Job-insurance link is strained

Costs threaten employee benefit

August 30, 2009 

Bill Atkinson is CEO of WakeMed Health & Hospitals and is on an American Hospital Association task force on health-care reform. He recently began blogging on the hospital's Web site, www.wakemedvoices.org, about health care and reform. Here is a recent highlight.

Uwe Reinhardt's recent commentary on CNN.com highlights the economic dangers that threaten the American middle class if efforts to reform the health-care system fail. Reinhardt, a political economy professor at Princeton University, made some very interesting points about the relationship between health insurance and employment in our country.

Reinhardt warns that without health-care reform, "Millions [of middle class Americans] will lose their employment-based insurance ... and millions will find themselves inexorably priced out of health care as we know it." He also points out that companies view health insurance as part of an employee's compensation package -- therefore when costs increase, this financial burden falls on the individual. He's right. Without reform, many more Americans will find themselves unable to afford health insurance because of the rising costs of health care.

Case in point, a story published in The News & Observer pointed out that health insurance premiums in North Carolina have risen five times faster than salaries over the past decade. With unemployment high, it leads to the question -- why is health insurance tied to employment in the first place? Part of the answer is that employment-based insurance in our country has long been based more in tradition than rationality. It was originally a perk -- an enticement as part of a larger benefits package that employers offer to attract and retain high quality employees. Now, health insurance premiums are beyond the reach of what many individuals can afford by themselves, making employer sponsored group plans one logical gateway to coverage.

But as the price of health coverage continues to climb, it is tougher for businesses, both large and small, to continue to foot these enormous costs. This is especially true for small businesses that currently are not offered price breaks due to economies of scale. And because of the growing number of uninsured Americans, cost shifting inevitably occurs. Additional health-care costs are passed on to whoever is paying the bills -- be that businesses or taxpayers. Businesses are clearly paying more than their fair share, and there is a lack of clear public policy to correct it. In effect, this is taxation without representation. Put simply: We taxpayers, businesses and individuals are paying to care for the uninsured anyway, and we're doing it in the most expensive way possible.

As we've heard in town-hall forums in Raleigh and across the country, small business owners fear that they won't be able to compete with large corporations if they're required to provide insurance to all employees. I am engaged in a number of active leadership roles in the community beyond health care. In those settings, I have been hearing these concerns from business leaders for many years now. And I would have the same fears if I were a small-business person; I would want someone to assure me that we would all be sharing in the costs. Equalizing costs of health coverage will ensure that businesses both large and small can be competitive.

I don't disagree that employment is the best place to cover the largest number of Americans, but this can only continue to be possible if there is a balanced distribution of the costs of the uninsured across the entire national economy. It's not a matter of having a view that we're responsible for everybody, but the reality is that the costs of health care are so high, no individual sector can afford to pay for it alone. I am always in favor of private sector solutions. But, if and when the private sector fails to find a solution or refuses to, and people continue to fall through the gaps, there is a time and place when public policy has to be brought to bear to define a solution. Public policy shouldn't be a hammer but a tool that helps mend the breaks in the safety net to cover all Americans. On any given day, any one of us could find ourself without coverage. This is something that is bigger than us as individuals, and we must find a public/private sector approach that realistically addresses access, cost and quality of care for all.

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