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Call a Doctor!

Can the ailing health insurance system be revived?
June 1, 2007
URL: http://www.entrepreneur.com/article/178358

For more on the states that are leading the way in efforts to solve the health-care crisis, go to www.entrepreneur.com/shortcuts.

Double-digit hikes in the cost of health care every year have business and government leaders looking for a silver bullet--and entrepreneurs saying that it's about time.

Of the nation's estimated 46 million uninsured, 27 million are either small-business owners, employees or dependents. Recent developments in state and federal governments and in the private sector suggest that entrepreneurs aren't the only ones desperate for an end to the crisis.

Some states are moving on their own to make insurance more widely available and affordable--or even mandatory. A law enacted in Massachusetts last year requires everyone to have health insurance and penalizes employers that don't provide it. Meanwhile, Vermont has passed legislation subsidizing affordable coverage.

Several states, including California, are working on universal coverage. According to the National Conference of State Legislatures, Arkansas, Kentucky, Montana, Oklahoma, Rhode Island and Tennessee have new laws to reduce insurance costs for small businesses, and others have enacted commissions to assess expanding coverage and health-care reforms.

Health savings accounts continue to get attention. In conjunction with catastrophic health insurance coverage, these tax-free accounts for paying medical expenses may incorporate the things almost everyone agrees on: transparency and an emphasis on wellness and prevention. President Bush wants to make HSAs more attractive by offering tax breaks to those who buy their own health insurance and taxing higher-end employer-funded health-care plans.

"This is a way for small businesses to stay in the game of offering health benefits to employees and for companies that are not offering [them] to offer insurance for the first time," says consultant Roy Ramthun, a former Treasury Department senior advisor for health initiatives.

Carl Kleimann, president of Odyssey OneSource, an HR outsourcing firm, says average consumers may go for the HSA tax break but fears that it could end up costing them. "The employee who is older or not so healthy is going to have a more difficult time getting insurance," he says, adding that insurance issues could make a workplace less appealing for in-demand experienced workers.

Other efforts include the Health Coverage Coalition for the Uninsured, an unlikely alliance of diverse stakeholders--including physicians, consumer groups, insurers and business groups--that banded together last year to come up with health-care solutions.

"Access to affordable health-care coverage is the number-one domestic policy priority today," says Mohit Ghose of America's Health Insurance Plans, an insurers group that represents plans covering 200 million Americans, and a member of HCCU. "There is a broad-based recognition that the worst [option] would be to do nothing at all." If passed by lawmakers, an HCCU proposal forged in January will allow parents to enroll their children more easily in public insurance programs and give families a tax credit to offset the cost of privately insuring their children. The second phase of the proposal will let states expand Medicaid to adults whose incomes place them at the federal poverty level.

Entrepreneur Jim Henderson, 43, agrees that inaction is the worst option. Tired of seeing his employees' health coverage whittled away, Henderson, owner of St. Louis-based Dynamic Sales Co. Inc., has become visible at governmental round table discussions and is something of a poster child for small-business frustration over rate hikes.

Henderson has grappled with insurance costs for his seven employees for 17 years. As the second-generation owner of Dynamic Sales Co., a construction and industrial supply firm with annual sales of $1.5 million, he remembers when his employees had a zero-deductible, 100-percent coverage plan. This year, Henderson went to a deductible of $2,000--with employees responsible for the first $1,000. "It's a solution, but it's not one I'm happy with," he says.

Kathleen Stoll, a member of HCCU, is director of health policy for FamiliesUSA, a consumer group aimed at universal, quality, affordable health care. She sees the first true marker of expanded coverage nationwide in an expected September congressional reauthorization of the State Children's Health Insurance Program, which provides insurance for children from families that don't qualify for Medicaid but can't afford private insurance. Started in 1997, SCHIP has received fairly broad bipartisan support and could be expanded.

For widened coverage of uninsured adults, congressional impetus may come after the 2008 election. Says Stoll, "I see multiple coalitions providing the heat so that we'll see action [triggered] in 2009." The question is whether the nation's entrepreneurs can wait that long.