Major firms band together on affordable healthcare

Top US employers have joined forces to provide more affordable health insurance to an estimated 4 million contract, temporary, or part-time employees who, along with their families, lack coverage.

The Fortune 500 companies, which include EMC Corp. of Hopkinton and Textron Inc. of Providence, believe that by banding together they will be able to find an insurer that will offer lower rates to contingent workers and early retirees who are not old enough to qualify for Medicare.

The effort by the 51 companies comes as more and more employers have increased the number of temporary and contingent workers on their payrolls. In a study released this year, Kelly Services, a Michigan-based temporary placement firm, reported that temporary or so-called free-agent workers comprised 22 percent of the country's labor force.

The companies involved in the effort said they were concerned that many of these workers were going without insurance coverage.

"Over the last 18 months, we decided to form a coalition that will allow us to help people who need healthcare coverage," said Jack Mullen, senior vice president of human resources at EMC. "It will help our part-time workers, retirees, and contract workers who are not insured. We see it as a win-win."

Mullen said an insurance provider and a detailed package should be available to the companies' uninsured contingent workers and retirees by 2005. He said more details would be released in coming months.

EMC spokesman Greg Eden said the company has about 200 employees who would probably qualify for such coverage. He said that number could grow as more of the company's workers retire. EMC, a leading data storage firm, employs 21,000 worldwide. It has 7,100 employees in Massachusetts, Eden said.

Called Affordable Health Care Solutions, the corporate effort is being spearheaded by Hewitt Associates, an Illinois-based human resources outsourcing and consulting firm, and the Human Resource Policy Association, a national group of senior human resource executives. Other participants include American Airlines, Ford Motor Co., Gap Inc., IBM Corp., Home Depot, and Starwood Hotels & Resorts.

"We are aiming to work with one health plan to create a series of coverage choices at different prices that can be tailored to fit a wide range of budgets, from low-income part-time workers to highly compensated independent contractors not covered by a company plan," Greg A. Lee, senior vice president of human resources at Sears, Roebuck & Co., said in a statement. Lee is the chairman of the coalition.

Some participants believe the benefit may give employers better leverage in the labor market when the economy picks up and demand for workers increases, said Marisa Milton, associate general counsel at the Human Resource Policy Association. According to Jim Hart, an economist with the regional Bureau of Labor Statistics in Boston, 261,000 temporary jobs have been added to the US economy since January, representing an increase of 11 percent.

"There is certainly very fast-paced growth in that industry," Hart said of the temporary employment sector.

An AFL-CIO spokesman said yesterday that many low- and moderate-wage part-time workers will not be able to afford even a modestly priced package unless they can increase their work hours or wages.

"This is not an answer," said Richard Bank, director of the federation's Center for Collective Bargaining in Washington, D.C. "What they will be doing is offering the benefit of group rates to these people, but they will not be actually purchasing health insurance for them. The problem with that is that many people in the category of part-time or temporary employee do not have the wherewithal to purchase decent healthcare at any price."

Milton said it is one solution to the increasing problem of high healthcare costs.

"Over the last five years, the average cost of healthcare insurance paid by employers has increase by 69 percent," Milton said. "The coverage will be offered to part-timers, independent contractors, and temporaries who lack insurance and might be inclined to delay preventative care, which exacerbates illness and increases costs."

The Centers for Medicare and Medicaid Services, a government agency, estimated recently that private health insurance premiums paid by employers would rise 8 percent per enrollee in 2004, down from 10.4 percent in 2003. The agency projected an increase of 7.1 percent in 2005.

Milton said the decline in premium costs "still mean huge increases" for employers.

Diane E. Lewis can be reached at dlewis@globe.com.