Conference Blogging: The Business Case for National Health Care Reform

The Business Case for National Health Care Reform

In her opening remarks, moderator Cheryl Matheis, director of health strategies, Office of Social Impact, AARP, declared “It seems to us the business community is ready to engage in health care reform.” She also suggested that states can serve as laboratories, noting that two panelists in this session are from California and can tell us something about what is happening there.

 She then introduced Bruce Bodaken, CEO of Blue Shield of California, and John Arensmeyer, founder and CEO of the Small Business Majority.

 Bodaken then began by talking about how universal coverage improves efficiency.

First, it “shares cost broadly and evenly,” he said. Today as more businesses drop coverage, costs are shifted to those businesses that still provide benefits. The businesses that provide coverage are paying for three groups:  (1) their own employees, (2) other companies’ employees who get care but don’t have coverage, and (3) Medicaid patients for whom government reimbursements for health care don’t cover the full cost of that care.

A 2007 New America Foundation study shows a 10 percent cost shift, which has helped hike premiums in recent years, Bodaken notes. The “freeloaders” who aren’t taking up the responsibility to provide coverage—or can’t for economic reasons—are helping to drive rising premiums.

Like others at the conference, Bodaken talked about giving employees financial incentives for weight loss and giving up smoking. “We offer cash payments to our employees for participating in smoking cessation or weight-loss programs,” he explained. Of course some employers are wary of investing in such programs. “Wellness programs bring a long-term benefit—what if an employee changes jobs?” [On the question of whether financial incentives are effective in causing employees to shed pounds and keep them off, see “Should People Who Don’t Take Care of Themselves Pay More?” on www.healthbeatblog.org.]

Bodaken’s answer: “If we have wellness programs and other employers have wellness programs, we’ll benefit from each others’ efforts. . . . We’ve go to work together to provide those programs. . . . We’re less interested in trying to “risk select” by hiring healthy people—we’re more interested in keeping our employees healthy.”

Employers can be very powerful in pushing for reform, he added, pointing to what has been happening in California.

He also pointed out that “Lack of universal coverage means people keep a job just because they need the benefits, which distorts the labor market.”

Finally, Bodaken added, “We are not getting value for our health care dollars. As research done by Dr. John Wennberg [at Dartmouth] suggests, about 30 percent of care is unnecessary, wasteful, and even dangerous.”

Turning to California, Bodaken talked about what he termed “a year of strange developments, even for California”:

• a  Republican governor offerings sweeping universal coverage;

• Democratic  leaders propose less than universal coverage;

• insurers  support guarantee issue;

• hospitals agree to tax themselves; and

• business  proposes sales tax.

He also spelled out the framework for a deal:

•  sliding scale for employer contribution (1 percent to 8 percent);

•  individual  mandate/guarantee issue with solid enforcement;

• 5  percent to 7 percent cap on individual contributions to premium;

• moderate deductible ($1,500 to $2,500); and 

• financing from employer fee, hospital tax, and sales tax.

“We would not support a bill with guarantee issue unless it has an individual mandate,” he added.

Will reform in California succeed? “Some in labor oppose individual mandate,” he observed. At the same time, he said, “Businesses accepts the sales tax—but not if it’s a big mandate.”

“There is a delicate balance between how much individuals are asked to contribute

And the scope of benefits they receive,” he added.

The ballot measure will be a challenge, he acknowledged, because

• California sales tax is already high;
•  some businesses will oppose it; and
•  single-payers advocates likely to oppose these reforms.

Nevertheless, a combination of government, labor, business, AARP, and Democrats is powerful in a high-turnout presidential election year.

John Arensmeyer, founder and CEO, Small Business Majority, then addressed the audience, and stressed three basic points:

•  Small  business is an essential ally for health care reform.
•  Healthcare reform is necessary for small business success and prosperity.
•  We now have evidence that small business wants to step up and play a constructive role.

Arensmeyer noted that while some people suggest that health care reform will lead to socialism, the fact is that our present system interferes with free-market entrepreneurship. Echoing a point made earlier, he noted, “People feel they can’t leave a job where they have insurance. Some ask, ‘If Bill Gates had had to worry about health insurance, would he have started Microsoft?’”

At the end of the discussion, in response to a question from the audience, Bodaken addressed the elephant in the middle of the room: the question of cost. If health care costs continue to spiral upward by 6 percent or 10 percent a year, no amount of reform is going to give us a sustainable system. Providers are going to have to improve efficiency, the panelists agreed. Rather than capping the rates we pay providers, we have to demand accountability.