Big business group urges cost cutting to pay for health overhaul

Big business is taking advantage of the August recess to speak out on health reform legislation.

John Castellani, the president of the Business Roundtable, told reporters today that health reform legislation should include mechanisms to finance coverage expansions largely through cost savings inside the health care system and should preserve ERISA, the 1974 federal law that regulates most private employee health plans.

The Business Roundtable is a coalition of CEOs of American companies who represent more than $5 trillion in revenue and 10 million employees. It includes companies such as Wal-Mart, Yahoo! Inc., WellPoint, Shell Oil, Pfizer, News Corporation, Medco, Aetna and many other large corporations. 

About the current push to overhaul the nation's health care system, "companies have a stake in getting it right," he said. "We believe in reform and we believe it can happen now." He also said ERISA's preservation is key to a successful overhaul. "It is the foundation of our health marketplace, and we cannot let it be eroded."

The House bill "contains a number of costly and unacceptable changes to ERISA that will undermine the ability of our companies to sponsor health care coverage for their employees and their families. … We need the kind of flexibility that ERISA gives us to be able to have a program that works for all of our employees and their families and not have to deal with state-by-state-by-state mandates that cause us to have 50 different plans rather than the one plan that we can afford."  Castellani wasn't specific about how he would like to see the House bill changed.

The Finance Committee is "closer to getting it right than any of the other bills that exist right now," he added.

Additionally, "the employer community is united in the belief that we must achieve real and permanent cost cuts in the system to avoid the continuation of cost-shifts to other payers," he said.

He also called for all parties to remain at the table. "Everybody needs to be a part of the solution in order to get higher quality care," he said, adding that his organization has been in "near-constant communications with the White House and Congress."

He warned that reform proposals involving an employer mandate to provide coverage for employees or face paying the cost of the subsidies for them -- the so-called "free-rider provision" -- have to be crafted in a manner that doesn't incentivize employers to drop coverage and doesn't overly penalize employers who can't afford to provide coverage. "What we know about 'free-rider' at this point -- we don't know everything, it's not all set in the details -- but we know the direction they're going and we think it could be worked out to be acceptable to us," Castellani said.

He dismissed as "unfounded" the idea that the "free-rider" approach would make it less attractive to hire poor single mothers or minorities who may make less than 300 percent of the poverty level. "Frankly I thought it was not true," he said. And, at that income level, they would qualify for a subsidy.

By Andrew Villegas, The Kaiser Family Foundation