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.
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