Health Insurance Costs Out of Control

Posted 2-12-10

Everyone reading this article has an opinion on the health care issue. People's views and opinions are shaped by their own experiences. I would like to describe your county government's situation and the challenges it presents the Commissioners, which has undoubtedly helped to shape my views on the topic.

When I started in 1996 the county had a single health insurer, was premium based (rather than being self-insured), and other than tiny co-pays, employees contributed nothing toward the cost of coverage. At the time we were paying about $8 million annually for that benefit.

Since then we have taken a number of prudent steps to limit the annual increases to the county's health care costs. We introduced competition among insurers that administer our program. We became "self insured", meaning we pay the cost of claims. We incentivized the use of generic prescription drugs over brand name drugs. We initiated employee contributions towards the cost of premiums, increased employee co-pays for doctor visits and prescriptions, and instituted an employee deductible for medial services. Yet, even with all these changes we are projecting to spend $18 million on health care in 2010. In other words, the cost of health care for county employees has more than doubled in just 14 years, despite the fact that our employees are paying a greater share of it.

From an employer's perspective the growth is completely unsustainable. We could reduce benefits and shift an even greater financial burden on our employees, but that strategy doesn't improve people's health or their financial well-being. Something must be done as the cost of health care has far outpaced the rate of inflation for decades. Now, honest people can debate the solutions to the problem, but there is no way to avoid the fact that our nation's health care system is broke and the financial burden is crushing families, businesses, and, yes, local governments.

One of the buzz phrases always thrown around during health care reform debates is "government-run". I can't help but think that the fear of "government-run" health care is more a result of a political philosophy than based on fact. Already millions of Americans have "government-run" health care. People on Medicare and Medicaid, as well as veterans, have "government-run" health care. Every person who works for the federal, state, county or municipal government has "government-run" health care. They may hire private firms to administer their programs, but "the government" sets the parameters of the coverage and the public pays for it. I have heard people say they don't want some government bureaucrat deciding about their coverage. Do they feel better that some private insurance bureaucrat, whose loyalty is to their employer's bottom line decides instead?

There are countless models to explore, ranging from government administered single-payer plans like Britain's or Canada's or the Netherlands' plan that is essentially highly regulated private insurance. Sure, the United States is ahead in most areas of medical technology, but we are decades behind the rest of the industrialized world regarding universal coverage.

Improved access to affordable health care is something the business community can rally behind too. From an employer's standpoint the most contentious part of labor negotiations is health care, not wages. It is also much more difficult to accurately budget for health care than wages. While I know of a lot of small business owners who support health care reform, I am puzzled as to why the business community is not leading the charge to separate health coverage from employment. In many ways the business community has the most to gain from revamping the system.

Without a doubt the cost of providing health insurance for employees puts American industry at a competitive disadvantage. When the cost of producing automobiles made in the USA includes the cost of employee health insurance and those that are made in Japan or Korea do not, which one is less expensive to produce? Several years ago I was visited by workers whose jobs were being relocated by their employer to Germany. The jobs in Germany paid $2 per hour more, but health coverage was not part of cost. So it was cheaper for that manufacturer to move jobs overseas, where in this case they paid a higher wage but did not have to provide employee heath insurance.

In these challenging times, the devastation of a lost job is only compounded by losing health coverage along with it. The millions of Americans who do not have coverage are for the most part working people whose employers cannot afford coverage for their employees. It is not our senior citizens (they have Medicare) and it is not the poor (they have Medicaid). The most vulnerable group that needs help is average, working-class, "regular" folks.

Regardless of one's political ideology the status quo is not working. And really, this should not be such a partisan issue anyway; fixing the health care system is in our nation's best interest. The attitude I sometimes see of "I got mine…to heck with everyone else" is unfortunate and un-American. From our earliest days we shared burdens and responsibilities in order to collectively protect ourselves and improve our society. To continue this American tradition in the realm of health care, we need to reduce inefficiencies, promote preventive care, expand coverage and limit profits for our supposedly "nonprofit" insurers. After all, should profitability really be the underlying principle of our health care system? That principle has left us with an unsustainable system that is crushing individuals and businesses alike.

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