The IBM bill

Wednesday April 13, 2011

We have developed a zero tolerance policy for schoolyard bullies but when it comes to the place where laws are made bullying is alive and well. Just ask anyone who has had to deal with IBM lately.

IBM is Vermont's largest private sector employer. Keep in mind that the state of Vermont employs the most people and that there are other sectors of our economy that employ many more people than the sacred IBM, such as the hospital industry.

History has taught us that when IBM wants something to happen or not to happen they get their way. They don't like the current health care bill that is on a fast track to the governor's desk so they have put together a coalition of large business owners to turn the bill into something they can live with.

Their rhetoric is right out of the right wing playbook, saying they are in favor of health care reform and recognizing that it needs to happen. Then they go on to detail all of things wrong with the bill, which is just about every major piece of it.

The IBM coalition is lobbying (or is it bullying?) the governor and the Legislature to make sure the health care bill turns out the way they want it. They may say that are only looking out for what is best for Vermonters, but what they really want is to protect their bottom line at all costs.

Their proposed amendments to the bill transform the entire health reform process into a plan based on the fatally flawed free market insurance model while allowing self-insured businesses to not have to be part of the shared responsibility for a system of health insurance that would provide a basic safety net for all Vermonters.

The IBM coalition amendments make it clear that IBM and its allies have no concern for the majority of Vermonters who own and work for all of the small businesses in Vermont, that are the foundation of the state's economy.

According to a January CNN story about IBM's 2010 fourth quarter profits, "IBM posted a fourth-quarter profit that beat Wall Street expectations. The tech giant also pointed to an improved outlook for 2010. The Armonk, N.Y.-based company reported a profit of $4.81 billion, or $3.59 per share, which was 9 percent higher than what IBM reported last year."

So what is IBM complaining about to Vermont's politicians? They are making veiled threats about moving out of Vermont because their profitability might be hurt under the current health care reform proposal. Let's look at the facts.

The health care bill has no funding mechanism, but according to the report by Dr. Hsiao upon which the legislation is based, a payroll tax on employers of about 10 percent would pay for the plan. IBM is big enough to be self-insured. That means they hire a middle man to administer an insurance plan for which they take most of the risk.

Large businesses do well with self-insurance plans and they are able to have a great deal of control over benefits and costs. It is one of their best recruiting and retention tools. Self-insured companies are also subject to a federal law, The Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry.

If a company comes under the umbrella of ERISA, such as IBM, they do not have to follow state laws when it comes to health insurance. It also means that if a state creates a health care system it cannot require companies that fall under ERISA rules to join any new insurance plan they create.

So IBM wants to have the choice of either keeping the plan they have or buying into the new state plan without having to pay the payroll tax if they choose not to join the state plan. They claim they would be paying twice for health insurance if they keep the plan they have. That may be true, but whatever happened to doing something because it was good for the entire state and not just for IBM?

IBM's share of the cost for Vermont's proposed health insurance system will not jeopardize very much of the $4.81 billion in profits that the company raked in last year. Whether or not IBM and its allies buy into a new health insurance plan, they should have a responsibility to make it viable for all of us. How many tax breaks and special concessions have they received over the years that have come at the expense of tax-paying Vermonters who don't work for IBM?

The truth is that the plan that Vermont eventually develops will be as good as if not better than what IBM now offers. It has to be at least as good as current Medicaid plans and that is about as good as insurance gets. If IBM really believed in health care reform as they claim, they could support a state-run insurance plan as long as they had input into the benefits package.

IBM could get out of the business of being an insurance company and concentrate on their ability to generate even more than $4.81 billion a year in profit. Instead of being Vermont's biggest bully they could lead the charge to create the largest and most diverse insurance pool the state has ever seen so that our new form of insurance will be financially viable for all Vermonters, not just IBM.

Tell your senators you don't want Vermont's health care reform bill to become the IBM Bill.

Richard Davis is a registered nurse and executive director of Vermont Citizens Campaign for Health. He writes from Guilford and welcomes comments at


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