Written by Russ Bennett
NorthLand Design & Construction Inc. has been providing health insurance and a living wage since we started in 1978. NorthLand, like all businesses, has to manage its production costs. We have to meet our clients’ budgets and deadlines. To survive, all businesses have to be able to control costs.
Our health insurance costs are out of control. In 9 of the last 15 years, our health insurance costs have increased by double digits, with multiple years at 22 percent and 30 percent plus. The good years are merely single-digit percent increases. This system of using insurance to deliver health care is not sustainable.
For us, providing health insurance is the only cost in business which we can’t control, other than to reduce or drop coverage. Increasingly many businesses are asking employees to pick up some of these costs by paying a percentage of the premium and purchasing policies with increased deductibles and co-pays.
In fact, even though a business may be picking up 75 percent of the cost of the health insurance and the employee 25 percent of the insurance costs, because of the increased sizes of the deductibles and the co-pays that individual must pay closer to 50 percent of their health care costs.
Businesses that provide health insurance for their employees (and there is no standard for what this means) cannot compete with businesses that don’t. All businesses that provide health insurance as a benefit are struggling with these unmanageable costs whilst trying to find a responsible way to make sure their employees are covered.
An employee who has a $5,000 deductible and a 20 percent co-pay could be on the hook for tens of thousands of dollars of actual health care costs (even after having paid in well over $100,000 over 30 years). Harvard researchers have found that 62 percent of all personal bankruptcies are due to medical bills. It is a cruel twist for people who have worked all their lives to end up unable get the medical care they need and be driven into economic ruin by the system that was supposed to protect them but doesn’t.
Health insurance is no more actual health care than automobile insurance is a car. There is no lack of horror stories of people being denied procedures they need but can’t afford or are denied because the insurance they have won’t cover the costs. Health care and health care insurance are so expensive that employees who work for companies that provide health insurance as benefit are afraid to leave their jobs and pursue careers they really want for fear of losing their insurance. This is debilitating for the businesses that experience diminished production and creativity as a result and it is unhealthy for the individuals and the vibrancy of the society at large.
Decoupling the costs of health care from employment will make businesses more sustainable and competitive and provide an equal playing field for that competition. A single-payer system that provides a better level of care than the existing system provides and decouples employment from the costs of health care is the goal. A quality single-payer system that covers all Vermonters and Vermont businesses will give Vermont businesses a competitive advantage over businesses in other states. This will foster economic development. Toyota built its North American plant in Canada in part because Canada has a universal health care system and the costs to business are quantifiable versus out of control like our current system.
Health care costs need to be spread fairly and evenly over a broad-based tax system that includes all of us. All taxpayers, whether they have health insurance or not, are currently paying for the health insurance of all state employees, teachers and civil servants. We all pay for Medicare and Medicaid. The hospitals and insurance companies and doctors are getting paid and providing care to people who have no insurance. Everyone, whether they do or don’t have coverage, is paying for the un- and under-insured.
Insurance industry profits and administrative costs consume 30 percent of the cost of health insurance. There are savings to be had in the duplication of administration, elimination of a middleman’s profit and in the incentives from insurance payments to medical professionals that reward testing that may not be necessary. According to the World Health Organization, America is 37th in the world in the quality of health care but number one in the world in terms of cost per capita for health care. There is waste and misappropriated profit in the existing system.
We would never pay an insurance company to pay the highway department or police department or NASA; imagine what a mess that would be. Insurance and the free market are part of the problem, not the solution. If they could have solved this, we wouldn’t be in the mess we are in. My primary care provider sold his practice to a hospital in part because he couldn’t spend his time managing all the conflicting insurance companies who are controlling his delivery of actual health care.
The general health of our society is everyone’s shared concern – when people are unhealthy and don’t get preventative care and rely on emergency rooms, that burden is borne by all of us.
There is a moral imperative here that is the underpinning of our society which has been so clearly demonstrated in neighbor helping neighbor in the aftermath of Irene. We need to exercise that imperative in an even-handed honest way to deliver preventive and other actual health care services.
How does this all relate to the exchange that will happen in Vermont as mandated by the federal government? The exchange is not the long-term solution but it can be a stepping stone to a single-payer system which is the efficient goal. Everyone that can legally be put in the exchange needs to be in it – no exceptions.
The exchange will have to be managed and its overhead will be borne by people in the exchange. Exempted people will benefit from the market pressures brought about by the exchange, without bearing any of the cost. This is patently unfair – a single-payer system paid for by broad-based taxes and modeled after Medicare and Medicaid will never be questioned constitutionally and wind up at the Supreme Court. We have just seen the mandated insurance model argued at that court for an entire week.
Many businesses attempt to provide health insurance for their employees and make the best decisions they can for themselves and their employees. These decisions have profound impacts on our employees’ most personal and private lives, both physically and economically. Businesses should not be making these decisions or carrying this responsibility.
Bennett lives in Waitsfield and is the owner of NorthLand Construction