Shouldn't the private sector be solving the health care problem?

• Author: Sharkey, William H.

Shouldn't the private sector be solving the health care problem? The nation's rising health care costs and the effect on the private sector is a national problem that certainly justifies a sense of urgency. It's a problem that, if left unresolved, could lead to fiscal disaster for many businesses in this country. How we in Corporate America resolve the issues surrounding health care now will have a very significant impact on our position in the 21st century.

There is ample evidence, both numerical and anecdotal, that employers indeed do have a crisis on their hands:

* Last year, AT&T paid roughly $1 billion in health costs for its 300,000 employees.

* General Electric paid $950 million in 1988 for employee health coverage--17 percent more than in 1987. And GE expected its annual health care costs to rise by 20 to 25 percent for 1989, an annual jump of roughly $200 million.

* The problem may be more acute for small and medium-sized companies. In a recent page-one feature, The New York Times told the story of Mitchell Black, the owner of a small printing company with six employees in New Jersey. Black is losing sleep because he can't afford to pay $5,100 every three months for employee health insurance.

* According to some estimates, health benefits cost companies, on average, more than $2,700 per employee in 1989. This year, the cost of health benefits per employee is likely to go beyond $3,000.

* To make matters worse, the federal government clearly is committed to shifting more and more of the health care cost burden onto Corporate America's shoulders.

There are many reasons for the extraordinary increases in costs: new medical advancements in technology and treatment, an aging population that requires more care, and an overly litigious society that has caused care-providers to practice a defensive and exceedingly expensive type of medicine. Together, these factors add billions to our health care costs.

But regardless of the reasons, what I've described, in short, is every financial officer's nightmare: a large and rising overhead cost that can't be controlled or avoided.

Moreover, the threat posed by these soaring costs isn't simply to the stability and survival of individual companies. The threat is to our national prosperity. Last May, the National Association of Manufacturers declared that health benefit costs were "out of control." The Association warned that health care costs alone could threaten the nation's ability to compete in global markets; they could blunt the competitive edge that all of us are trying to achieve.

This litany of woes has caused employers to seek any cure, to try anything that will remove the problem from their balance...