SEC Supports Health Care on Proxies

Shareholder groups are championing health care as a sustainability issue of top concern as this proxy season heats up -- and the SEC says those shareholders are well within their rights to press companies for a vote on universal health coverage, reports The New York Times.

Shareholder health care proposals ask that companies adopt principles for comprehensive health care reform such as those developed by the Institute of Medicine. Its principles are that health care coverage should be universal, continuous, and affordable for individuals and families, while also affordable and sustainable for society, and health insurance should “enhance health and well being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered and equitable.”

The SEC is requiring Boeing, General Motors, United Technologies, Wendy’s International, and Xcel Energy to include health care proposals filed by shareholders, including religious groups and labor unions, in their proxy materials. The Times says that the decision represents a shift by the commission, which had previously backed companies that sought to exclude such proposals. Some companies argued that health care isn’t an appropriate matter for shareholder voting because it doesn’t relate to a “significant social policy issue” as defined by the SEC.

The commission has reversed positions in the past to keep up with changing societal attitudes, and in an election year where health insurance is a key campaign issue, the argument that it’s not significant is a tough position to support.

John Castellani, president of the Business Roundtable, told Business Week that the majority of its members identify health costs as their biggest economic challenge and that the current situation is not sustainable in a global, competitive workplace. In fact, General Motors’ health care cost burden played a major role in its decision to shift jobs to Mexico and Canada.

One proposal, submitted to Xcel Energy by a religious shareholder group, cites the National Coalition on Health Care stating that implementing its principles would save employers presently providing health insurance coverage an estimated $595 billion in the first 10years of implementation.

Companies that have resisted such proposals argue that adopting health care principles won’t advance the health care debate in Congress or lead to legislation that would benefit the company or shareholders. Some experts, however, say that a loud and persistent dialogue between companies and shareholders could help bridge the gap between health care haves and have nots.

Shareholder groups, of course, have financial as well as altruistic goals. Some groups say that a health care proxy could benefit their investment because as businesses struggle with high health insurance costs, shifting more of those costs to workers, employee productivity and health may suffer -- and this could negatively impact shareholder value.

The Times reports that labor unions and religious groups intend to broaden the proxy campaign by bringing more pension plans into the discussion next year. But the SEC’s move to allow health care balloting could signal the go-ahead for more health care proxy activity this year.