Health care on corporate agenda

by Stephen Butler

The Securities and Exchange Commission just decided to let corporate shareholders vote on proposals to have their corporations endorse national health care. To be more specific, the vote will encourage public companies to adopt a stand in favor of "principles for comprehensive health-care reform" — reform that would make health care "affordable to individuals and families, and affordable and sustainable for society." Who can argue with that?

How we make it happen is the $2 trillion dollar question. Major corporations killed Bill Clinton's attempt back in 1994, because they were certain that it would increase their costs. Today, however, we are competing in a world economy where all other countries spread medical costs over all taxpayers instead of just those who happen to work for companies.

Companies in foreign countries are not saddled with the brunt of medical care costs for all current and retired employees. Stockholders of our major companies are now waking up to the fact that their investments may do better if health-care costs are treated as social costs rather than those built into the cost structure of a manufactured product.

One would think that some senior executives whose bonuses and options are tied to company profits would jump at any chance to foist those health care costs off on the taxpayers --- on the "little people." This Wall Street Journal years ago pointed out that executives who do the math would clearly support national health care, but that they resist the notion for fear of being ostracized at their country clubs.

With $2 trillion of annual health-care expenditures in play, however, I shudder to think of what medicine would look like if all decisions were dominated by bureaucrats at the national level. Yet, an army of consultants and policy makers is gearing up for what they are convinced will put them in the driver's seat to control all that money.

The best book on the subject, suggested by a reader of this column, is Harvard Business School Professor Regina Herzlinger's "Who Killed Health Care?" She is quick to point out the fallacy of having the government run our healthcare system. But, she is quick to point out that transparency of the medical profession would set the stage for consumer-driven health care.

There are many problems with the current system, but one of the most critical is the fact that we can't find out what hospitals and doctors are actually good at what they do. We also can't determine what they charge. A hospital bill presented to someone who is uninsured is just laughable (on the high side, to say the least.) Hospitals maneuvered to legally keep their prices secret under the guise that disclosure would lead to "price-fixing."

The next, more complicated step would be to pay insurers more money for accepting those with higher health risks. At the moment, the system tries to deny coverage to those who need it the most. (Yes, there would still be insurance companies, but they would not have any more $1.7 billion/per year CEO's) All providers and payers would be required to produce audited price and outcome (success ratio) statements accessible to the general public.

The final key to this brave new world lies with the concept of changing demand rather than changing supply. If citizens have opportunities to shop from among a variety of health plans, they may elect a policy that has a high deductible and spend money that their employer has deposited into an account. With full transparency of costs and quality, characteristics totally lacking in the system today, health-care providers can be presented as a spectrum of choices. Today, in California, there are only six health insurance carriers left --- and only two are non-profits.

Buyers can select what they feel will best meet their needs. There would be a system of tax credits or outright subsidies to pay for this, but the starting point for funding would come from what we now pay in health insurance premiums. There would still be premiums to pay, but they would be different for each individual depending on what policies they happened to choose and how much their employer contributed. For the unemployed, there would be an opportunity to enroll in a government-subsidized system"...an expansion of Medi-care or the Veterans' Administration program.

Today, there is a working model for this system, and it operates in Switzerland. Swiss citizens have what amounts to a government-subsidized private insurance system that allows for consumer-driven choices and that results in healthier people at a far cheaper cost.

Unfortunately, today's presidential candidates are predictably vague on what they will be recommending as a fix to this $2 trillion dilemma. It will be interesting to see if the corporate ballot box, where people get to vote with their money, proves to be a more powerful agent of change than our current political structure.

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