B.E. 100s CEOs speak out on health reform; the leading African-American chief executives debate the merits of employer-mandated health care proposals - Black Enterprise's list of the top 100 corporations

Black Enterprise, June, 1994 by Marjorie Whigham-Desir

The leading African-American chief executives debate the merits of employer-mandated health care proposals.

SINCE THE UNVEILING OF THE HEALTH Security Act last September, the debate over President Clinton's proposed plan has often centered on the ability of small business to pay for employer-sponsored health insurance. The argument? Most small businesses cannot afford employee health insurance. And to mandate that they pay for it will force some companies to cut jobs or, worse, go out of business.

But the facts don|t necessarily bear this out. According to the Bureau of Labor Statistics, 71% of full-time employees at companies with fewer than 100 people had some form of health care coverage in 1992. About 5% of part-time employees at companies with fewer than 100 workers received health insurance through their employers. According to the Employee Benefit Research Institute, for 81.1 million workers, or 71.9% of the U.S. workforce, employers are the primary source of health insurance benefits.

Where do BE100 companies stand in the debate? An informal sampling of BE100 CEOs found that, for most companies, the issue was not whether every one deserves health insurance. Instead, the CEOs questioned the extent to which employers would have to participate, how flexible the cost of coverage would be and how good the quality of benefits would end up being.

At the center of the debate is the Clinton plan, which calls for universal health insurance via employer-mandated coverage with a standard package of benefits that businesses would buy through regional purchasing alliances. A national health board would determine the budget for health care coverage and make changes in benefits. Employers would pay 80% of the premium for full-time employees and a prorated share for part-timers, with a cap on premium contributions ranging from 3.5% to 7.9% of payroll--depending on the size of the company and the average wage paid. States would be required to enact legislation that would make health care reform possible by 1998. O ther proposals have been put forward, including a "single-payer" universal system like Canada's in which the federal government would finance all medical care via federal taxes. Two other proposals--the Cooper plan introduced by Rep. James Cooper (D-Tenn.) and the Chafee plan proposed by Sen. John H. Chafee (R-R.I.)--offer variations on the Clinton plan. For instance, the proposals include: mandatory health care purchasing groups for companies with fewer than 100 employees; a standard benefits package to be approved by a health care standards commission; and voluntary employer participation in health care purchasing alliances. While the Chafee plan guarantees universal coverage through individual mandate, the Cooper plan only proposes universal access. However, neither the Cooper nor the Chafee plan has caps on health care premiums because neither plan requires mandatory employer participation.

Since most businesses, large and small, offer some health care benefits, the real issue that has been a thorn in the side of most companies is an ideological one. Should government determine what benefits companies should offer their employees and force employers to pay for and participate in that system?

In testimony given last October in a joint hearing before two subcommittees of the House of Representatives Committee on Energy and Commerce, Luther M. Ragin Jr., vice president and chief financial officer of Earl G. Graves Ltd., pointed out that the debate over health reform should not center on whether the current health care system needs changing, but how to accomplish it. "Our company believes that universal access to quality, cost-effective health care, combined with individual responsibility are critical elements of any reform package," said Ragin.

All BE 100 companies surveyed offer health insurance, subsidizing 50% to 100% of the cost of the plans. Some employers say they subsidize employees only; others also finance costs for family coverage. The former say they make family coverage available so that employees can purchase extra coverage at their own expense. * Universal coverage, yes; employer mandate, maybe. No one argues that universal health care coverage isn't needed--or wanted. The question is: Who should pay for it?

Clara Taylor Reed, CEO of Belzoni, Miss.-based Mid-Delta Home Health Inc., says she personally supports universal coverage "because all people deserve quality, preventive care." Reed currently covers 100% of employee medical premiums at her 345-employee home health care and medical equipment and supplies company, but she doesn't contribute to family plan costs. Her 29 part-time employees who work at least 35 hours a month are also covered.

For companies like Mid-Delta that can afford higher benefit costs by charging higher fees to their customers, the cost of health care isn't as much of an issue. Floyd Gary Thacker, president and CEO of the Atlanta-based construction firm Thacker Engineering Inc., also believes that universal coverage is needed, even with an employer mandate. "If [universal coverage] increases the pool [of insured employees], it may decrease the cost to employees", says Thacker, who splits the cost of premiums 50-50 with his 126 staff employees. "If we have to, we can afford to [insure all workers], but we'd pass the costs along to the client."