The New York Times reported on Wednesday that the Senate Finance Committee "has become intrigued by a version of a health care tax being pushed by Massachusetts Democrat John Kerry that comes dressed in a whole lot of lipstick. It doesn't fall on workers. It doesn't even fall on employers. It falls on everyone's favorite villain: health insurance companies."
The tax would be levied against health plans costing more than a certain amount. The NYT example is plans costing more than $25,000 per year. Insurers offering plans costing more than that would be taxed, and the proceeds would be used to cover the cost of the uninsured. Insurers would presumably pass the cost onto their customers, who would then have an incentive to offer less generous health plans.
There are a whole bunch of things wrong with this idea. But here are just two of them.
Keep in mind that, for small employers and individuals, insurance administrative costs can run as high as 25-40 percent of the premium dollar.
What kind of "silver plated" health plan costs $25,000?
Late last year, our family lost its health coverage when My Charming Wife was laid off from her job. We couldn't afford COBRA continuation coverage under her plan, which would have cost us $1300 per month (that would've been $15,600 per year that we didn't have).
She worked for a large employer, and her benefit plan was very generous. So I went shopping. We raised the deductibles by a factor of ten, dropped the dental and vision coverage, and priced a plan through Cleveland's Council Of Smaller Enterprises (COSE), which makes a big deal about saving small businesspeople money on their health care coverage.
COSE's offer to us: they'd sell us the plan we wanted...for $1880 per month (that's $22,500 per year).
So we shopped further. We raised the family deductible to $3000 per year, and sought coverage through the individual market.
The best cost we could find: through COSE's insurer, Medical Mutual of Ohio, we were quoted $1860 per month (that's $22,300 per year). Assuming we'd have bought that plan (we didn't) and experienced a ten percent rate increase, out hardly silver plated health plan would have cost us nearly $25,000.
The folks in Washington don't get that the price small businesspeople and individuals pay for health insurance is only indirectly related to the cost of health care. On average, small companies pay 18 percent more for health insurance coverage than big companies do.
So taxing a health plan based on its cost would create still more pressure on small business owners...whom I'm told the Government wants to help...and create even more challenges to maintaining a small group health plan.
That's problem #1.
Here's Problem #2. Insurers would readily accept the "responsibility" of taxing those "generous" health plans they offer to small businesses and individuals. As a senior health insurance official said of another recent scam, it'd be "all about shared responsibility, and that's what needs to happen."
But billing for the tax would require effort and expense. So would collecting the tax, accounting for it, and paying it to...whoever. So insurers would insist that it'd be only fair that they be able to recover the administrative costs entailed in collecting, processing, and paying the tax.
That would raise their administrative costs still further, AND enable insurers to treat the new tax as a revenue source. And of course, it all just adds to the cost of health insurance.
Make sense to you?
Me, either...
Friday, July 31, 2009
Tuesday, July 28, 2009
Ohio Insurers Pick Small Business' Pockets In The Name Of "Shared Responsibility"
Here's a cautionary tale which shows how small business loses when health care reform and politics meet.
While most eyes are on Washington's ongoing health care reform debate, Ohio insurers have reportedly incorporated a provision into the new State budget which will allow them to pick small business' pockets in the name of "shared responsibility."
The Cleveland Plain Dealer reported on July 14th that the Ohio Department of Insurance has "quietly, behind the scenes, been lobbying for key insurance mandates."
One of those mandates would require insurers selling plans in Ohio to enable families to carry dependents on their health plans through age 28, whether or not they live at home. Fair enough, and plan costs will be adjusted so the new provision pays for itself through premiums.
The second mandate is a doozy. It seeks to create a subsidy for participants in Ohio's "open enrollment" plan, through which individuals with severe health conditions which make them "uninsurable" in the conventional market, and who can afford to pay, can obtain some sort of health coverage.
Because these folks are generally sick,the premiums charged to open enrollment participants are steep. The PD says they average $800 per month, but that means they're considerably higher for some plan participants.
