Small Businesses Open To ‘Any Kind’ Of Government Intervention In Health Care
Small Businesses Open To ‘Any Kind’ Of Government Intervention In Health Care
Bob Laszewski points to an article by John Sinibaldi, a “well-respected health insurance agent in St. Petersburg, FL , [who] has become prominent in Florida’s broker community.” Sinibaldi argues that many small businesses would now accept some sort of government intervention in health care:
Across the board, the 100+ businesses I represent, all of them two to 50 full-time employees, have received increases between 13 percent and 75 percent this year. The average has been around 20 to 24 percent. That’s on top of more than 15 percent average increases last year, the year before, and the year before…So an increasing percentage of small businesses now feel that governmental intervention of ANY kind is preferable to the present untenable situation. In the small group marketplace, the pinch has been here for a long time, and has turned into a hard squeeze. Soon, it will squeeze the life out of the markets — at which point the small group market will implode.
The acceptance of “any kind” of government intervention is a departure from the rhetoric of 1993/1994, when the National Federation of Independent Businesses (NFIB) misrepresented Clinton’s employer-mandate as a crushing financial burden that would cost thousands of jobs.
Under Clinton’s proposal, “most small businesses that currently insure would have seen significant declines in cost.” Clinton’s plan capped total health care costs for companies participating in the new state-based alliances at 7.9 percent of payroll — dropping as low as 3.5 percent for the smallest businesses — provided discounts for the smallest low-wage companies and offered 100 percent tax deductions of health costs for the self-employed and independent contractors. But as Paul Starr explains, “few small employers understood that this obligation was limited to a share of payroll” and most “business simply did not trust the administration.”
Fifteen years later, small businesses may be more trusting of comprehensive reform. In fact, small business owners and their employees account for the largest share of the uninsured population—an estimated 27 million of the 47 million Americans without health insurance. Generally, small businesses have three major disadvantages when it comes to providing insurance:
- Risk is shared by a smaller number of workers, which makes them more expensive to insure as a group- Small businesses lose economies of scale, which makes their administrative costs more expensive
- Small business premiums can vary more from business to business and year to year, making premiums unpredictable and, in some cases, exorbitantly expensive.
Progressives have long maintained that insulating small businesses from growing health care costs would require “all interest groups — business owners, employees, the health care community and government” to contribute through the concept of shared responsibility. Such an approach would save small businesses from the inadequacies of the current system.
President-elect Barack Obama proposes establishing a health insurance exchange to connect individuals and employers to affordable insurance options. The plan establishes a large risk pool, spreads the cost and risk of insurance across a broad population, reduces the administrative costs of purchasing coverage, and ensures that premiums are set fairly and consistently. Small businesses would compare private coverage options with a public plan and purchase the most appropriate policy.
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One Response to “Small Businesses Open To ‘Any Kind’ Of Government Intervention In Health Care”
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Across a nearly fifteen year period, my firm offered health insurance coverage for employees and their dependents at no cost to the employee. When we initiated this plan, we though it made good business sense and was the right thing to do.
With the exception of the first few years of the plan, we saw our annual premiums rise typically between 30 and 50 percent each year, and were able to avoid or delay such untenable increases only by increasing annual deductibles, office co-pays, and by reducing benefits. Finally, the cost became so great—about $ 9,000.00 per covered party per year for combined premiums and deductibles—that it simply made no sense at all to continue coverage. We are now effectively self insured, with individuals making their own payments to providers out of pocket. To some yet to be established threshold, the company remains committed to reimbursing such expenses, but economic realities have rendered even that possibility difficult to achieve and unlikely.
I have not consumed $ 9000.00 of medical care in fifteen years, despite being 56 years old and visiting a doctor one to two time per year. Yet, I would have seen that amount paid on my behalf this year alone, simply for ‘covereage’ which exceeded the $ 1000.00 deductible and for payment of 80% of usual, customary and reasonable fees imposed by providers.
The system is well beyond broken for most consumers. While Federally administered programs like Medicare generally report administrative costs of roughly 3 percent, for-profit health maintenance organizations consume typically 10 times that amount in overhead.
The Federal government administers a healthcare system for each branch of the military, another through the Veteran’s Administration, another for the Public Health Service, and shuffles reimbursements for state Medicaid programs and military dependents, Federal employees and members of Congress, among others.
It’s long past time to argue about ‘government run healthcare’ and to finally get the for-profit segment out of the business by establishing a single-payer plan. It’s strange how some of the loudest public voices complaining about ‘government run healthcare’ are, in fact, recipients of it.
November 25th, 2008 at 4:26 pm