Executive Summary

The Problem That Won't Go Away

Kenneth A. Macke
Chairman & CEO of Dayton Hudson Corporation

March 1992

As a nation, we spend 14% of our GNP for health care. And yet, medical care effectiveness in the United States is no better than other nations that are spending as little as one-third of what we spend.

The experts estimate that if we don't do something about this, annual medical expenses in our country will exceed 20% of GNP by the year 2000. 1 am equally alarmed that an estimated 37 million Americans do not have access to medical insurance.

Reform will mean sacrifices by all segments of the medical treatment chain: providers, payers and users. Because of the depth of the problem and because of the rapid escalation in costs which will continue if we do not intervene, it is paramount that changes occur as soon as possible. Waiting another three or four years will allow spending to double again and will hurt those who are unprotected.

Given the gravity of our situation, Dayton Hudson is aggressively participating in various coalitions whose purpose is to bring about health care reform that results in quality health care, delivered in the most economical manner to all Americans.

Although reform in Minnesota may be underway, nationwide reform is essential. We are a national economy; employers and medical providers alike operate across state lines. We have a mobile population with millions moving annually from state to state. The need for universal coverage will be met only if there is national reform. If 50 states form 50 separate systems, we will have even greater chaos then we have now.

We are so convinced that a nationwide reform is essential that we are members of the National Leadership Coalition for Health Care Reform. After two years of study, that coalition developed a proposed strategy for universal coverage and major reform.

The reform proposal we advocate has eight interconnected elements:

• Initiatives to improve the quality of health care.

• Universal coverage with a funding mechanism.

• Cost control through spending limitations.

• Organized delivery systems for efficiency, quality, and accountability.

• Management and oversight.

• Insurance reform.

• Malpractice reform.

• Administrative simplification.

The financing of the plan would occur as follows:

• All employers offer health insurance or make a 7% of payroll contribution to the public plan.

• Employees above poverty pay either 20% of the premium if insurance is offered, or 1.75% of their salary if the contribution Option is selected.

• All employers contribute 0.5% of taxable payroll to fund the public plan.

• All employees contribute 0.5% of their taxable payroll to fund the public plan.

Because of the nature of our particular coalition, we have a chance to mobilize the private sector and to work with government to achieve these necessary reforms. We are dedicated to help bring federal and state government, and the private sector together around this task. The problem will not go away, but a solution is within our reach.

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