So needless to say, not many Ohioans participate in the "open enrollment" program. Currently, only about 1,300 Ohioans are signed up.
Now Ohio insurers, who are by their own admission making tons of money selling individual health plans, want to encourage more Ohioans to participate in the open enrollment plan. How? By creating a subsidy that will reduce open enrollment premiums to an average of $400 per month.
Where will the money come from? The provision gives Ohio insurers the ability to raise premiums for other insurance plans...including, especially, the insurance plans offered by Ohio's small businesses...by up to 5%.
An official from Medical Mutual Of Ohio says, "It's shared responsibility, and that's what needs to happen."
So let's do some math: 1,300 Ohioans currently pay $800 per month for their insurance coverage. Over a year, that comes to $12,480,000.
In exchange for a 50% subsidy ($6,240,000), insurers get to raise your premiums by as much as 5%.
Let's assume for a moment that the COSE health plan is about a $500 million health plan (no one outside the COSE inner circle knows for sure, cuz COSE's not tellin'). That 5% "tax" comes out to $25 million on the COSE plan alone.
So Ohio insurers have found a way to create a new pile of money for themselves...which small employers will pay for...to cover a subsidy for a tiny number of individuals with serious health conditions, so that insurers can direct a few more of them to a plan they operate.
This won't affect large employer plans, which are self-insured, or government plans, either. The cost will fall on everybody else who buys coverage through Ohio insurance companies.
Far as I can tell, this provision sneaked into the budget with no hearings or public comment.
Where are the intrepid watchdogs who are supposedly looking out for the interests of small business in the legislature? Undoubtedly congratulating themselves for getting to see President Obama when he came to town...
While most eyes are on Washington's ongoing health care reform debate, Ohio insurers have reportedly incorporated a provision into the new State budget which will allow them to pick small business' pockets in the name of "shared responsibility."
The Cleveland Plain Dealer reported on July 14th that the Ohio Department of Insurance has "quietly, behind the scenes, been lobbying for key insurance mandates."
One of those mandates would require insurers selling plans in Ohio to enable families to carry dependents on their health plans through age 28, whether or not they live at home. Fair enough, and plan costs will be adjusted so the new provision pays for itself through premiums.
The second mandate is a doozy. It seeks to create a subsidy for participants in Ohio's "open enrollment" plan, through which individuals with severe health conditions which make them "uninsurable" in the conventional market, and who can afford to pay, can obtain some sort of health coverage.
Because these folks are generally sick,the premiums charged to open enrollment participants are steep. The PD says they average $800 per month, but that means they're considerably higher for some plan participants.
So needless to say, not many Ohioans participate in the "open enrollment" program. Currently, only about 1,300 Ohioans are signed up.
Now Ohio insurers, who are by their own admission making tons of money selling individual health plans, want to encourage more Ohioans to participate in the open enrollment plan. How? By creating a subsidy that will reduce open enrollment premiums to an average of $400 per month.
Where will the money come from? The provision gives Ohio insurers the ability to raise premiums for other insurance plans...including, especially, the insurance plans offered by Ohio's small businesses...by up to 5%.
An official from Medical Mutual Of Ohio says, "It's shared responsibility, and that's what needs to happen."
So let's do some math: 1,300 Ohioans currently pay $800 per month for their insurance coverage. Over a year, that comes to $12,480,000.
In exchange for a 50% subsidy ($6,240,000), insurers get to raise your premiums by as much as 5%.
Let's assume for a moment that the COSE health plan is about a $500 million health plan (no one outside the COSE inner circle knows for sure, cuz COSE's not tellin'). That 5% "tax" comes out to $25 million on the COSE plan alone.
So Ohio insurers have found a way to create a new pile of money for themselves...which small employers will pay for...to cover a subsidy for a tiny number of individuals with serious health conditions, so that insurers can direct a few more of them to a plan they operate.
