roundtable, the Service Employees International Union (SEIU) and the AARP, only the AARP and SEIU supported H. R. 3200 when it was introduced in the House.
How whatever reform bill that is enacted into law, if any, will affect business is anyone’s guess. The financial impact on business will depend on arcane provisions buried in the small print of a 1000-plus page bill, which will be best understood by accountants and financial analysts. These kinds of provisions will make all the difference to employers — how small business is defined (eg., by less than 25 or 50 employees?); whether or not an employer mandate will be enacted?; what new requirements are added to ERISA?; and what will the penalties be for employers not participating in an employer mandate?.
Most important, none of the proposals now being considered by committees in Congress will rein in health care costs, so employers, employees and their families can look forward to continued escalation of health care prices and costs well above the cost of living and median wages. Business groups are starting to look sideways at industries that will clearly profit from health care “reform”, such as the insurance and drug industries, their Alliance “partners”, fully realizing that their revenues will be passed along to them as increased costs and decreased opportunities.
John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008. With permission of the publisher, Common Courage Press
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