The New Health Dialogue

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.

Our audience, mostly state legislators and their staff, were acutely aware of the innovative but frustrating reform efforts to reduce states' uninsured rolls and improve the quality care in their states. For instance, in addition to Massachusetts' comprehensive coverage effort, New Jersey is trying to cover all its kids and some adults, Indiana is experimenting with new kinds of policies for Medicaid, Alabama is helping small businesses offer coverage, Iowa is determined to cover all its kids, and Ohio is pondering its new task force proposals. Still, these states and many more are waiting for a signal from the federal government about a more comprehensive reform package. States may be able to tackle issues on the periphery, but the real rub is how to pay for it—and they do not have the federal tax code at their disposal. States also do not have the leverage to make widespread payment reform changes (i.e., in the Medicare program) that could slow down health care costs in the private sector. (Minnesota's governor recently vetoed a health reform bill precisely because he thought it gave short shrift to cost control.)

Joe Minarik of the Committee for Economic Development agreed with us on Friday, sharing some of the facts that gave rise to CED's report: Quality Affordable Health Care For All: Moving Beyond the Employer-Based Health-Insurance System. In its proposal to reduce the reliance on employers to provide health benefits, the CED offers some troubling statistics:

• From 2000 to 2006, the absolute number of people covered by employer-based insurance fell from 179.4 million to 177.2 million
• From 2000 to 2007, the percentage of firms offering health benefits fell from 69 percent to 60 percent, reflecting mainly small employers dropping coverage for workers.
• Health insurance premiums are rising faster than the affordable increases in total compensation, and therefore, faster than incomes
• Premiums in 2007 are estimated to be almost double those of 2000

David Sloane of AARP also shared the dais last Friday, but was more reluctant to reduce the employers' role in the health insurance system. Still, David aptly described the health care system as a "Rubik's Cube" where one twist always affects another part of the system. That is why health care reform cannot be incremental, but must be comprehensive and designed to be sustainable—without hurting our businesses in the short or long-term. Now that's something we should all get jazzed about.