This won't affect large employer plans, which are self-insured, or government plans, either. The cost will fall on everybody else who buys coverage through Ohio insurance companies.
Far as I can tell, this provision sneaked into the budget with no hearings or public comment.
Where are the intrepid watchdogs who are supposedly looking out for the interests of small business in the legislature? Undoubtedly congratulating themselves for getting to see President Obama when he came to town...
Sunday, July 26, 2009
Small Businesses Need Health Insurance Reform That Works. Will They Get It? Part 3
So, Mr. President and members of Congress, if you want to take some steps toward fixing small group and individual health insurance, here’s what to do:
1)…Take active steps to encourage the formation of large, non-profit health insurance purchasing co-operatives, and explicitly open them up to small companies and self-employed individuals;
2)…Conduct a top-to-bottom review of the pricing and underwriting rules imposed on the small group and individual health insurance markets by state and federal regulations, and repeal those which do not explicitly contribute to broadening the risk pool;
3)…Establish a series of pilot projects which will encourage insurers to use information technology to increase the efficiency of their small group and individual health plan marketing efforts, and;
4)…Give insurers five years to reduce their administrative cost ratios to not more than 12 percent of premiums for small groups, and not more than 15 percent of premiums for individuals.
The combination of these efforts would create incentives for insurers to work with private aggregators to take advantage of economies of scale to reduce administrative costs, bring down prices, and make health insurance more affordable to more people.
If the marketplace hasn’t improved markedly over a five-year period, a public plan would be enacted, run on principles similar to FEHBP, and administered by insurers who prove they get it.
Absent reforms that look a lot like these, a mandate on individuals or employers would, indeed, force the formation of a public option, because the price of private health insurance will continue to skyrocket, and more small employers and individuals will be priced out of the health insurance market.
1)…Take active steps to encourage the formation of large, non-profit health insurance purchasing co-operatives, and explicitly open them up to small companies and self-employed individuals;
2)…Conduct a top-to-bottom review of the pricing and underwriting rules imposed on the small group and individual health insurance markets by state and federal regulations, and repeal those which do not explicitly contribute to broadening the risk pool;
3)…Establish a series of pilot projects which will encourage insurers to use information technology to increase the efficiency of their small group and individual health plan marketing efforts, and;
4)…Give insurers five years to reduce their administrative cost ratios to not more than 12 percent of premiums for small groups, and not more than 15 percent of premiums for individuals.
The combination of these efforts would create incentives for insurers to work with private aggregators to take advantage of economies of scale to reduce administrative costs, bring down prices, and make health insurance more affordable to more people.
If the marketplace hasn’t improved markedly over a five-year period, a public plan would be enacted, run on principles similar to FEHBP, and administered by insurers who prove they get it.
Absent reforms that look a lot like these, a mandate on individuals or employers would, indeed, force the formation of a public option, because the price of private health insurance will continue to skyrocket, and more small employers and individuals will be priced out of the health insurance market.
Small Businesses Need Health Insurance Reform That Works. Will They Get It? Part 2
One might conclude that if insurers were seriously interested in the non-group segment, they’d find ways to turn at least a few more of the 90-plus percent of these unsuccessful applicants into customers. And they haven’t been very forthcoming about how they’d make these restrictions go away in exchange for a mandate. Their simplistic answer is that in the face of a mandate everyone would have coverage, and the cost of coverage per individual would therefore be lower.
It’s just as likely that a mandate would blow the lid off health insurance premiums as insurers agree to provide coverage to those whom they’ve previously rejected, but at what insurers consider appropriate risk-adjusted prices. But the cost would no longer matter, because the law requires everyone to have coverage, no matter what it cost. Given the traditional behavior of insurers, which outcome is more likely?
