U.S. News

Healing Healthcare: Prescriptions For Success

By CNBC.com Staff

Healthcare reform may finally be on the way. With Democrats controllling Congress and both political parties gearing up for a presidential election, the issue is moving to the fore. What's more, American business is also pushing the issue, with both big and small companies getting involved.

Health insurance expenses are the fastest growing cost component for employers, according to a McKinsey and Company study. Since 2000, premiums have increased 87%, compared to cumulative inflation of 18%.

U.S. health care spending is projected to reach $2.9 trillion in 2009.  Healthcare in the U.S. consumes far more of the nation's GDP, for instance, than other G7 nations such as Germany, France and Canada. Yet at the same time, about 47 million Americans --roughly one out of six -- are uninsured, which is priced into the system.

The bottom line is that a largely private sector-based healthcare system is not cheaper than a government funded one and it certainly is not an egalitarian one. .

In Britain, for instance, 11% of a taxpayer's income to a certain level, goes directly to National Health System. Private plans also exist, but they're considered supplemental.

The U.S. healthcare system is a drag on corporate profits, national competitiveness and government budgets.

Given that backdrop, there's a growing sense that some form of universal health care system is needed, regardless of where the money comes from. Who pays is indeed another -- and equally complicated -- question.

Business, which supplies 60% of the nation's healthcare, is ready to back reform efforts. No national plan has yet to emerge, but states such as Massachusetts and California are making progress.

There's no shortage of opinions out there, either, but it's part of a constructive dialog.

Take Robert Crandall, former chairman and CEO of AMR, the parent company of American Airlines, for example.

"I want to put everyone on Medicare," Crandall recently told CNBC. Medicare works." 

Crandall says Medicare, the federal government's health insurance program -- which covers about 40 million Americans, most of whom are 65 years of age and older -- has administrative costs that are 20% that of private health insurance.

"You save billions of dollars on administrative cost." says Crandall. "If we fund Medicare properly, we'd have a very satisfactory system. "

CNBC undertook an indepth series, "Healing Healthcare", to look at what business and government are doing to address the problem. Here's a roundup of Bertha Coombs' reports.

Health Coaching

Part 1 -- Health Coaching

With as much money as employers are spending in health care, some are taking a hands on approach.

UPS, for one, it trying to help employees get healthier through a "health coaching" program, which will also help lower healthcare costs. The company's program has been underway for a year and is entirely voluntary. Two-thirds of US companies either have or plan to implement such programs.

Health coaches have access to employee health records and then target high-risk individuals, calling them directly to address health hazards and/or concerns. The goal is to get the employee on the healthy track and in turn, save the company money.

Healthy Dose of Venture Capital

Part 2 -- Healthy Dose of Venture Capital

Venture capital invested $2.8B in health care companies in the first quarter of this year - the most ever. With more and more VC money pouring into healthcare, there's a new emphasis on cutting costs with more efficient technology.

Electronic medical records, for instance, coud play a critical role in reducing costs but it will require an enormous upfront investment. Medicare will soon offer free software to get doctors to use its electronic system.

Meanhile, one VC firm, Boston Millennia Partners, has invested in a technology that is changing the way the Leahy Clinic operates.

Watch this space in the coming days for more of Coombs reports or catch them live on CNBC's "Power Lunch".

Costco's Alternative Healthcare

Part 3-- The Costco Solution

The warehouse giant may have a cure for small business.

The Washington-based company now offers small business health and dental plans in its home state as well as Oregon, Washington, Nevada, Hawaii and California.

Costco's insurance arm says it offers competitive rates and desirable deductible levels as well as a wide selection of providers.

John Conlon, the company's director of insurance services, says expanding the program has been hard  because "each state is individually regulated."

Find out how it made a difference at two companies -- G.G. Consultants and Mattress Depot USA.

"Healthy" Profits

Part 4 -- Business Steps Up

From small business owners to Fortune 500 CEOs, business leaders are among the loudest voices calling for universal healthcare these days.

“I think we're really at the stage where the issue has to be addressed,” says Carl Highsmith, who runs the 500-employee Specialty Packaging Group in Connecticut.  “It's why I've become so active in advocating for universal healthcare system because I think it's vital to our competitiveness."

When his healthcare costs doubled in five years, Highsmith decided to self-insure and push for reform

General Mills CEO Stephen Sanger has become an outspoken proponent of reform, who is calling for a national system to cover the millions of uninsured but still let’s businesses maintain their private health plans.

'How to do it is complex and there could be unintended consequences but I think we've got to find a way to do that," says Sanger.