Corporations seek remedy for uninsured

By ARTHUR JONES

When the largest U.S. corporations start worrying about health care coverage for part-time workers there’s reason to believe that the national anxiety over access to health care is pandemic.

A coalition of corporations, such as McDonald’s, Marriott and Marathon Oil -- to mention only the Ms on a list of 50 corporate names -- announced May 10 they would pool resources to see what new, innovative health care coverage might be bought for their 4 million part-time employees.

Not insignificantly, the announcement came at the start of Cover the Uninsured Week. Dan Yager, spokesperson for the Human Resources Policy Association, the group of corporate human resources executives pushing the proposal, told NCR that a year ago the group met to see what might be done to fix the health care system generally. He said that as major health care coverage consumers, they were seeing where costs and quality were going.

“But when,” said Yager, “they were confronted with figures that today’s 43 million uninsured figure could rise to 62 million in the next six years, the recognition grew that if you focus on the uninsured you really get to the core problems of the system -- in addition to focusing on a huge social problem. And unlike most countries, we do have an employment-based insurance system.”

Corporations know that one problem with uninsured employees is high turnover, so employee retention is an attractive element, he said. If something can be done for part-timers “it’s a win-win situation,” said Yager. “It’s a win for society, but also a win for the company because it helps address the needs of their own employees.”

While the idea has merit, Stuart Schear, spokesperson for Uninsured Week’s major backer, the Robert Wood Johnson Foundation, outlined hard realities.

“What’s first needed is negotiation between these employers and carriers, to see what price they can get that is affordable for part-time workers to buy. On this question of affordability,” he said, “the economists we work with say the absolute maximum -- and it’s a very large amount of money -- that someone can afford to spend on health care coverage is 10 percent of their gross household income.” (For a couple holding 2.5 minimum wage jobs between them, one working 40 hours a week, the other 60, with a gross overall income of $800-$900 a week, that’s $80-$90 for health care out of a take-home pay of perhaps $600. California statistics suggest that 50-60 percent of the working poor’s income now goes in rent. After health coverage purchases, that would leave a minimum wage family of two adults and two children about $210 a week for everything else, including running a car to get to work.)

Schear asked rhetorically, “Can employers get enough economy of scale, and put enough pressure with their pooled power in the marketplace, to get prices low enough?” The key word appears to be “subsidy” -- who is going to subsidize the poorer or part-time worker?

Alwyn Cassil at the Center for Studying Health System Change, explained. “Creating a pool creates a subsidy, expanding public programs creates a subsidy, proposals to provide tax credits to people create subsidies,” she said. “Giving someone a fairly modest tax credit and telling them to go out and buy coverage in the individual insurance market is not going to get much bang for buck -- it’s the most expensive place to buy coverage.”

But, she continued, getting 50 of the nation’s largest corporations to buy health care coverage as a group, and then giving the nation’s workers a tax credit to buy group insurance (many tax credit proposals are only for individual insurance packages) “would make this coalition proposal potentially much more attractive and possibly successful.”

Paul Fronstin is director of health research and programs with the Employee Benefit Research Institute, which has worked with the coalition consultants on the proposal. “What triggered this,” he said, “was corporations concerned about their own costs and what was happening to the system.

“They know there are cross-subsidies, that they’re subsidizing the cost of coverage [either directly, or indirectly through taxation]. If they could do something positive in the absence of public policy -- which is the environment they’re operating in -- they’d need to take some initiative.”

The May 10 coalition proposal is that initiative. Fronstin believes corporations, at best, would only see a modest benefit on their costs from pooling, “but I think they’re more concerned about the future and what’s going to happen to the workforce if it continues uninsured.” Representing the big insurers that have the major role as coverage suppliers, Aetna spokesperson Jo Griffiths said that on May 10, Aetna’s president, Ron Williams, who attended the kick-off, pledged support and said the coalition proposal was “encouraging because it comes from employers with real muscle in the marketplace.” Added Griffiths, “What’s compelling to us is how the population of the uninsured is changing a little bit. We’re seeing higher compensated people going without coverage -- or choosing to go without because they can’t afford the health premiums.”

National Catholic Reporter, May 28, 2004