Business Roundtable Report Shows Health Care Costs Will Skyrocket to Nearly $29,000 per Employee in the Next Decade Without Effective Reform

A new report released today by Business Roundtable, an association of chief executive officers of leading U.S. companies, finds that annual per employee health care costs will triple to nearly $29,000 over the next decade without significant marketplace reforms that reduce costs, expand coverage and improve delivery. These runaway costs, combined with a $56 billion cost shift to payors from uncompensated care, are threatening the employer-based system that currently provides coverage for the majority of Americans and their families.

"The debate over health care reform is at a critical juncture. Our report shows that without effective reforms, employment-based health costs will almost triple from $10,743 per employee today to $28,530 by 2019[1]," said Antonio M. Perez, Chair of Business Roundtable's Consumer Health and Retirement Initiative and Chairman and CEO of Eastman Kodak Company. "Maintaining the status quo is simply not an option. These costs are unsustainable and would put millions of workers at risk. But it's not too late to act. As business leaders, we are committed to safeguarding the coverage we currently provide, while creating a more efficient system. There are many reforms we can and should undertake to protect Americans and their health and well-being."

The findings of the report conducted with Hewitt Associates, Health Care Reform: The Perils of Inaction and the Promise of Effective Action, were highlighted this morning by Perez and Ivan G. Seidenberg, Chairman of Business Roundtable and Chairman and CEO of Verizon Communications.

"The costs of the U.S. health care system have put America's companies and workers at a significant competitive disadvantage in the global marketplace," said Seidenberg. "Failure to implement reforms that address inefficiencies will erode U.S. economic competitiveness at a time when our nation can least afford it."

Employers provide 60 percent of all health care coverage in the United States, with Business Roundtable's member companies providing health coverage to more than 35 million Americans.

The report finds that the current U.S. health care system provides incentives that are often misaligned and prevent traditional market forces from curbing costs. Business Roundtable believes the following structural changes are imperative if we are to reduce health care costs and create an efficient system. Policymakers must:

-- Reform the delivery system by changing Medicare reimbursement, shifting away from a fee-for-service model to one where the incentives are aligned to reward providers for quality and value in the delivery of coordinated care;

-- Address the rising cost of health care so that more Americans can afford coverage and so that the $56 billion cost shift from uncompensated care to payors can be eliminated; and

-- Reform insurance markets to create a competitive marketplace that guarantees people can obtain coverage and the coverage is without restrictions on pre-existing condition coverage.

"Business Roundtable is committed to working with Congress and the Administration to achieve effective, bipartisan health care reform that builds on the successes of the employer-based system while fixing what doesn't work," said John J. Castellani, President of Business Roundtable. "The time for health care reform is now, but how we get the job done has never been more important. The well-being of Americans and their families and the competitiveness of American companies are at stake."

To access the full report, visit www.businessroundtable.org.

About Business Roundtable

Business Roundtable is an association of chief executive officers of leading U.S. companies with more than $5 trillion in annual revenues and nearly 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and pay nearly half of all corporate income taxes paid to the federal government. Annually, they return $133 billion in dividends to shareholders and the economy.

Business Roundtable companies provide health care coverage to more than 35 million employees, retirees, and their families.

Please visit us at www.businessroundtable.org, check us out on Facebook and LinkedIn, and follow us on Twitter.

About Hewitt Associates

Hewitt Associates is a global human resources outsourcing and consulting company, providing services to major employers in more than 30 countries and employing 23,000 associates worldwide. This report draws heavily upon the experience of Hewitt's consultants and actuaries who have extensive knowledge of--and direct experience with--the employer-sponsored health care system, the health insurance marketplace, and the emerging market trends and strategies aimed at broadening access, controlling cost, and improving the health and productivity of the U.S. workforce. Hewitt administers health plans for more than 200 large employers, representing over 6.5 million participants. They also created and maintain The Hewitt Health Value Initiative(TM) database, containing detailed census, cost, and plan design information for 325 large U.S. employers representing 13.1 million participants and $50.5 billion in 2009 health care spending.

Learn more at www.Hewitt.com. Check us out on Facebook and LinkedIn, and follow us on Twitter.

[1] This figure assumes the current annual cost trend rate of 10.2 percent will continue for the next 10 years.