Between drugmaker Eli Lilly and Co., health insurer WellPoint Inc., numerous hospital systems and a burgeoning cadre of small
life sciences companies, health care accounts for one out of every nine jobs. And those jobs pay 17 percent above the state
average, according to the Indianapolis Private Industry Council.
So when Democratic Sens. Hillary Clinton and Barack Obama come to town talking "jobs, jobs and jobs," and touting major health care reforms, local business leaders and economists pay attention.
The topic of health care sparked the most spirited comments from business leaders interviewed by IBJ ahead of the May 6 presidential primary. When asked whether they thought Obama or Clinton would be better for business, executives in manufacturing, exporting, computer technology, logistics and education largely demurred.
Some said they didn't know enough about the candidates. Others, such as Kevin Brinegar, president of the Indiana Chamber of Commerce, voiced an emphatic "neither."
Dr. Alfonso Alanis has a preference. The CEO of Indianapolis-based Anaclim LLC, which conducts clinical drug trials, prefers Obama to Clinton because he has painful memories of her attempt at health care reform in 1993 and 1994, when she was first lady.
"That was not a pleasant time for the health care industry and for the innovation industry," said Alanis, the former chief medical officer at Lilly. "Hillary, we don't see her as the leading candidate."
Alanis and his business partner, Rex Alexander, are still somewhat divided, however, on whether to support Obama or Arizona Sen. John McCain, the Republican nominee-in-waiting.
But economist Michael Hicks thinks Clinton's policies would be better for Indiana--especially on health care. The director of Ball State University's Bureau of Business Research worries that Obama's health care reform plan would effectively create price controls, stifling innovation.
"Sen. Obama's health care proposals could really threaten one of our major industries here," Hicks said.
Dan Krajnovich doesn't know which of the Democratic candidates he would prefer. The CEO of health insurer UnitedHealthcare of Indiana said he's waiting to hear a fuller health care proposal from McCain, which suggests he's not thrilled with either Democratic proposal.
"We really have not seen the full details of the Republican plan with regard to health care," he said.
But what's clear is that the spirited race between Clinton and Obama has the attention of many of central Indiana's health care business leaders.
The first question at a panel discussion of health insurance executives, held downtown April 30, cited the coming presidential primary and asked how a changed political environment would affect health insurers.
"We do appear to be at some kind of tipping point," responded Robert Hillman, president of WellPoint's Indiana subsidiary, Anthem Blue Cross and Blue Shield.
Avoiding a stance
Other business leaders seemed to be less engaged--or simply less willing to state a preference in public. There are political realities in the business world that have nothing to do with parties, candidates and ballot boxes.
Carol D'Amico, president of Conexus Indiana and a former education official in President George W. Bush's administration, said she didn't know enough about Clinton and Obama to comment. Elwood-based Red Gold Inc., whose officers are grappling with rising food and fuel prices and worried about immigration policy, did not respond to a request for an interview.
Brinegar, with the Indiana Chamber of Commerce, said he really hasn't studied the candidates--even though the unpopularity of Bush makes it more likely a Democrat could win the White House in November.
"I'm not thinking that far ahead, I guess," Brinegar said. "I won't be voting for either one of them."
Serial entrepreneur Scott Jones said he's worried that either Clinton or Obama would raise the capital gains tax. That tax is assessed on any gains earned by investors--in stocks, in companies, or even in antique Coke bottles--when they sell their investments.
The current capital gains rate is 15 percent.
During a debate in Pennsylvania, Obama acknowledged that he might raise the capital gains rate as high as 28 percent, according to a transcript of the debate. Obama's Web site, however, proposes to eliminate the capital gains tax for startup companies, a category it does not define.
During the debate, Clinton said she would only raise the tax rate to 20 percent, if at all.
For Jones, a higher capital gains rate would mean lower returns when he sells a company. The Indianapolis entrepreneur has major stakes in several companies, including the Internet search engine ChaCha Search Inc. and Precise Path Robotics LLC. He also heads up Gazelle TechVentures, a business investment fund.
In April, Jones engineered the sale of Gracenote Inc., a technology firm he chaired, to Sony Corporation of America for $260 million. The prospect of lower returns could also hamper Jones' and other entrepreneurs' ability to raise money from outside investors.
"The person who wants to raise it least would be better for our businesses," Jones said.
That would appear to lean Jones toward Clinton, though Jones said he has yet to select a candidate for whom he will vote. Jones said he liked Obama because one of the founders of Facebook, the online social networking company, is working for his campaign. Jones also said Obama appears "progressive" in his use of and views on technology.
Obama and Clinton drew the most consistent criticism from business leaders for not being progressive on trade issues.
Both candidates have taken a skeptical tone about free trade deals--at least the way the Bush administration handled them.
"We're not going to stand idly by and lose our standard of living," Clinton said in an interview at The Indianapolis Star, which was broadcast on the Internet. She added, "I'm 100 percent in favor of free trade, but I'm not in favor of being taken advantage of."
Obama has been flooding mailboxes with slick ads arguing that he will be the better candidate at protecting Hoosiers' jobs. The ads repeatedly mention that Obama always opposed NAFTA, the North American Free Trade Agreement, which Clinton's husband, former President Bill Clinton, signed into law in 1993.
One Obama ad shows a Fortune magazine with Clinton on the cover behind the headline, "Business Loves Hillary!" The ad says, "When the chips are down, and the choice is between protecting American jobs or the corporate bottom line, she will stand up for their interests instead of ours."
Both Clinton and Obama have said they want to review trade deals and make sure any future agreements include strong protections for workers and the environment.
But that rhetoric scares Dennis Kelley, president of Pacific World Trade Inc., which coordinates supply chains in Asia and Europe for U.S. manufacturers.
"The Democratic candidates are talking about penalizing China and creating some trade barriers. That would impact our business," Kelley said. He added, "People tend to forget that a lot of people in Indiana work in jobs exporting things."
In Columbus, Cummins Inc. is in the midst of adding 1,100 jobs, in large part because of the success the company has in international markets, said company spokesman Mark Land. International sales account for more than half the revenue Cummins brings in, not counting joint ventures it has in many foreign countries.
"A big part of why we've been successful is because we're so good overseas," Land said. He added, "Last year, the heavy-duty truck industry in North America fell 50 percent; we still had record sales and profits. Part of that is because we are very strong in places like China, India, Europe, the Middle East."
Land said Cummins as a company will not support one candidate over another. But he acknowledged the company's views on trade put it at odds with both Obama and Clinton.
Ironically, Cummins President Joe Loughrey and his wife, Deborah, are some of Clinton's biggest supporters. They've jointly given her campaign $6,900. Cummins CEO Tim Solso and Chief Financial Officer Jean Blackwell also have supported Clinton.
"We're not taking shots at Clinton or Obama," Land said. "But we are at a different place on trade."