Employer Burden

HEALTH CARE: The Business Case for Reform

CEO of Kelly Services, Carl Camden, has an excellent piece up on The Huffington Post making the business case for health reform. Camden made a similar argument at an event earlier this year co-sponsored by New America, the Committee for Economic Development, and Better Health Care Together. Check out video from that event below and read excerpt from Camden’s latest piece after the break:

COST: Government Report Describes Health Care’s Drain on Small Business

Skyrocketing health care costs are a burden on small businesses and harm their workers, says a new U.S. Department of Health and Human Services report. No surprise there. But the sheer speed with which the problem is worsening makes comprehensive reform of the American health care system all the more urgent.

Escalating health care costs are damaging small businesses and the people they employ by consuming more payroll dollars and limiting business growth, the report states. Perhaps the grimmest news is how rapidly and sharply health insurance offered by small businesses has declined. From the executive summary:

In the past two years, more than half of small businesses that offered coverage reported switching to plans with higher out-of-pocket costs in response to rising premiums. Another third switched to a plan that covered fewer services, and 12  percent dropped coverage entirely.

The decline in quality and coverage of health insurance by small businesses is well-documented, but that's still a startlingly rapid decline in coverage for the millions of Americans working in small businesses.

COST: CEOs Concerned about Health Care Costs

Recently, the Business Roundtable, an alliance of CEOs who companies provide more than 35 million Americans with health insurance coverage, released a report adding to the evidence that the  U.S. health system is in trouble. And it's causing trouble for business. Paying for health care, the group said, was seriously hurting the ability of U.S. firms to stay competitive in the global marketplace.

Weighted against leading economic competitors, the United States spends more and receives less value than both G-5 countries (Canada, Japan, Germany, the United Kingdom and France) and emerging industrial BIC countries  (Brazil, India, and China). On average, U.S. workers and employers receive 23 percent less value from our health care system than G-5 workers and employers, and 46 percent less value than Brazil, India and China. For every dollar spent on health care by U.S. firms, G-5 firms spend only 63 cents, and BIC countries spend just 15 cents. Per capita, the United States spends $828 more per person than G-5 countries and $1,654 more per person than BIC countries. Despite paying much more, the Business Roundtable reports that the U.S. does not have a healthier workforce.

COST: Small Businesses, Big Health Care Problems

For small businesses the economic hits just keep coming, and as the New York Times reminds us, the hardest hits are often from health care.

The Times' Kevin Sack profiles several small business owners faced with a difficult choice: cut health care benefits or close their doors. Amberly Allen, who runs her own direct-mail firm, spends 17 percent of her firm's payroll on employee health benefits. Thomas L. Fritts, who owns a sporting goods store in Illinois, saw his company's health care costs rise 30 percent last year while his business's sales plummeted 60 percent.

Small business owners are shifting a greater share of health care costs onto their employees. In the past two years, for businesses with fewer than 200 workers, the percentage of employees enrolled in a plan with an annual deductible of $1,000 or more jumped from 16 percent in 2006 to 35 percent in 2008. See the chart below from the 2008 Kaiser HRET survey:

COST: The Business Case for Health Reform

There were no bald eagles or the Boss, and our hopes for a surprise appearance from the Jonas Brothers didn't pan out (sigh), but the lunch forum we attended last week on business and labor perspectives on health care costs had more than its fair share of star power (at least in the health care world).

The event, organized by the Committee for Economic Development with the help of New America and Better Health Care Together, brought together a variety of voices to make the business case for health reform.

After introductions, representatives from Better Health Care Together set the stage with perspectives from business and labor on health reform. SEIU's Mary Kay Henry talked about the union's commitment to health reform and its efforts to create an army of health care voters. Wal-Mart's Linda Dillman spoke about efforts to apply the company's "Save Money, Live Better" motto to health care. She talked about Wal-Mart's work to provide insurance coverage to its associates, the company's $4 drug program, and its forays into providing electronic personal medical records to its employees and customers.