Given that so many uninsured individuals are customers that insurers don’t seem to want, the development of a public option ought to seem like a pretty good idea. But opposition to a public option is at the forefront of the industry’s agenda. One reason seems to be a principled opposition to the idea of “socialized medicine.” The other reason is that a public plan may, through public subsidies and administrative efficiencies, drive private insurers out of the market.
The first objection is nonsensical on its face. Almost half the health care spending in our country is financed through government, via Medicare, Medicaid, The Veterans Administration, and the Federal Employees Health Benefit Plan. Like it or not, the Federal government is in the health care business to stay; cries of “socialized medicine” are a big red herring.
Fear of competition based on administrative costs?...NOW you’re talking.
For all their flaws, the Federal government’s plans are quite efficient administratively. Medicare and FEHBP are run (often by private insurers, or by consortiums of insurers such as Blue Cross/Blue Shield plans) on administrative costs which are about three to four percent of claims costs. For the largest private employers, whose plans are self-insured but typically administered by insurance companies, administrative costs are typically five to six percent of claims costs. For that amount, insurers working with these plans are managing enrollment, paying claims, and making a little money.
For small businesses and individuals? Independent aggregate data is hard to come by, but a study by the Small Business Administration’s Office of Advocacy concluded that administrative costs for a group of small group insurers averaged between 33 and 37 percent of claims costs. That translates into 25 to 27 percent of premium. An article from The Center For American Progress recently estimated administrative costs in the non-group market to be 30 to 40 percent of premium.
(Insurers typically obfuscate this issue by pointing to administrative cost ratios which “average” 15 percent or less. If you take the 5% they charge large employers, add it to the 25% they charge small groups, then divide by two, you get 15%).
Why the huge disparity? It’s not corporate profits; insurers administer FEHBP and self-insured corporate plans efficiently and still make money.
It’s because the process of advertising, marketing, sales and underwriting is enormously inefficient and costly. Unlike other segments of the health insurance market, small group and individual sales are usually still done on paper.
Typically, more than 80 percent of applications for new business are returned at least once to a small business or an agent because they’re filled out incorrectly or incompletely. And because insurers typically will only accept their own application forms, shopping for coverage among three insurers means filling out three sets of paper forms. And nearly 95 percent of new business applications received by an insurer do not result in new business. That’s a huge amount of wasted effort and lack of productivity, the cost of which is passed back to the small business customer.
Agent compensation is relatively high compared to premium costs, but that’s because agents bear a significant chunk of the process’ inefficiency. If coverage were simpler to sell, they’d be happy to take less commission in exchange for making less effort. As it is, many agents no longer seek business from companies which don’t generate sufficient commission income, making it harder still for small employers to shop for coverage.
In addition to all this built-in inefficiency, marketplace dynamics also work against the small employer. Insurers have used state and federal regulations to undercut the ability of small employers and self-employed individuals to put the actuarial laws of large numbers to work for them by aggregating into large co-operative purchasing pools. A large portion of excessive administrative costs relate to the efforts of insurers to enforce their own rules by underwriting every small group employee and individual application as if it were an actuarial universe of one.
Insurers have actively resisted the development of large purchasing co-operatives which could create efficiencies and reduce costs (and therefore prices) because they see administrative efficiencies as reducing their revenues. Unfortunately, their efforts are often supported by Chambers of Commerce and other membership organizations which have come to rely on their sponsored health plans for big chunks of their revenues, and which fear real competition as much as their insurer enablers.
It’s just as likely that a mandate would blow the lid off health insurance premiums as insurers agree to provide coverage to those whom they’ve previously rejected, but at what insurers consider appropriate risk-adjusted prices. But the cost would no longer matter, because the law requires everyone to have coverage, no matter what it cost. Given the traditional behavior of insurers, which outcome is more likely?
Given that so many uninsured individuals are customers that insurers don’t seem to want, the development of a public option ought to seem like a pretty good idea. But opposition to a public option is at the forefront of the industry’s agenda. One reason seems to be a principled opposition to the idea of “socialized medicine.” The other reason is that a public plan may, through public subsidies and administrative efficiencies, drive private insurers out of the market.
