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Small Businesses Disconnected on Health Reform

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In today’s Washington Post, Keith Girard writes,

Under the current system, small businesses will see their premiums increase by as much as 20 percent next year, with the average increase around 13 percent — more than five times the expected rate of inflation, according to a new survey by the National Small Business Association (NSBA).

The survey findings are in line with insurance premium increases between 2000 and 2005, according to the Kauffman-RAND Institute for Entrepreneurship Public Policy, a California research group. It found that the median cost of health insurance for businesses with fewer than 25 employees rose 43.5 percent during that time.

Small businesses that don’t offer insurance realize that they are at a competitive disadvantage when it comes to hiring and retaining top employees. Yet 89 percent of firms without health insurance have no plans to offer coverage in the next year because it’s too expensive. If it were affordable, however, 63 percent say they would offer it.

Not surprisingly, a strong majority, 61 percent, thinks reforming the current system is important, according to the NSBA poll. But an even bigger majority, 73 percent, is opposed to being required to contribute financially to their employees’ health plan or to pay some kind of fee if they don’t.

In contrast, a Thomson Reuters poll found that 63 percent of Americans surveyed are willing to pay for health care reform if it delivers quality care at an affordable cost.
In other words, small business owners want reform, but they are unwilling to pay for it. Is this realistic? Hardly, but it is indicative of the disconnect that exists among small business owners on the health care issue.

Keith Ashmus, NSBA chair and co-founding partner at Frantz Ward LLP in Cleveland, summed up the issue with the release of the study. “The key is enacting reform that won’t make costs go up — reform that guarantees access, affordability, and quality while ensuring American small businesses are no longer at a competitive disadvantage,” he said.
Without the [government] option, what’s left is a package of “reforms that are mere trite extensions of what the U.S. government has been doing for decades,” wrote Holman W. Jenkins, Jr., this week in a commentary in The Wall Street Journal.

This is one more view of the health insurance reform being argued in Congress. Others, such as Steve Pearlstein, Business Editor of the Washington Post, and Dylan Ratigan of MSNBD and previously business journalist at CNBC, write that the current plan does not provide open competition. That competition comes in the Wyden Amendment which is being blocked from coming up for a vote. Both journalists see the stipulation that denies workers from mid to large sized employers from participating in the health exchanges as anti-competitive because it prevents those employees from lowering their health insurance costs. As Ratigan writes in yesterday’s Huffington Post,

Instead of seeking answers to the problem of paying for and providing medicine, we are doing the exact opposite. Taxpayers’ money is being played with by politicians who are desperately trying to protect the competition-stifling, false security of the monopolistic employer-based health care system and its outdated, over-charging, under-delivering ways. Given the least consideration are those affected the most — the patients and the doctors who care for them.

However, The Hill points out, the Wydan Amendment would, by necessity, require the overturning of the health insurance companies anti-trust exemption…to which they are totally opposed.

Although the proposal is very popular with Democrats and liberal groups, Reid has concerns that attaching it to the healthcare legislation risks damaging prospects for an effort already facing significant hurdles.

Republicans say Reid is being calculated in a different manner, dangling the standalone bill as a way of intimidating the companies into making concessions on Obama’s broader healthcare objective. But they will have to overcome recent testimony from former Senate Republican Leader Trent Lott, who backed a broader effort to lift the exemption for the entire industry.

So far the powerful insurance industry has held back waging a full-out battle against Democratic health reform proposals because companies stand to gain tens of millions of new customers. But adding language that would open health insurance companies to prosecution by the Justice Department would provoke a strong counterattack from the industry.

Reid has long argued that health insurance companies are able to gouge consumers because they are not subject to the Sherman Antitrust Act, which outlaws trusts and monopolies that stifle competition.

“They could be conspiring to fix prices as they do every day and not a single thing could be done about it because they are not subject to the law like everybody else,” Reid told a crowd of healthcare workers at a Tuesday rally.

“The only business that has a sweetheart [deal such as] they have is Major League Baseball. So is it any wonder that the biggest burden we have to fight [on] the healthcare reform issues that we have is the insurance industry? Of course not.”

This is not to say that Republicans are on the right side of this anti-trust issue and, thereby, opening up greater competition. The Hill goes on to write:

Republicans charge the legislation would destroy the industry.

“Some of my colleagues would like to destroy the insurance industry because they want a government-run healthcare system,” said Sen. John Cornyn (R-Texas), a member of the Senate Finance panel.

Cornyn said that Reid is waving the threat of antitrust legislation to cow the industry into making more concessions on healthcare reform.

“We all understand what he’s trying to do — it’s an intimidation tactic,” Cornyn said.

In all of these negotiations, I keep reading about industry concerns and concessions to keep them happy. But I have to wonder where are the concessions to keep the rest of us Americans happy. Why is Congress kowtowing to an industry that is protected from anti-trust laws, raises its prices by 25% minimum per year, and now lobbies against any competition caused by the Wyden Amendment or a Public Plan?

Is this what Madison envisioned when he wrote the Constitution or his share of The Federalist Papers? I don’t think so.


Written by Valerie Curl

October 1, 2009 at 8:32 PM

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