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Employers Are Far From Unified Against Overhaul

By Alec MacGillis
Washington Post Staff Writer
Thursday, July 23, 2009

Even as the national business lobby ramps up its opposition to health-care reform, there are signs that employers around the country are divided on the issue, reducing the force of an opposition push.

The U.S. Chamber of Commerce launched an ad campaign this week, with its lobbyist R. Bruce Josten warning that Democratic bills would "take us to a government takeover of the health-care system."

Wal-Mart, on the other hand, recently came out in support of a mandate on employers to provide health insurance, and the temp firm Kelly Services, which employs thousands, followed with a similar statement.

Less noted has been the diversity of opinion among small and medium-size businesses. Many agree with the Chamber that a public insurance option would undermine the private insurance market and that requiring companies to provide coverage would impair job growth. Others say the current system is so broken that they are assessing whether to support the reform plans.

The wait-and-see approach that many businesses are taking -- alternately skeptical and hopeful -- is a further sign that the alliances that previously scuttled health-care reform may be scrambled this time around, not just in the health-care industry but also in the business world at large. President Obama and congressional Democrats face formidable obstacles to their reform efforts, but one factor in their favor is businesspeople who may not be as inclined as they were in the past to bring grass-roots pressure against reform.

While the business lobby warns of the devastation of the employer-based insurance system that now covers 177 million Americans, some businesspeople say it would not be so bad if insurance became less tied to the workplace. Others envision a system in which health premiums increase at a more reasonable pace.

Take the board of directors of the state Chamber of Commerce in Maine, a state whose moderate Republican senators are key to the health reform outcome, and one of five states where the U.S. Chamber is running print ads; the others are Arkansas, North Carolina, Colorado and Louisiana. Board members expressed varying degrees of support for the reform proposals and said there has been no effort by the Maine Chamber to lobby in opposition.

Mitchell Sammons, an executive at Sheridan Corp., a Maine building contractor, said that health premiums for the company's 90 employees have been rising and that a public option would bring needed competition to Maine, where the private insurance market is dominated by one or two companies.

Sammons, a Republican, dismissed worries that a public option would drive private insurers out of business. "They always find a way to make a buck," he said.

Jim Conlon, president of Bangor Savings Bank, said premiums are becoming harder to afford for the lower-salaried people in his 650-person workforce, such as "the teller whose husband's a fisherman." He likes the idea of a new insurance exchange that would draw more insurers into the market.

"If there's a bigger playing field with more competition . . . then that's a home run," he said.

John Oliver, vice president of public affairs for L.L. Bean, based in Freeport, Maine, said that the employer mandate is a "concept we do have openness to" and that a well-structured public option is a "reasonable goal."

He said the 5,000-employee company is open to a federal overhaul partly because of the mixed results of Maine's efforts to broaden coverage.

"Most in the business community here have come to the conclusion that it's tough to accomplish at the state level, so there's a looking to Washington to solve the problem," Oliver said.

Charles "Wick" Johnson, the president of Kennebec Technologies in Augusta, Maine, is bothered that his two daughters cannot afford health insurance as they start their own small businesses; he supports requiring coverage at all but the smallest companies. The House bill would mandate that companies with a payroll of at least $250,000 offer insurance or pay a fine from 2 percent to 8 percent of payroll. The Senate health committee's bill has a penalty of $750 per full-time worker and exempts firms with fewer than 25 employees.

"Three or four hundred thousand dollars [in payroll] is a relatively large company," Johnson said. "It makes sense to head in that direction."

Buttressing his view was a report released Wednesday by the Economic Policy Institute, a left-leaning think tank, which found that the House plan, with its insurance exchange and public option, would make coverage more affordable for small businesses that now face far higher health premiums than big employers.

National business groups see the mandate much differently. For all the complaints about rising premiums, they say, many employers prefer that insurance remain their responsibility so that they can control it.

Though they want to preserve the employer-based system, industry groups say it would be wrong to shore it up by requiring more employers to offer coverage. "We're among the fans of the employer-based health-care system . . . but we think the essence of the system is its voluntary nature," said Neil Trautwein, a vice president of the National Retail Federation.

John Mackey, chief executive of Whole Foods, said that while his company offers coverage, he worries that an employer mandate would lead to more stringent federal rules on what employer plans must include.

He said that would drive up the cost of employer benefits, motivating companies to end their benefits and instead let employees sign up for the public insurance option, figuring that paying a penalty would be less costly. This would result in eventual domination by the public insurance plan -- something Mackey suspects is reformers' secret hope.

"It's a Trojan horse," he said.

On the other side is Wal-Mart, which decided that it could support an employer mandate because it now covers an increasing share of its workers. Skeptics note that a mandate could hurt Wal-Mart's competitors -- smaller retailers that do not cover workers.

Kelly Services is supporting a mandate even though it covers only a few of the 650,000 people who work for the company in any given year, meaning that it would have to pay a penalty. Its calculation is that health-care reform would expand its talent pool because it would be easier for workers to purchase individual coverage, thus making them more open to temp work.

Josten, the Chamber lobbyist, dismissed the defections, saying that they are limited to a few companies and that Chamber groups across the country are fully engaged in the opposition push.

But in Arkansas, another state targeted by the U.S. Chamber campaign, there are signs that rank-and-file businesspeople are far from mobilized. The state Chamber of Commerce has been focused on defeating the pro-union legislation known as "card check." State Chamber President Randy Zook said there is no local anti-health-reform push planned. And while there are concerns about the bills, he is not sure how much unity there would be for such an effort.

"You've got a whole range of opinion that's going to be hard to reconcile," he said.

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