The first objection is nonsensical on its face. Almost half the health care spending in our country is financed through government, via Medicare, Medicaid, The Veterans Administration, and the Federal Employees Health Benefit Plan. Like it or not, the Federal government is in the health care business to stay; cries of “socialized medicine” are a big red herring.
Fear of competition based on administrative costs?...NOW you’re talking.
For all their flaws, the Federal government’s plans are quite efficient administratively. Medicare and FEHBP are run (often by private insurers, or by consortiums of insurers such as Blue Cross/Blue Shield plans) on administrative costs which are about three to four percent of claims costs. For the largest private employers, whose plans are self-insured but typically administered by insurance companies, administrative costs are typically five to six percent of claims costs. For that amount, insurers working with these plans are managing enrollment, paying claims, and making a little money.
For small businesses and individuals? Independent aggregate data is hard to come by, but a study by the Small Business Administration’s Office of Advocacy concluded that administrative costs for a group of small group insurers averaged between 33 and 37 percent of claims costs. That translates into 25 to 27 percent of premium. An article from The Center For American Progress recently estimated administrative costs in the non-group market to be 30 to 40 percent of premium.
(Insurers typically obfuscate this issue by pointing to administrative cost ratios which “average” 15 percent or less. If you take the 5% they charge large employers, add it to the 25% they charge small groups, then divide by two, you get 15%).
Why the huge disparity? It’s not corporate profits; insurers administer FEHBP and self-insured corporate plans efficiently and still make money.
It’s because the process of advertising, marketing, sales and underwriting is enormously inefficient and costly. Unlike other segments of the health insurance market, small group and individual sales are usually still done on paper.
Typically, more than 80 percent of applications for new business are returned at least once to a small business or an agent because they’re filled out incorrectly or incompletely. And because insurers typically will only accept their own application forms, shopping for coverage among three insurers means filling out three sets of paper forms. And nearly 95 percent of new business applications received by an insurer do not result in new business. That’s a huge amount of wasted effort and lack of productivity, the cost of which is passed back to the small business customer.
Agent compensation is relatively high compared to premium costs, but that’s because agents bear a significant chunk of the process’ inefficiency. If coverage were simpler to sell, they’d be happy to take less commission in exchange for making less effort. As it is, many agents no longer seek business from companies which don’t generate sufficient commission income, making it harder still for small employers to shop for coverage.
In addition to all this built-in inefficiency, marketplace dynamics also work against the small employer. Insurers have used state and federal regulations to undercut the ability of small employers and self-employed individuals to put the actuarial laws of large numbers to work for them by aggregating into large co-operative purchasing pools. A large portion of excessive administrative costs relate to the efforts of insurers to enforce their own rules by underwriting every small group employee and individual application as if it were an actuarial universe of one.
Insurers have actively resisted the development of large purchasing co-operatives which could create efficiencies and reduce costs (and therefore prices) because they see administrative efficiencies as reducing their revenues. Unfortunately, their efforts are often supported by Chambers of Commerce and other membership organizations which have come to rely on their sponsored health plans for big chunks of their revenues, and which fear real competition as much as their insurer enablers.
Small Businesses Need Health Insurance Reform That Works...Will They Get It? Part 1
Businesspeople…especially small business owners and self-employed entrepreneurs…have good reason to be apprehensive over the emerging debate on health care reform. After all, since the mid-‘90’s, when a Democrat President (Clinton) and a Republican Congress enacted the LAST round of reforms seeking to increase access to affordable health insurance (The Health Insurance Portability and Accountability Act), their premiums have escalated nearly 150 percent.
And that’s if they can obtain coverage at all. That last round of reforms also led to the expansion of the very lucrative (and exclusive) non-group insurance market, whose high costs and restrictive underwriting rules have contributed in no small measure to the growth, from 37 million to 47 million, of Americans who spend at least a part of the year without any sort of health insurance coverage at all. The National Federation of Independent Business estimates that up to 26 million of those uninsured Americans are either small business owners or their employees and family members.
