3-02-06, 10:05 am

Thirty percent of the nation’s Chief Financial Officers (CFOs) are ready for Congress to consider a national health care plan, the highest percentage ever recorded by the annual survey of U.S. senior finance executives conducted by CFO magazine. Twenty-three percent say they “are not sure” about a national plan; 45 percent are opposed.

The business community has long rejected this obvious solution to the growing health care crisis in the U.S., but there is a simple explanation for this new level of support. Eighty percent of the CFOs report that they are concerned about the effect of rising health care costs on profits.

In the post-Sarbanes Oxley environment, CFOs have more power and influence in U.S. companies than ever before. As the chief executive for a company’s finance and reporting function, the CFO has the greatest awareness of the impact of benefit costs and liabilities on the organization’s earnings and long-term prospects. CFO support for a national health care plan carries tremendous significance. These same CFOs report that in 2006, their companies will once again tap every cost-shifting vehicle to push more health care costs onto workers. Almost two-thirds say that they will increase co-payments and deductibles. Six out of ten say they will raise employee contributions to health insurance premiums. Almost half say they will use health savings accounts, the first step in installing the new high-deductible “consumer driven” plans now promoted by the Bush administration.

Other evidence of employers’ ongoing determination to cut their share of health benefit costs comes from the annual BNA survey of employer bargaining objectives. Cutting health benefit costs stands at the top of the employer agenda for contract negotiations in 2006, with two-thirds of surveyed employers indicating that this is their top priority.

Provisions for cost shifting in new contracts will be a top goal, the BNA survey shows. Although most covered workers already contribute to health insurance costs through co-payments, deductibles or premium contributions, more than three in five employers will bargain to either increase workers' existing payments (48 percent) or add new cost-sharing provisions (14 percent) in 2006. Seven in ten manufacturers (69 percent) plan to bargain for higher employee health care contributions.

Health provisions most commonly targeted for cuts in the 2006 bargaining round include prescription drug coverage (28 percent), doctor visits (25 percent), hospital coverage (22 percent) and surgical coverage (21 percent). Other areas that top employers' lists for winning concessions include pensions/retirement (29 percent), wages (28 percent), job security (17 percent) and paid leave benefits (16 percent). As noted, health care/insurance led all priority areas (67 percent).

Employers will also attempt to hold wage increases in the three percent range, which means that real wages will continue to decline. With inflation now running at an annual rate of four percent, workers will see their real wages drop by more than one percent when increased health care contributions are factored into the equation.

The consumer-driven plans now promoted by the Bush administration and the employer camp leave employees facing huge deductibles but only slightly lower premium payments. A survey by Mercer reports that the average monthly employee contribution for family coverage is $290 for a PPO plan, $266 for an HMO, and $206 for a consumer-driven plan (CDHP). As a percentage of the total premium paid, the employee contribution for a CDHP is 35 percent, compared with 33 percent for a PPO or HMO plan, and the CDHP carries disastrously high deductibles.

The health care crisis is only growing worse. Although the annual double-digit increases in health benefit costs moderated somewhat in 2005 and should remain at still high but more moderate levels in 2006, experts predict that cost increases will jump back up to double-digit levels in 2007.

The Centers for Medicare and Medicaid reported in February that health care will suck up 20 percent of total GDP by 2015, up from its current 16.2 percent level. Annual health care costs will reach $12,320 per person by 2015. This will be a disaster for the economy as a whole and particularly for middle and low income Americans.

The only real solution to unbearably high cost-sharing for workers with health insurance is for unions to join forces with the substantial part of the employer community that is ready to support a national health care plan.

From Labor Research Association