COST: Jazzing Up Employer Health Benefits


Reveille may be the bugle call that gets our military up in the morning; but all it takes is a few good state legislators to get us humming a tune about employer-provided health benefits in the wee hours of the morning. That was our song last Friday at 8:00 am Central Time, when we welcomed an impressive crowd at the National Conference of State Legislatures 2008 Legislative Summit in New Orleans. It is amazing how regular people will nod along to a health economics lecture even in New Orleans if you just set it to the right tune.

We explained how American firms' share of health care costs are contributing to their competitive disadvantage in the global marketplace. Like our paper on the same subject outlines, U.S. employers contribute more than twice as much as our top trading partners and are unable, in the short run, to shift costs onto workers or into prices. Accordingly, more employers are being forced to drop health coverage altogether and business support for comprehensive health reform is growing.

IN THE STATES: What's the Matter With Kansas (City)?

Kansas City, Missouri—hometown to winners of not one, but two seasons of Survivor, as well as the most recent season of American Idol—lost its bid on Sunday to land a $375 million Bombardier aircraft plant, which will instead be located closer to the Canadian company's headquarters in Montreal.

Why did the Paris of the Plains lose out to its Quebecois competitor? Globalization brings many variables into play, but Senator Claire McCaskill (D-MO) says it was health care that tipped the scale, according to the Kansas City Star's Jason Noble.

She's got a point. According to a recent policy paper by our New America colleagues Len Nichols and Sarah Axeen, U.S. manufacturing firms pay nearly three times as much per hour in health benefits as their Canadian competitors.

QUALITY: Unhealthy Trends in Employee Benefits

I am guilty of going to work when I'm sick. I admit to workaholic tendencies, but the real reason that I choose to cough my way through a day is because, as a working mother, most of my lost work days are due to my kids' illnesses and doctor appointments. Many of us hard-working, competitive Americans have our reasons for this practice of showing up to work sick. We load up on OTC medicine and suffer our way through a contagious illness, while sharing our germs with our not-so-grateful co-workers. When we get really sick, though, some of us don't have the luxury of staying home. It would mean unpaid leave or cutting into scant, precious vacation days.

This is troublesome for our already problematic health care system. When illness goes untreated, it can lead to more serious conditions that require higher-priced services and drug treatments. Increased health care costs ripple through the system:

COST: Krugman and the Links Between Health Care and the Economy

Health care is the Kevin Bacon of economic maladies. Name a problem facing the U.S. economy and, without too much effort, you can find a way link to the wealth of nations back to the health of nations. New York Times columnist Paul Krugman zeroes in on this connection in his column today, discussing the close link between health care, jobs, and the economy. He argues:

Most public discussion of health care focuses on the problems of the uninsured and underinsured. But insurance premiums are also a major business expense: auto makers famously spend more on health care than they do on steel. One of the underemphasized keys to the Clinton boom, I’d argue, was the way the cost disease of health care went into remission between 1993 and 2000. ... But premiums surged again after 2000, imposing huge new burdens on business. It's a good bet that this played an important role in weak job creation.

VOICES OF REFORM: CED's Charles Kolb Explains Why Business Has Had Enough

Charles Kolb, president of the Committee for Economic Development, a business-led think tank here in D.C., took part in a New America Foundation panel discussion this spring about the economic burden that health care puts on our nation's businesses. We were particularly struck at the time by Kolb's perspective on just how seriously the health care system has declined, and how bold the solutions must now be. The CED understands bold; created in 1942, it helped draw up what eventually became the post-war Marshall plan. With Kolb's permission, we're sharing an edited version of his remarks that day. For more detail on the CED's health care proposals, see the long version here or the summary here ).

Six years ago, the CED looked at health care and concluded that the employer-sponsored system was sustainable, it was fixable. We recommended a number of things that the government could do, that the private sector could do, that individuals could do. We thought through all the little tweaks, how to take better advantage of the market power that employers had, how we could save the system.

Nothing happened.