Manufacturers doubt U.S. will reform health care

By Nick Carey

CHICAGO (Reuters) - Chief executives from the U.S. manufacturing and transportation sectors say something must be done about soaring health-care costs but doubt the ability of Washington to come up with meaningful, bipartisan reform.

"There is a lot of work that needs to be done on the part of the politicians to rein in some of these costs," Lincoln Electric Holdings Inc (LECO.O: Quote, Profile, Research, Stock Buzz) CEO John Stropki said at the Reuters Manufacturing Summit in Chicago this week, adding: "I have very little confidence in Washington."

In some cases, U.S. companies say they are focusing on "wellness" programs to cut health-care costs, including encouraging employees to eat well, exercise and quit smoking.

U.S. health-care costs have seen double-digit increases for much of the past decade and are set to keep on rising.

"Something eventually has to give there," said Wick Moorman, CEO of U.S. railroad Norfolk Southern Corp (NSC.N: Quote, Profile, Research, Stock Buzz). "This is a critical issue that is confronting our economy."

According to the U.S. government's Centers for Medicare and Medicaid Services (CMS), by 2017 health-care spending will account for 19.5 percent of the country's gross domestic product, up from 16.3 percent in 2007. Annual expenditure will nearly double to $4.3 trillion, the CMS said in a forecast.

"It's not a show stopper, it's not a reason you would pull manufacturing out of the U.S.," said Herb Henkel, CEO of diversified manufacturer Ingersoll-Rand Co Ltd (IR.N: Quote, Profile, Research, Stock Buzz). "But it's a cost element that has to be effectively managed."

It is also a key issue in the 2008 U.S. presidential election. Democrat Hillary Clinton wants a public-private partnership to provide mandatory health insurance for all Americans, including mandates on large employers to provide health insurance or help pay for it. Subsidies for the poor would be provided along with small-business tax breaks.

Her rival Barack Obama's plan would create a national public insurance plan, allowing everyone the same options to buy affordable health care enjoyed by federal employees. It would cover most Americans and mandate coverage for children. Employers would have to contribute to health coverage for their employees or to the cost of the public plan.

On the Republican side, likely nominee John McCain favors tax credits and health savings accounts to help individuals pay for health care.

Manufacturing CEOs, however, are unimpressed.

"I'm not hearing anything from the presidential candidates to make this better," said CEO Dave Cote of Honeywell International Inc (HON.N: Quote, Profile, Research, Stock Buzz).

"This needs to be a bipartisan effort, we need to start with an objective and work back from that. But everyone just wants to point to their own private nemesis," he added.

Even if Washington manages to overcome partisan differences and comes up with a comprehensive reform package, some CEOs said they doubted it would lead to any meaningful improvements.

"I really get nervous when Washington tries to do anything because they usually don't do it very well," said Bill Zollars, CEO of YRC Worldwide Inc (YRCW.O: Quote, Profile, Research, Stock Buzz), the big trucking company.  Continued...