Corporate concerns over reform

Marquee companies like Delta Air Lines, Coca-Cola, United Parcel Service and Home Depot aren’t endorsing any of the current plans. Some won’t even discuss the issue publicly.

Most support the general idea of reforming the current system in an effort to stem the soaring cost of providing health care to employees, which by some measures has more than doubled during this decade.

But corporate top guns also worry that changes aimed at shrinking costs in the long run could do more harm than good.

The devil, as usual, is in the details. And when the details are in the hands of Washington politicians, corporate leaders begin to sweat.

Some economists and political leaders contend CEOs are reluctant to talk about specifics because they fear firms like theirs could get stuck paying for reform. Other economists argue increased efficiencies will cover most of the expense, but nearly everyone agrees there will be additional costs.

Estimates of the costs of implementation run from several hundred million dollars to well over $1 trillion over 10 years.

“Those costs have to be covered by someone, and it will be taxpayers, and it will come in the form of higher taxes to individuals and corporations,” said economist Dorsey Farr of the Atlanta firm French Wolf & Farr. “You don’t get any of this for free.”

Farr said many large companies fear they will become demonized in the political discussion and ultimately be handed the health care bill.

“It’s easy to make corporations sound like the bad guys,” he said. “But they are owned by shareholders and pension plans. This idea that you can just tax them and no one gets hurt is sorta silly.”

U.S. Sen. Johnny Isakson (R-Ga.) said Atlanta’s big companies have reason for concern. Isakson said the Democrats have floated several ideas to pay for health care reform, including a tax on soft drinks and a 35 percent tax on the offshore earnings of multi-national companies. Neither proposal is currently in any of the bills.

“There’s no question those are issues he [President Barack Obama] thinks are on the table,” Isakson said. “If you start taxing offshore earnings at 35 percent for multi-national companies like Coke, it will run them offshore.”

When local corporate leaders do talk about the current reform efforts, concerns over increased costs to their companies quickly move to the forefront.

“Our employees should not be taxed for their health benefits, and Delta should continue to be allowed a tax deduction for the cost of providing health benefits,” Delta Air Lines CEO Richard Anderson said in a written statement. “Reform shouldn’t hurt that system.”

Anderson, who worked for Minnesota-based UnitedHealth Group before coming to Delta, said it also should not get in the way of current health benefits the world’s biggest airline provides. Delta has more than 70,000 employees, and more than half live in metro Atlanta.

“For instance, today Delta provides free physicals for its employees,” he said. “Don’t change what already works.”

Norman Black, a spokesman for UPS, headquartered in Sandy Springs, said that “as a general rule” the shipping giant supports health care reform. The company has 345,000 U.S. employees and spent $3 billion on health care premiums last year. It provides health care to all employees, even part-timers, many of whom are covered under union contracts.

Total premiums and out-of-pocket costs paid by employers and workers for a typical family of four will hit $16,771 this year, according to Milliman Inc., a consulting and actuarial firm. About 60 percent is borne by employers, the firm said.

Ralph J. Neas, CEO of National Coalition on Health Care, said that over the last decade health care costs shot up 120 percent while wages increased only 34 percent.

“The rapidly escalating rate of increase in health care costs is undermining American businesses, big and small, and has to be brought under control,” Neas said.

Neas said his organization, which bills itself as the nation’s largest and “most broadly representative alliance” working to improve America’s health care, hasn’t endorsed any specific reform plan. But he said reform is critical.

“We can’t face these kinds of increasing costs forever,” UPS’ Black said. “Eventually it impacts our competitiveness in the global marketplace.”

However, UPS has not taken a position on proposals floating around Congress. And Black said the company is adamant about what should not be in the bill: No new mandates or taxes that would increase costs for employers.

“That’s a non-starter for us,” he said. “ We don’t think any additional costs should be placed on an employer who is already providing comprehensive care.”

Atlanta-based Coca-Cola and Home Depot declined to comment on any specific reform proposals.

“Clearly, we are watching health care reform closely, but can’t speculate on anything since there are no firm details in place,” said Home Depot spokesman Ron DeFeo. “Our focus will continue to be on offering our associates access to quality care through an array of choices that can be selected based on individual needs.”

Coke referred a reporter to a recent opinion article by Chief Executive Muhtar Kent. In it he professed “in principle” to support the Obama administration’s “desire to reform health care.” But Kent offered no specifics.

Neas said his health care advocacy group, a nonpartisan organization whose board includes former Presidents Jimmy Carter and George H.W. Bush, thinks increased efficiencies in the health care system can pay for most reforms.

“Why go taxing things outside of the system,” he said. “You’ve got enough money in the system if it were wisely spent to pay for quality affordable health care reform for everyone.”

But California-based economist Jason Shafrin, who runs the Healthcare Economist blog, said additional money will have to come from somewhere.

“Just saying we’re going to be more efficient and will do better preventative care will not pay for it.” he said.

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