Amid all the white noise entailed in the current debate, two issues are of particular interest to small businesspeople: a proposed mandate, requiring either individuals or their employers to purchase coverage or face a financial penalty; and the possible formation of a “public option,” which would provide purchasers with some sort of alternative to the private marketplace. Both issues are being flogged by representatives of the insurance industry.
While they haven’t said exactly how, insurers have stated that they’d be able to ease their underwriting rules on non-group policies (which result in highly-restricted coverage and/or very high prices for individuals with even modest health conditions) if government policy were to require that all individuals be insured. Their stated rationale is that requiring coverage would bring into the insured pool millions of young, healthy people who currently don’t buy coverage.
Insurers and their spokespeople have also expressed alarm at the possibility that Washington might support the formation of a public option, an “exchange” looking much like the current health plan for Federal employees, through which individuals or small businesses which find private insurance unaffordable might be able to find coverage. Insurers contend that a public plan, receiving ongoing Federal subsidies and operating on a very large scale, is just a means of forcing private insurers out of business.
Setting aside for a moment the notion that virtually nothing in this debate has been specific, it’s appropriate to look a little more closely at these two issues, because they may pose a possible key to a meaningful health insurance reform strategy.
Theoretically, there’s nothing wrong with a mandate to provide health insurance coverage. Proponents usually invoke auto insurance as an analogue. But a mandate makes practical sense only if the marketplace is sufficiently healthy that coverage is available to anyone who might choose to buy it; once the voluntary marketplace is working as well as it can, a mandate might be necessary to catch the outliers.
It simply cannot be said that the health insurance marketplace is working as well as it can. Consider that The Commonwealth Fund has estimated that more than ninety percent of individuals applying for non-group coverage end up not buying it. The most common reason: most of those applying have health conditions which either drive up the price of coverage to a point at which it’s unaffordable, or render them uninsurable at any price. And these conditions need not be life-threatening; individuals with routine hypertension, higher-than-ideal cholesterol, or asthma can find themselves facing costly “write-ups.”
Even those who purchase coverage can’t breathe easily. Most non-group plans contain pre-existing conditions exclusions which restrict coverage for current health conditions. And individuals who develop serious health conditions while covered can see their premiums skyrocket, or can find themselves dropped by their carriers and unable to find coverage elsewhere because they had to use their health insurance.
Saturday, July 25, 2009
The Alfred E. Newman Corollary
There's an old joke in fundraising circles: "Nothing is easier for two people to agree on than how a third person should spend his money."
In health care reform, the EASY part is to agree in principle on what the desired outcomes are: coverage for everybody; freedom of choice in providers; an excellent and inclusive benefits plan; Higher quality and lower costs.
How those things get paid for, and who pays...those are not so easy.
Princeton health economist Uwe Reinhart has been a leading voice for reasonable health reform for over 25 years. A brilliant academic who's also an exceptionally engaging speaker, Reinhart includes in many of his presentations a slide which summarizes the difficulty entailed in controlling health care costs. He refers to it as "The Alfred E. Newman Corollary." (For those too young to remember, Alfred E. Newman was the gap-toothed "cover boy" for Mad Magazine, which was THE source of juvenile, stupid humor in the 1950's and '60's.)
Here's what the slide says:
"One dollar of health care savings = one dollar of income someone isn't going to get."
There are many large and influential stakeholders in the health care debate...hospitals, physicians and other service providers, insurers, pharmaceutical companies, nursing homes, equipment makers, and many others...who have a place at the health care trough, and have a hand in a "health care industrial complex" which comprises 16% of the nation's GDP.
How likely is it that all these powerful interests will "take one for the team" and agree to see their revenues cut...or even the expected increase in their revenues cut...in order to "do what's right" to reform health care.
