Healthcare reform's unlikely ally: big business

A big-business coalition, breaking ranks with smaller firms, will lobby Sacramento and D.C. to expand coverage to all.

By Jordan Rau, Times Staff Writer
May 7, 2007

SACRAMENTO — Abandoning the business lobby's traditional resistance to healthcare reform, a new coalition of 36 major companies plans to launch a political campaign today calling for medical insurance to be expanded to everyone along lines Gov. Arnold Schwarzenegger is proposing for California.

Founded by Steve Burd, chairman of the Safeway grocery chain and an ally of the governor, the coalition could boost efforts in Sacramento and Washington, D.C., to overhaul healthcare laws. It also formalizes a growing division over the issue among businesses.

The coalition includes some of the nation's largest companies: PepsiCo, General Mills, Pacific Gas and Electric Co., Wm. Wrigley Jr. Co., The Kroger Co., a number of Safeway vendors and grocery item manufacturers such as Bumble Bee Seafoods LLC.

It also includes insurers and drug firms that probably would benefit from mandated health insurance: Aetna, Blue Shield of California, Cigna HealthCare, Eli Lilly and Co. and PacifiCare.

Such large firms already provide medical coverage to their employees and have become increasingly frustrated as premiums have increased over the years. That has made them more willing to look to the government for solutions.

But small and midsized operations, such as restaurants and retail stores that usually don't provide coverage, have resisted wholesale changes to healthcare laws.

California's Chamber of Commerce and the state's restaurant association led the successful ballot fight in 2004 to repeal a state law requiring companies with more than 50 workers to provide insurance.

The chamber and restaurant group are skeptical of Schwarzenegger's proposal and those offered by Democratic legislative leaders.

Schwarzenegger's plan would require all individuals to obtain health insurance, hospitals and doctors to subsidize insurance for the poor, and companies to spend a set amount on employee healthcare.

The Democrats who dominate California's Legislature have several proposals that include similar requirements for employers but do not insist that everyone get insurance.

Schwarzenegger's proposal to insure everyone in California, unveiled in January, was influenced by Burd's views. The governor was particularly drawn to financial incentives instituted for Safeway workers to encourage them to seek preventive care, stash money for future illnesses and address ailments such as diabetes before they become debilitating. Schwarzenegger has incorporated such ideas into his proposal.

Burd's group has embraced two of Schwarzenegger's central concepts: requiring everyone to be insured and providing financial assistance to the poor to help them purchase coverage.

That framework also forms the basis of a proposal in Congress, sponsored by Sen. Ron Wyden (D-Oregon), that has some bipartisan support. But the coalition's "core principles" steer clear of how to pay for subsidies and what requirements, if any, need to be placed on the nation's employers.

Burd said he hoped that his Coalition to Advance Healthcare Reform would help employers see that inaction would be devastating.

"Most people believe [healthcare reform] does not get done without good business support," Burd said, "and we've assembled a coalition of people who believe business has a responsibility to make sure people get the healthcare coverage that they need."

The coalition is the latest to form this year as lawmakers face off over a plethora of proposals to overhaul the healthcare system. AARP, which has 3 million members over 50 in California, last week launched a television campaign to encourage state lawmakers to provide "quality, affordable healthcare now."

A number of unions, insurers and healthcare providers have their own coalition to encourage action on the state and national level.

The coalition intends to press state and federal lawmakers beginning today in Washington, D.C., and in Sacramento on Thursday. Burd said he already is talking to legislative leaders in both places and hopes that as the coalition grows, its influence will expand.

In Sacramento, the coalition could lean hard on Republican legislators, who have come out against the idea of forcing people to buy insurance. GOP leaders — who side with business on many issues — say it is unrealistic to aspire to universal coverage. Instead, they say, the state should emphasize better access to medical care.

"For Republican legislators, the business community has been an important constituency," said Adam Mendelsohn, Schwarzenegger's spokesman. "And when you have businesses standing up and saying, 'The healthcare system is problematic for us; fix it,' that presents a dynamic that has been missing in previous healthcare debates."

But Scott Hauge, director of Small Business California, an association with 2,700 member companies, said Burd's effort drives a "wedge" into the business lobby that hurts his efforts to press legislators to contain rising healthcare costs.

He said that when Schwarzenegger announced his plan, Burd publicly said its requirement that employers spend at least 4% of payroll on healthcare was too low.

"When you get Safeway going out saying it should be more, they're chopping our knees off," Hauge said.

But Burd said that the climbing cost of healthcare is an "emergency," adding that by 2015 costs will eat up 22% of the country's gross domestic product, damaging corporate competitiveness worldwide.

"By next year, the average Fortune 500 firm will have a healthcare bill that exceeds its net income," Burd's coalition says in its statement of principles.

Burd's political efforts have drawn derision from Safeway workers, who accuse him of hypocrisy.

That is because the company, which is based in Pleasanton, Calif., and other grocers are in a dispute with unions over how long new employees must wait to acquire health benefits, among other issues. Hourly employees wait a year or more; their families wait 30 months.

"This is coming from the guy who eliminated healthcare" for thousands of workers in Southern California, said Michael Shimpock of SG&A Campaigns, a Pasadena media and political consulting firm hired by the United Food and Commercial Workers union to speak about the negotiations.

"I would be very dubious before I would accept" the coalition's position at face value, he said.

The coalition says its members employ more than 1.7 million workers, and 18 of the companies are among the Fortune 500's biggest firms.

"I think we're going to find that as the debate gets louder and because the cost associated with healthcare can't continue to climb the way it has, you're going to see more employers get engaged," said Ed Hanway, chairman of Cigna Corp., which provides insurance for Safeway's managers and salaried workers.

jordan.rau@latimes.com