World and Nation

Companies Reopen Debate on How to Fix Health Care System

Ever since Hillary Rodham Clinton's effort to overhaul the nation's medical system was rejected in 1994, most big employers have stayed out of the debate on health care reform.

But with their medical costs ballooning, top executives of large companies are starting to speak up again — and many are calling for a national approach to fixing health care. Few advocate a wholesale shift to government-directed medicine, but most are seeking broad changes in the employer-subsidized health system, which they regard as unsustainable in its current form.

Business executives are motivated in large part by health insurance premiums that are rising much faster than inflation, adding to their costs at a time when many are facing more intense competition from abroad, where companies rely on government-supported health care systems largely financed by taxes. A 2006 study by the Kaiser Family Foundation and Hewitt Associates found that premiums in the United States had risen by about 87 percent since 2000.

"Five years from now this problem will have to be cured, or the competitiveness of the United States will be dramatically affected," said J. Randall MacDonald, senior vice president for human resources at IBM.

In general, employers "are more interested in reform today than at any time since the Clinton effort" in the early 1990s, said Robert S. Galvin, global health care and policy director at General Electric, which provides health benefits for 460,000 employees and dependents and 240,000 retirees and dependents.

The surge of interest, Galvin said, "is driven by compounding health cost increases at three times the general inflation rate, plus the entrance of Wal-Mart and other retailers" that are beginning to feel the pain of out-of-control increases in costs.

Wal-Mart Stores introduced lower-cost coverage for its huge work force last year, after state officials and editorial writers criticized the numbers of Wal-Mart employees on state Medicaid rolls.

Many retailers, with large staffs of low-paid, temporary and part-time workers, would welcome a larger government role.

"The way it's going, there will be 75 million uninsured in another 10 years," said James D. Sinegal, chief executive of Costco Wholesale, which subsidizes health care for 81,000 of its 100,000 workers in the United States. "The federal government has to lend some assistance."

Sinegal said he had agreed to support an unlikely coalition of businesses and labor unions that recently called for "achieving a new American health care system by 2012." The group, the Better Health Care Together campaign, includes Wal-Mart, AT&T, Intel and Kelly Services, the temporary-staffing company, as well as the Service Employees International Union and the Communications Workers of America.

"The system is going to break," warned Carl T. Camden, president and chief executive of Kelly Services. "You can only put so many uninsured people through the emergency rooms before employers stop offering coverage."