If you guessed "not bloody likely," you'd be right...
Insurers will say that hospitals, doctors, and drugmakers should take the cut, and people with insurance should expect to pay more. Providers say insurers charge too much, and that Medicare and Medicaid pay them too little already.
Every stakeholder in the debate can be expected to fight like wounded tigers to protect their place at the trough, and to pass the cost of health care reform onto the other stakeholders.
What could concern small businesspeople is that there's no one representing their interests in the debate. And there's certainly no one involved in the debate who understands how different the small business market is from the big business market.
So it's very appropriate to be concerned that when all the parties meet, they could very easily agree that business, especially small business, ought to pay for the cost of health care reform.
In health care reform, the EASY part is to agree in principle on what the desired outcomes are: coverage for everybody; freedom of choice in providers; an excellent and inclusive benefits plan; Higher quality and lower costs.
How those things get paid for, and who pays...those are not so easy.
Princeton health economist Uwe Reinhart has been a leading voice for reasonable health reform for over 25 years. A brilliant academic who's also an exceptionally engaging speaker, Reinhart includes in many of his presentations a slide which summarizes the difficulty entailed in controlling health care costs. He refers to it as "The Alfred E. Newman Corollary." (For those too young to remember, Alfred E. Newman was the gap-toothed "cover boy" for Mad Magazine, which was THE source of juvenile, stupid humor in the 1950's and '60's.)
Here's what the slide says:
"One dollar of health care savings = one dollar of income someone isn't going to get."
There are many large and influential stakeholders in the health care debate...hospitals, physicians and other service providers, insurers, pharmaceutical companies, nursing homes, equipment makers, and many others...who have a place at the health care trough, and have a hand in a "health care industrial complex" which comprises 16% of the nation's GDP.
How likely is it that all these powerful interests will "take one for the team" and agree to see their revenues cut...or even the expected increase in their revenues cut...in order to "do what's right" to reform health care.
If you guessed "not bloody likely," you'd be right...
Insurers will say that hospitals, doctors, and drugmakers should take the cut, and people with insurance should expect to pay more. Providers say insurers charge too much, and that Medicare and Medicaid pay them too little already.
Every stakeholder in the debate can be expected to fight like wounded tigers to protect their place at the trough, and to pass the cost of health care reform onto the other stakeholders.
What could concern small businesspeople is that there's no one representing their interests in the debate. And there's certainly no one involved in the debate who understands how different the small business market is from the big business market.
So it's very appropriate to be concerned that when all the parties meet, they could very easily agree that business, especially small business, ought to pay for the cost of health care reform.
Friday, July 24, 2009
You Could Poke An Eye Out
A wise old Senator who was a veteran of the LAST Great Healthcare Debate once said that the most valuable tool to bring into the debate is a pair of safety glasses, because "with all the finger-pointing going on, you could poke an eye out".
That element of the debate hasn't changed very much. Hospitals and doctors blame government bureaucrats and (worse) insurance companies. Insurers blame hospitals, doctors, pharmacists, and people who don't have health care coverage or live "unhealthy" lifestyles. Big business blames unions.
Everybody's right, of course.
For most small businesspeople, and for their employees and families, the principal way they access the health care system is through their health plans. Those plans are rising rapidly in cost, and business owners are under a lot of pressure, both to keep their companies operating through one of the most brutal periods in recent economic history, and to help protect their employees from the catastrophe which a single illness or serious injury can lead to.
I haven't really heard too much in this round of health care reform debate that would give much comfort to a small business owner, whether struggling to hang on to their health coverage or struggling to obtain it. If there's an improvement in the quality of the discussion at all, it's a shift from blaming small businesses for not providing coverage to their workers to, at least, recognizing that the majority of small business owners are trying to do the right thing.
But most small businesspeople know that smoke and mirrors are smoke and mirrors. And that it's been hard so far to understand how elements of the debate will really affect the prices they pay for health insurance.
