The Nation's Pulse

Devilish Details

Business leaders are striking a Faustian bargain on healthcare reform.

By 6.17.08

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Labor unions and business leaders rarely see eye-to-eye. But these normally disparate groups recently teamed up to urge action on health reform. If their venture succeeds, the business community likely will remember the move as a serious political miscalculation.

Four groups have joined together in a campaign called "Divided We Fail" to show that employers, employees, and labor unions all place a high priority on health and employee benefit reform. They include the Service Employees International Union (SEIU), the AARP, the Business Roundtable composed of corporate CEOs, and the National Federation of Independent Business (NFIB).

What the SEIU and AARP stand to gain is obvious. Many rank-and-file members of the 1.9 million-strong SEIU are service industry workers who lack health insurance. The same can be said about many of the early-retiree members of the AARP.

Although Medicare covers the vast majority of Americans over age 65, some AARP members are too young to qualify and don't have or have lost their job-based coverage. Both the union workers and early retirees are looking to government for solutions.

As for the NFIB and the Business Roundtable, the employers that these organizations represent are desperate for solutions to their ever-rising employee health costs. The NFIB says the campaign provides a national platform to talk about why small business is so important to America and why rising health costs continue to be the number one concern of small businesses. The Business Roundtable sees it as a way to "catalyze new thinking" about high health costs.

WHILE THE LABOR unions, the AARP, and the big and small business groups may seem to have common problems and even goals, they will find it very difficult to reconcile their principles when they get down to the task of actually talking about solutions.

We can see the evidence from looking at the other agendas of these strange bedfellows, especially the SEIU. Its Vision for Reform calls for "a universal health care system" with "guaranteed affordable health coverage for all Americans" and a "core health care benefit similar to the one that is available to federal employees."

The SEIU certainly has no qualms about forcing employers to pay for health care. The union spearheaded Maryland's so-called "Wal-Mart Bill," which required the mega-retailer to spend at least 8 percent of its payroll on health insurance. It was overturned in the courts as violating federal law, but the union nonetheless is pressing on in other states.

The joint "Divided We Fail" campaign also calls for making affordable health care available to everyone. But who is going to pay for that health insurance?

Regardless of the business community's wishes, legislators inevitably would require employers to contribute. Indeed, every recent push for universal coverage has included a "play or pay" mandate requiring businesses to either provide insurance to their employees or pay a fine or a fee toward a public insurance pool.

Witness Massachusetts, which enacted a sweeping overhaul of its health sector in 2006. The legislation contained the simple statement that employers must make a "fair and reasonable" contribution to their employees' health insurance -- health insurance that every resident of the state is now required by law to have.

The result? Massachusetts employers must pay at least half of the premiums, and the share is likely to increase with the escalating costs of the plan.

It's understandable that businesses want urgent action on health issues. The price of employment-based health insurance has increased nearly 80 percent since 2001, according to the Kaiser Family Foundation. But the agendas of the SEIU and the AARP are out of sync with the needs of American businesses.

Principles matter. Bringing competition and choice into our health sector to get prices down would be a much more powerful force than more government control and expensive new mandates on employers. In its unorthodox attempt at unity, the business community could unwittingly provide political cover to special interests with a decidedly anti-business agenda.

Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on free-market solutions to health reform.

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About the Author
Grace-Marie Turner is president of the Galen Institute and a co-author of Why ObamaCare Is Wrong for America (Broadside/HarperCollins, 2011).