CEOs and ObamaCare

An internal revolt at the Business Roundtable over support for ObamaCare.

One lesson that Democrats learned from the failure of HillaryCare in 1994 is that they had to buy the silence, if not the outright support, of the business class. They've done this brilliantly by peddling the illusion that ObamaCare will "lower costs" for employers.
But slowly as the legislative details become clear, it is dawning on executives of businesses large and small that reform is boiling down to a huge tax increase to finance a gigantic new entitlement. The cost and quality of care are afterthoughts that will both suffer, as a growing roll of medical experts have been writing on these pages.
The tragedy is that ObamaCare is not inevitable and far better reforms are still possible—but only if the current version is defeated and Democrats are forced back to the drawing board. With only a few exceptions, drug makers and health-care providers have shown that their priority is rent-seeking from government, which means that any last-minute push back will have to come from the other six-sevenths of the economy.
The Chamber of Commerce and National Federation of Independent Business have finally figured out they were being taken for a ride. And now even the Business Roundtable, the association of CEOs from the largest companies, is engaged in a furious internal debate about the way forward. The Roundtable has been vaguely supportive but restive. But last week Roundtable president John Castellani was informed in a contentious conference call that many of his members will quit if the organization isn't more assertive against ObamaCare.

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Associated Press

Business Roundtable President John Castellani

What the executives leading the revolt understand is that the current reforms bear no resemblance to the more rational system the Roundtable favors. As Ivan Seidenberg of Verizon accurately put it in September, "The problem with the health-care market in this country is that it doesn't really function as a market—leaving major consumer needs unmet, costs unchecked by competition, and basic practices untouched by the productivity revolution that has transformed every other sector of the economy."
Yet in Congress the market-based policies that could encourage such changes have been ignored, dumped or converted into timid pilot programs. Instead of increasing the competition and consumer choice that would result in better value and reduce the annual double-digit cost increases in health spending, ObamaCare will simply expand the status quo and make it more expensive.
Roundtable companies sponsor health insurance for some 35 million employees. Not only would their wages continue to be depressed as costs continue to accelerate, but large and unpredictable costs would remain on corporate balance sheets.
Most Roundtable members also self-insure under the 1974 law known as Erisa that allows large corporations to offer national insurance largely free of regulatory interference. This flexibility will be undermined with mandated benefit packages and limits on employer ability to innovate with consumer-directed health plans. The most powerful Democrats simply have no appreciation for—or interest in—how a decentralized approach like Erisa could make health care more affordable and result in the coverage expansions that corporate America generally favors.
The larger issue for business is the productivity and competitiveness of the U.S. economy. Democrats are about to pass the largest entitlement expansion in more than four decades when federal spending is already at unprecedented levels. The "pay or play" tax on employers and the hike in payroll taxes on top earners in the House and Senate bills are merely teaser rates. The long-term pressures created on the federal fisc would require enormous tax hikes that would depress capital investment and economic growth, to say nothing of the Roundtable's priority of reducing U.S. corporate tax rates that are among the world's highest.
The tendency among business groups is usually to conciliate and speak the language of consensus—especially with Democrats running all of Washington and able to do great harm to anyone who doesn't cooperate. And no doubt the Roundtable is hearing from the CEOs of companies like Pfizer, Wal-Mart and General Electric that are deeply invested in more government control of the economy. Other members favor making marginal improvements to a faulty bill, on the theory that it's a fait accompli anyway.
Yet if the Roundtable in particular and business in general would invest their advertising dollars, lobbying expertise and prestige into a concerted campaign, there is still a chance to move public opinion enough to stop this destructive bill. That would force the Democrats on the left who are driving this process to work with moderates in both parties to focus on meaningful cost control and better value.
Democrats have defined success as dragging any bill into law as quickly as possible, no matter how damaging, while leaving the mess it creates to be cleaned up in the future once the entitlement is entrenched and higher taxes are inevitable. The only way to prevent that outcome is to force them to start over.
The choice isn't between the status quo with all its flaws and ObamaCare. It's between ObamaCare, and a better reform alternative.