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Health Insurance: ECONOMIC NECESSITY, PERSONAL RESPONSIBILITY December 16, 2009

Posted by Obi Jo in : health care reform, health insurance, health insurance reform, health reform, politics, Public Health, Tax Policy , trackback

In our section ‘details on the plan’ we have offered, unconventional, yet we think innovative solutions to address the conundrum of having business in the business of providing health insurance coverage (which for 99% of businesses, is not their business).  We have argued from day one that the  post-WWII model of employer benefits including health insurance, while understandable historically, made no sense in the new economy that is evolving in the 21st century. Businesses need to be free to focus on their core competencies and not have to worry about superfluous matters, such as health insurance policies and their administration, which should be the responsibility of the individual.  Just as a worker brings a resume with his/her qualifications, education, special training and experience, they should bring their own health insurance.  Employers and potential employees SHOULD NOT have to entertain that issue as part potential employment discussions.

A recent article in the NY Times on the drain on innovation being caused by the current link between employers and health insurance is insightful (see below). However, we cannot get over this problem without some fundamental changes.  These are changes which ARE NOT encompassed in the health bills now being debated in the Congress.  They include freeing business from the need to provide health coverage, mandating that citizens obtain and maintain health coverage, addressing costs for individuals through the dual action of raising the minimum wage and exercising real regulatory authority and oversight in regard to the health insurance industry.  Below, we have listed just 4 of the current 16 points of “the plan” which we have outlined and evolved to create real, meaningful health care reform.   Innovation and the free market are linked.  We must free our businesses to do what they do best, innovate, create jobs and grow.  Real health reform can do just that, but not without common sense mixed with out of the box thinking . . . obi jo

(1) All persons must have health insurance from the private sector or government sponsored plans.

Many have objected to this as a violation of personal choice and freedom.  However, I would suggest that it is a dereliction of civic responsibility (if such a thing still exists in America) to force others (fellow citizens, doctors, hospitals, insurers, government - i.e. taxpayers) to pick up the tab for you when you become very sick or injured (as you WILL at some point in this life).  By mandating coverage with penalties, just as we do for auto insurance, we put personal responsibility back in the equation.  It has been far too long since that was the case as the government in particular, along with big labor and big business to varying degrees, have sought to remove responsibility from the individual and to displace it to some other entity.

(5) All company-sponsored programs would be phased out over three years (better than a tax break).

This will strike some as a major politically incorrect proposal.  However, if we are to restore personal responsibility back to the system we must do so by removing the need for businesses, which are clearly not in the health insurance business, from it.  Business should not be in the health business, but in business.  The morass created by having to have benefit coordinators (who spend most of their time on health insurance matters) instead of focused on traditional benefits (retirement, vacation, leave, etc., etc.) is inefficient and costly.  Elimination of the need for businesses to carry these costs will result in markedly reduced overhead, which is even better than a tax break to expand their current coverage systems as some have suggested.

(6) Minimum wage increased by $2.00 per hour so low income workers would have no excuse to offer for not having coverage.

Again, there will be resistance in many quarters to this proposal.  As we well know, the minimum wage is in the process of being increased as we speak ($6.55 effective July 24, 2008 and then again rising to $7.25 per hour effective July 24, 2009).  However, a further increase as suggested beyond this is a better format than asking businesses of all sizes to carry the full load for providing health insurance, which should be a personal responsibility.  For a full time worker, this $2 increase translates to $4,160 per year ($2 x 2080 hours).  That is more than sufficient for workers to purchase their own health care coverage within the context of the full plan as outlined here.

(7) Private health insurance should be re-structured to function as a regulated utility. Their rate structure should be only that needed to operate (process payments, review claims etc) plus a set profit of not more than 8-10%. Rates to be set nationally not state by state, or group by group.

Another very controversial approach. This site favors open markets and market based solutions to problems.  However, if we view health care as a national security issue and personal citizen responsibility (not necessarily a ‘right’ as some would argue) then it is fairly easy to justify some set controls on health insurance premiums and rates.  At present, there is little control, and since product offerings vary so widely and offer insurers so many avenues to deny claims, there must be some balance put into play.

Details on “the plan” – http://realhealthreform.wordpress.com/the-plan/details-on-the-plan/

This link between insurance and innovation isn’t relevant merely for the obvious reason that Congress is in the late stages of debating health reform. It is also relevant because the United States is suffering from an innovation deficit. Even before the financial crisis, the decade that will end later this month was on pace to have the slowest economic growth of any since before World War II. The No. 1 reason, I’d argue, was our innovation deficit.

Only 46% of companies with three to nine employees offer health insurance, down from 56 percent a decade ago, according to the Kaiser Family Foundation. Why? The administrative costs of insurance are high when they aren’t spread over a large group of workers. Insurers also know that the individuals and small companies who sign up for health plans tend to be the ones with the most medical problems, pushing premiums for such plans even higher. So unless the government steps in to create a large pool of workers who can then buy insurance more cheaply, many small companies will go without it — and some workers will find themselves tethered to the safety of a big company.

If Health Care Reform Fails, America’s Innovation Gap Will Grow – http://www.nytimes.com/2009/12/16/business/economy/16leonhardt.html?_r=1&ref=politics

The United States spent 16 percent of its GDP in 2007 on health care, higher than any other developed nation. The nonpartisan Congressional Budget Office (CBO) estimates that number will rise to 25 percent by 2025 without changes to federal law (PDF). Employer-funded coverage is the structural mainstay of the U.S. health insurance system. According the U.S. Bureau of Labor Statistics, about 71 percent of private employees in the United States had access to employer-sponsored health plans in 2006. A November 2008 Kaiser Foundation report notes that access to employer-sponsored health insurance has been on the decline (PDF) among low-income workers, and health premiums for workers have risen 114 percent in the last decade. Small businesses are less likely than large employers to be able to provide health insurance as a benefit. At 12 percent, health care is the most expensive benefit paid by U.S. employers, according to the U.S. Chamber of Commerce.

Healthcare Costs and U.S. Competitiveness – http://www.cfr.org/publication/13325/

According to data from the Bureau of Labor Statistics National Compensation Survey (NCS), in March 2006, 71 percent of private industry workers had access to employer-sponsored medical care plans and 52 percent participated in such plans. In the NCS, employees are described as having access to a benefit plan if it is available to them for their use. Employees are considered as participating in contributory plans if they have paid the required contributions and fulfilled any requisite service requirements. Employees in noncontributory plans are described as participating whether or not they have fulfilled any applicable service requirements. The term “take-up rate” refers to an estimate of the percentage of workers with access to a benefit plan who participate in the plan. The term “incidence” can refer to either rates of access to or rates of participation in a benefit plan. Most employees place a high value on benefits, especially benefits such as medical, life, and disability insurance. Firms employing large number of employees generally can negotiate lower group insurance rates and better coverage than individual employees are able to negotiate in the open market

The Likelihood of Having Employer-Sponsored Health Insurance – http://www.bls.gov/opub/cwc/cm20071128ar01p1.htm

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