And when the President says that Congress has achieved agreement on most things, but there are still details to be worked out, they know that means Our Friends In Government haven't figured out what reform will cost, or how to pay for it. That should make everybody in America, but especially small businesspeople, anxious. Because in their hearts, small businesspeople need to know that whether directly, through premiums, or indirectly through taxes, they're going to end up on the receiving end of the bill for a health care reform plan which probably won't help them very much at all.
And when the President talks about "exempting" small businesses from payroll taxes or mandates, they know that businesses with fewer than 10 employees are the ones who struggle most in the health insurance market; fewer than half of companies with nine or fewer employees provide coverage to their employees. The National Federation of Independent Business estimates that 26 million of the nation's uninsured citizens work in small businesses. So exempting small businesses from penalties doesn't really help them in their struggle to find or maintain access to decent health coverage.
We've been taught that it's not gracious, or impolite, to take political discussion personally, to ask, "What's in this for me?" But that's exactly what's called for in this debate. Small business owners have every right to ask, "How exactly is this reform idea going to help me? How much will it increase or reduce the price my business pays for health coverage?"
It's important that you ask because nobody's at the table looking out for you. And you know the old poker adage: if you can't recognize the sucker at the table, it's probably you."
I have a few ideas about how to reduce and control the cost of small business health care, based on years of experience at actually doing it. And I hope, over the next few weeks, to hear from a bunch of smart people who have ideas of their own.
That element of the debate hasn't changed very much. Hospitals and doctors blame government bureaucrats and (worse) insurance companies. Insurers blame hospitals, doctors, pharmacists, and people who don't have health care coverage or live "unhealthy" lifestyles. Big business blames unions.
Everybody's right, of course.
For most small businesspeople, and for their employees and families, the principal way they access the health care system is through their health plans. Those plans are rising rapidly in cost, and business owners are under a lot of pressure, both to keep their companies operating through one of the most brutal periods in recent economic history, and to help protect their employees from the catastrophe which a single illness or serious injury can lead to.
I haven't really heard too much in this round of health care reform debate that would give much comfort to a small business owner, whether struggling to hang on to their health coverage or struggling to obtain it. If there's an improvement in the quality of the discussion at all, it's a shift from blaming small businesses for not providing coverage to their workers to, at least, recognizing that the majority of small business owners are trying to do the right thing.
But most small businesspeople know that smoke and mirrors are smoke and mirrors. And that it's been hard so far to understand how elements of the debate will really affect the prices they pay for health insurance.
And when the President says that Congress has achieved agreement on most things, but there are still details to be worked out, they know that means Our Friends In Government haven't figured out what reform will cost, or how to pay for it. That should make everybody in America, but especially small businesspeople, anxious. Because in their hearts, small businesspeople need to know that whether directly, through premiums, or indirectly through taxes, they're going to end up on the receiving end of the bill for a health care reform plan which probably won't help them very much at all.
And when the President talks about "exempting" small businesses from payroll taxes or mandates, they know that businesses with fewer than 10 employees are the ones who struggle most in the health insurance market; fewer than half of companies with nine or fewer employees provide coverage to their employees. The National Federation of Independent Business estimates that 26 million of the nation's uninsured citizens work in small businesses. So exempting small businesses from penalties doesn't really help them in their struggle to find or maintain access to decent health coverage.
We've been taught that it's not gracious, or impolite, to take political discussion personally, to ask, "What's in this for me?" But that's exactly what's called for in this debate. Small business owners have every right to ask, "How exactly is this reform idea going to help me? How much will it increase or reduce the price my business pays for health coverage?"
It's important that you ask because nobody's at the table looking out for you. And you know the old poker adage: if you can't recognize the sucker at the table, it's probably you."
I have a few ideas about how to reduce and control the cost of small business health care, based on years of experience at actually doing it. And I hope, over the next few weeks, to hear from a bunch of smart people who have ideas of their own.
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