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Center for American Progress

NEW REPORT – Businesses Speak Out About Health Care
Press Release

NEW REPORT – Businesses Speak Out About Health Care

New Center for American Progress study examines 10 businesses and their health care programs

Washington, DC—Businesses are the backbone of the U.S. health insurance system, providing health benefits to nearly 175 million Americans as part of workers’ total renumeration. Yet, ever-escalating health care costs are placing a huge strain on employment-based health insurance while leaving nearly 45 million other Americans without any health insurance whatsoever.

A new Center for American Progress report provides key insights into the challenges facing employer-based health insurance. Through extensive interviews, these case studies highlight companies’ decisions about how (or whether) to offer employee health care packages and their strategies for determining how (or whether) to provide health benefits amid rising costs over time.

This paper examines 10 different kinds of businesses, including two large multinational corporations, two medium-sized companies, and six small businesses. These 10 busi¬nesses, based in different parts of the country, are engaged in manufacturing, technol¬ogy development, retail sales and services, education, staffing, and the media. They include a local grocery store and a gift shop, a global technology manufacturer, and a worldwide retail store operator.

“Employer-sponsored coverage is and so far remains the backbone of our health insurance system—but that back is experiencing a lot of stress and pain,” said Karen Davenport, Director of Health Policy for the Center for American Progress.  “As we look towards fundamental change of our health care system, it’s imperative to understand the dynamics of employer-based health insurance, and learn from businesses’ actual experiences as they try to provide coverage to their employees and control costs.”

These case studies tell a compel¬ling story of the strain experienced by businesses under the current health care system, and offer possibilities for reform. Among the experiences that can be drawn from this survey are:

Substantial resources are invested by businesses in deciding on a health plan. Many small business owners pay an external broker, while larger busi¬nesses employ staff to specifically handle such decisions.

All businesses, regardless of size, are dealing with rising health care costs. Some businesses have decided to forgo offering health insurance to their employees, while others have increased cost-sharing with their employees. Larger businesses engage in utilization manage¬ment programs to control their health care spending, but medium- and small-sized businesses that offer health insurance often lack the time, resources, or expertise to engage in such management programs.

Health care costs, along with the re¬sources invested in making decisions on health plans, affect business as a whole. Employment decisions, product pricing, investment in research and devel¬opment, and other employee benefits are now weighed against the impact of rising health care costs.

Employee education presents a chal¬lenge for employers. Employees often do not appreciate health care benefits as part of their overall compensation, and are not always proactive participants in health care decisions.

High health care costs and the ris¬ing number of uninsured are two major areas for potential health care reform. Many businesses link these two problems because they realize that the uninsured ultimately generate higher health care costs through their inefficient use of the U.S. health care system—costs that are passed on to the insured.

A partnership between business and government is essential. Sustainable health reform will necessitate the involve¬ment of all players, including the govern¬ment, employers, providers, health plans, and patients.

All of the executives at the 10 businesses interviewed in these case studies recog¬nize that the current U.S. health insur¬ance system needs to be fixed. While there is no obvious consensus on what shape the reforms should take, what is evident to all of them is the need for a partnership between business and gov¬ernment. All of the executives recognize that sustainable health care reform is critical to their businesses’ productivity and competitiveness and will require the involvement of the government, employ¬ers, health insurance plans, health care providers, and patients.