Healthcare: A Moral & Business Failure with a Pragmatic Solution

While we've focused on jobs, the stock market, and the economy, we forget other issues. When the flood waters breach the levee it's not time to talk about how lousy some of our schools are, the cycle of poverty, or the rights of women in Saudi Arabia.

Those are all important issues, but please pass the sandbags and we'll talk about it when things dry out. 94.5% of those wanting to work are, in fact, and while it will likely get worse, employment will not likely drop below 90%, especially with Obama's emergency response to the economic debacle.

But the next part of the economic crisis is also the great moral failure of our generation: healthcare. Most of us know by now that 50 million people are uninsured. Another 80 million or so are under-insured--not covered for either major medical (leading to bankruptcies) or primary care (leading to major medical issues)--and thus at risk. The risk, though, does not stop with them, it extends to the entire community. In Pennsylvania alone, about 4 million people are under-insured or uninsured.

So that's what we know. What we don't know about our inadequate, costly, employer-based system of healthcare is how much the Wall Street meltdown will drive up premiums to business this coming year, and what employers will do to handle it.

Our rates increased by more than 25% this past year, and have doubled over the past 4 years. In May, when we renewed our contract, the Dow was at 14,000. This week it hit 7500. Historically, premiums rise moderately when the markets go up, and rise dramatically when the markets fall. This is partly because insurance companies invest our premiums on the market, and when thy lose money they make it up on the backs of businesses.

Our options are limited with a dramatic increase. If rates do go up like they did last year, that's about a $40,000/year increase. That's a job. That's important marketing investment. Or that's profit we can use to reinvest and grow.

So we can do one of the following:

• cut benefits, exposing our employees to the risk inherent in being human in modern America
• cut an employee, reducing our capacity and effectiveness
• cut profitability, reducing the value of the company.

So far, we've chosen the last one. But we're an exceptional company; healthcare is one of the things we have embraced as part of our "dialtone" of company principles. (This is not to say we are perfect; we certainly make mistakes but we're a solid company with good people and a growing business).

This year, though, the increase will be huge, and the majority of employers will either reduce costs through employee layoffs or reduced benefits. With 7 million small businesses, that might be 3.5 million jobs. Maybe it's less; maybe half will choose the other option of reducing coverage, and we lose 1.7 million jobs. Either way, the increase will hurt those people directly, hurt savings, hurt new investment, reduce tax revenue at local, state, and federal levels, increase bankruptcies and foreclosures, and reduce the capacity of business to compete. So that's bad.

This is the problem with employer-based healthcare. Those losing their jobs now will have no healthcare unless they pay for COBRA (basically an expensive way of staying covered, usually costing over $12,000 a year), which given their new income level of $0 will be pretty tough. But most of those laid off will not qualify for publicly subsidized healthcare. So they are at risk. Which threatens the stability of the healthcare system itself.

I have not seen an employer-based healthcare system that achieves the following:

• covers all Americans with comprehensive healthcare (everything's covered)
• reduces the complexity and cost of the healthcare payment system
• reduces or guarantees cost levels to business
• reduces costs to individuals
• covers all regardless of employment
• eliminates costly defensive medicine (i.e., when docs over-test, over-prescribe, etc to CYA).
• eliminates the cost of healthcare administration
• enforces quality of care standards.

So this market-based system we've tried for decades has failed miserably. Obama's proposal is better, but it doesn't meet the requirements above. But many countries--87, I believe--have systems that do meet the above requirements. None of them have employer-based systems.

We can do a lot better than this. We get so hung up on politics, fear of systemic changes, and arguments about market-based solutions. Well I'm a capitalist, and the health insurance system is a drag on capitalism, friction in the economy, and, if care is the goal of the healthcare system, it's a market failure and bad for business.

We've allowed ourselves to get suckered into accepting the pain, suffering, death, and wasted dollars as the norm. That any of us is left without the basic human need of healthcare is our time's moral failure. I'm hoping we can get past the clutter of market mythology and add healthcare to the "dialtone" of our country. We can start in this state with the Family and Business Healthcare Security Act --House Bill 1660.