Health Insurers Have Had Their Chance

Of the many supporters of a single-payer health care system in the United States, some of the most ardent are small business owners who have struggled to continue offering coverage to their workers.

Among them are David Steil, a small business owner and former Republican -- yes, Republican -- state legislator in Pennsylvania who earlier this year became president of the advocacy group Health Care 4 All PA.

Another supporter is Vermont Gov. Peter Shumlin, who last Thursday signed a bill that sets the stage for the country's first single-payer plan. If all goes as Shumlin and the bill's many backers hope, all 620,000 Vermonters will eventually be enrolled in a state-run plan to replace Blue Cross, CIGNA and other private insurers whose business practices have contributed to the number of Vermonters without coverage -- approximately 60,000 and growing.

Both men told me last week that their feelings were shaped by their backgrounds. Their experiences as businessmen convinced them that a health care system controlled by private insurers cannot be sustained, regardless of attempts to force those insurers to provide affordable access to care for all Americans. They are both skeptical that the Obama administration's Affordable Care Act will provide the fix the country needs, even with the new regulations and consumer protections.

Steil, president and owner of a small manufacturing company in Bucks County, Pa., told me he grew increasingly frustrated about having no leverage in dealing with private insurers, which demanded double-digit premiums increases every year.

Shumlin, who along with his brother took over the management several years ago of a travel business their parents founded, echoed the same frustration. Shumlin, who also served as a legislator, shared another frustration with Steil: not being able to help political constituents, many of them farmers and small business owners, who called begging for help in finding coverage.

"During my 16 years in the legislature, my staff and I were frustrated time and again trying to help people who had lost their coverage and couldn't find a single insurer willing to offer them a policy, usually because of a preexisting condition of some kind," Steil said. "We could deal with almost everything else, but this was one thing we could not solve. There simply was no solution."

I know exactly what he means. I have spoken to hundreds of groups about the health insurance industry over the past two years, and invariably at least one person -- and sometimes several -- will grab me afterwards to ask for my advice on obtaining coverage. They assume that someone who spent two decades as an insurance company executive ought to be able to help them out.

Unfortunately, I have no better answers than Steil or Shumlin had for those constituents. If you've been sick in the past, or have a spouse or child who has been treated for one of hundreds of conditions insurers consider "preexisting," about the only way you can get coverage is to convince an employer that still offers health care benefits to hire you. Good luck pulling that off in this economy.

And if you would much rather work for a small employer or become your own boss, be prepared to remain in the ranks of the uninsured.

The number of employers of any size still offering coverage dropped from 69 percent to 60 percent between 2000 and 2009, according to the Kaiser Family Foundation. The decline has been much steeper among small businesses with 10 or fewer workers. In 2009, far fewer than half of them were still offering coverage.

The Affordable Care Act, which provides tax breaks to small employers if they offer coverage and subsidize premiums for their workers, might at least slow that trend. Some of the big insurance companies have reported a recent uptick in the number of small businesses offering coverage -- many for the first time -- as a result of those tax breaks.

But even with financial help from the government, most small companies are still finding it difficult to pay what insurance firms are demanding. Another Kaiser Family Foundation study found that health insurance premiums employers paid for their workers in 2010 stood at $13,770 for family coverage -- more than double what they paid just 10 years earlier.

In a Crain's magazine survey of 300 small businesses in Michigan earlier this month, 24 percent said they had considered cancelling their group policies in 2011, primarily because of rising premiums. Several employers in Michigan did drop coverage.

Of those that decided to offer benefits for at least another year, a growing percentage are making employees pay a heftier share of the premium, and they're shifting them into plans with higher deductibles. A survey this month by PriceWaterhouseCoopers (PwC) found that 17 percent of employers offered high-deductible plans, up from 13 percent last year. PwC says that if the trend continues -- and why wouldn't it? -- high deductible plans will be the most common type of coverage by 2014.

Low income individuals and families will become eligible that year for subsidies from the federal government to help them pay their premiums. But even so, Steil and Shumlin don't believe the current system, dominated by private insurers, is sustainable in the long haul. You can't keep shifting more of the cost of both coverage and care to people--and also make them pay increasing amounts of tax dollars in subsidies that will go straight to private insurers--and not expect people to eventually stage a rebellion.

Private insurers, say Steil and Shumlin, have had their chance to control costs and expand access and have failed miserably. It is time, they believe, to replace them with a single payer -- the government.