I am the CEO of a $10 Mill/year, 200+ employee company and believe we need health insurance form now and with a public option. Our company is headquartered in Silicon Valley and is part of the Internet- Technology segment that is a driver of innovation and growth for our country.
Health insurance reform is necessary to save our economy, save jobs and create jobs in almost all American businesses, reduce business costs and make our country competitive in the global market place.
1) Reform will reduce costs for business, not increase them. Even if businesses have to pay new taxes and have increased requirements to provide insurance, the net impact on business is lower costs.
2) Reform will save and create jobs in small and large businesses in almost all industries (except maybe health insurance companies)
3) Reform will enable businesses to be more productive and more competitive in the global marketplace.
I'm not being liberal or conservative here. I'm just being a practical businessman trying to create and protect jobs in this country.
Each year the insurance companies raise our rates (like they do for most companies) by 15%-20%. (or the same level of coverage. (In some years rates have gone up 30%-40%.) There are only a few insurance companies in part due to the cartel nature of the industry, its local state regulated structure and it's profit and high exec compensation driven mentality. This combination drives them to pursue their financial goals independent of real competition or real consideration for their customers (sound familiar?)
In this context they all raise their prices, every year. Prices go up while coverage goes down. It is also very painful for businesses and employees to switch insurance companies due bureaucracy, loss of deductibles, loss of doctors from prior network, loss of coverage and assorted extra costs. This high switching cost further intensifies the cartel like structure of the health insurance industry.
They are a cartel because there are only a few of them, there have infrastructure economies of scale and they have coordinated standard practices in conjunction with state regulation. There is no true competition. Certainly no true price competition.
Each year we negotiate the rate increases down to 5%-10% coupled with substantial reductions in coverage and increases in deductibles. This means each year our direct costs go up. The lower coverage means our employees cost of health care goes up. Either we raise employee pay and our business cost goes up again, or the employees are effectively taking a pay cut. Until last year our company paid for most of the coverage fee increases, but we can't do that anymore. Now each year, like most businesses we shift more of the cost to be directly paid by our employees. So every year costs go up, coverage goes down, deductibles go up and the employees pay more.
The results for our business and most American businesses are:
1) Businesses are getting cost squeezed.
2) Employees are getting less health care because they can't afford it with lower coverage and higher deductibles. With less health care they are less healthy, not always able to work as well and business productivity goes down.
3) Employees are taking a financial hit in cost up and net income down. Meaning their net take home pay after health insurance premiums and health care costs is going down year after year.
The notion that health care reform will hurt businesses with increased costs (taxes, requirement to provide health insurance) fails to understand the health care economics of American business. Health care insurance is about 5% of our company's costs (which is actually low compared to some companies.) That's a pretty big % of cost when running a business. Using as a quick example a 20% annual increase in health insurance costs to maintain the same coverage:
- That would cause our total company costs to go up 1 1/2% every year or about $91,000/year for something that adds no direct value to the business. That does not create value for customers, employees and shareholders. That $91,000/year could pay for 1-3 jobs (depending on the position.)
Not likely our taxes or other such costs are going to go up that much due to health care reform. Even if they did, those new costs won't increase every year. With our current health care system over 5 years our insurance costs can increase by $451,000/year. Over 10 years by $909,000/year. A business can't sustain that. That's also the loss of 5-20 jobs each and every year that could be created if we implement health insurance reform.
Had we implemented reform years ago, our costs as American businesses would be lower than they are today. Our employees net take home pay after taxes, health care insurance and health care costs would be higher. They would be healthier, more productive employees. We would have healthier, more profitable businesses investing in new technologies, products, services and jobs instead of investing in the profits of health insurance companies and their executives.
If we want to create jobs, if we want to protect jobs, we have to change this situation with substantial reform and a model that breaks the insurance industry's cartel-like hold on pricing. That's a public option (at least.)
Most of Washington's debate on this subject is the equivalent of arguing over the color of the life preservers while the ship of our economy is sinking fast due to a busted health care engine. We need to save the ship now with a new engine now. We can tune it once we're afloat again.