NCHC | News – Media Statements

Bill Daley
National Coalition on Health Care
Media Event
May 19, 2003

Thank you and good afternoon.

I appreciate this opportunity because this gives SBC Communications a chance to bring attention to a growing national concern in the business community. A problem that, if it remains unchecked, could endanger the very foundation of business funded health-care programs for employees.

Escalating health-care costs are a concern for all businesses. But these costs are especially challenging for labor-intensive companies such as SBC …which employs a significant number of people to build and operate our nation’s telecommunications infrastructure.

In our case alone, it takes more than 175,000 people to serve more than 50 million customers in 13 states.

Any way you look at the expenses we incur to provide health care to these employees, the costs are staggering.

At SBC, our health-care costs have increased to $2.2 billion…an increase of 50 percent or $740 million…in the last three years alone. And we expect these costs to increase a billion dollars to more than $3.2 billion or another 50 percent once again during the next three.

This comes at a time of intense cost cutting in every other aspect of our business. While our company was able to reduce overall spending by $1.6 billion last year, our health-care costs jumped by more than $250 million or 17 percent.

Bear in mind that this increase also comes at the same time our employee base has shrunk by 25,000 employees in the last four years and the overall inflation rate remains low.

Part of SBC’s challenge is not only funding these programs for employees but also for our retirees. Not many companies do that these days. And most that do, usually pay only a small portion of the costs.

It’s something we are proud to do. That is our history … our culture … who we are as a company.

We want to continue to give back to the people who have helped make SBC what it is today.

But the tremendously escalating cost of health care threatens our ability to sustain these benefits.

The basic economics and the increasing financial burden this coverage imposes cannot be ignored.

When you fold in employees, retirees and both their dependents, SBC health-care plans cover more than 700,000 people. That’s about the size of the population of San Francisco.

Like most good businesses, we have done many things over the years to try and control these costs.

We’ve introduced managed health-care programs, cost sharing and worked to increase efficiencies in patient care. But these efforts have done little to slow the tide or fix a health-care system that continues to drain resources at an alarming rate.

The present course we are following is unsustainable. Employers can’t continue to absorb double-digit increases in health-care spending, year after year.

This issue is bigger than any one company. We need solutions. We don’t have all the answers but we do know that something must be done. That is why we are here today.

At SBC, we take great pride in providing health-care benefits to retirees as well as employees. We want that to continue.

We are anxious to find ways to address this situation. At the same time we are hopeful that coalitions such as this can make a difference in dealing with this critical issue.

This is not just an issue that deserves the attention of our policymakers … this issue demands it.

Thank you again for your time and this opportunity to talk with you today.