CEO confidence index: CEOs say "no" to government-run health care.

OVERALL, CEO Confidence increased slightly in April after two months of decline. But corporate leaders remain deeply concerned about rising health care costs, which they believe are hitting their bottom lines. What they don't want is deeper government involvement in solving the health care crisis. (See cover story, page 20.)

The Confidence Index went up 3.8 points to 158.3, but Current Confidence, one of the components of the broader index, declined to 161.3, while Future Confidence increased to 156.2. (See graph, below left.) One of the biggest single movements was in the Employment Confidence Index, which rose by 9 points to 156.1. The choppiness of the numbers suggests that many CEOs are treading water, rather than launching bold new initiatives. (For complete details, go to www.chiefexecutive.net.)

Out of 312 respondents, 150 said they expected their companies' health care costs to increase by 11 to 20 percent each year over the next three years. (See pie chart, below right.) That was the largest single bloc of readers, representing about 48 percent of them.

[GRAPHIC OMITTED]

But when asked whether the federal government should intervene more aggressively in the health care sector, fully 60 percent of respondents said "no."

"The track record of the government in setting or dictating prices for private businesses has been atrocious," wrote Samuel L. Poole, CEO of Poole Investment Ventures, a venture capital outfit near San Diego. "It would be far more reasonable and effective for the government to eliminate many of the excessive government regulations that often push the price of health care upward or increase the efficiency of the FDA process, thus reducing the enormous cost of bringing a new drug to market."

Many CEOs argued that reforming the tort system, which has spawned thousands of lawsuits, would be a better thing for the government to concentrate on. "Tort reform is what is needed by the government to reduce costs," wrote Scott Shute, president and CEO of etalk, a call center technology company based in Irving, Tex. "Out of sight workers' compensation and general liability would also benefit from tort reform, which in the end would lower costs and put more dollars toward capital spending. That would expand business and jobs."

But some execs do want government help. "Federal involvement needs to occur and cap the costs we are seeing," wrote William J. Browne Jr., managing director of Morgan Carbon America's Fostoria Operations. "We can compete with anyone in the world. What we cannot control is health care, soaring energy costs and tort litigation. If we have a level playing field, we can compete and win, but there are too many things working against us."

Others felt that only certain segments of the work force ought to be involved in any governmental solution. "It's a very complex situation," wrote Philip H. Levy, president of the YAI Institute for People with Disabilities, based in New York. "Government involvement with special populations, such as the elderly and the disabled, is probably necessary."

But whether they favor government or market-based solutions, all respondents recognized that health care costs are a major concern.

At what annual rate do you expect your health care costs for employees
and retirees to increase over the next three years?

 5-10%        33%
11-20%        48%
21-30%        14%
31-40%         4%
less than 5%   1%

Note: Table made from pie chart.