The Vermont House took bold and necessary action on March 24 by passing the universal health care bill, H.202. There are many businesses in this state that support reform because they believe the current health care system is unsustainable, inefficient and unfair. Vermont Businesses for Social Responsibility is one statewide business association that believes inaction is not an option and that businesses large and small, all across the state, will benefit from an improved system.
When VBSR solicits feedback from our 1,200 members, the stories we hear about the current state of our health insurance system are shocking and discouraging. In addition to the burden of annual double-digit cost increases, we hear about how the current system creates a competitive disadvantage to employers who offer decent health insurance benefits when their competitors do not.
As one might imagine it is hard to have the low bid on a construction job when you are paying $10,000 a year for each of your employees’ health insurance when your competitor is not incurring the same cost. It adds insult to injury when the business realizes they are also paying for their competitor’s uninsured employees due to the cost shift.
We frequently hear about lost opportunities; when a person does not dare leave a dead-end job to start their own business for fear of losing health insurance. Another less spoken of, but still common situation, is when a employer retains a mismatched employee because they don’t want the employee to lose health coverage. While this is admirable it is not smart business.
We also frequently hear about the tremendous amount of time and effort many businesses need to devote to exploring options and managing health insurance — this is time and effort that are being diverted from their core business functions. The time has come to de-couple health insurance from employment.
In addition to the obvious inefficiencies and counter-productive market signals the current system sends, from a dollars-and-cents perspective it is just not sustainable. Last summer VBSR surveyed our membership and we found that the cost of health insurance was the greatest obstacle to the success of our member businesses — greater than taxes, greater than regulations, greater than access to capital. The cost of health insurance was a greater barrier than any of the 19 other choices offered. If we truly want to help Vermont businesses succeed, we must take steps to move away from our employer-based health insurance system and we need to start now.
Here is what we know:
• Health insurance continues to get more expensive for employers. Sixty-one percent of our member businesses that offer health insurance pay more than the equivalent of 10 percent of payroll. Twenty percent of them pay more than 20 percent.
• Employers are responding to the increasing costs by offering lesser quality health insurance coverage to their employees. Thirty-six percent of survey respondents reported they have reduced benefits in the last 5 years.
• Employers are asking their employees to contribute more toward their health insurance. Forty-three percent of the businesses have introduced or increased employee contributions in the past 5 years.
H.202 sets Vermont on a path for reform. It sets up a process for payment reform and for reducing system costs. What H.202 does not do is impose a financing system — financing solutions would be tackled as part of future work.
It is important that we continue to have an open and honest conversation about what this bill does and does not do so that we may improve the system to the benefit of our businesses. We need to at least be willing to explore an alternative system that the experts tell us will save us $590 million in its first year of implementation, and that will bring equity and quality health care.
Andrea Cohen of Montpelier is executive director of Vermont Businesses for Social Responsibility.