The Senate prepares to vote on health care, and I’m starting to panic
(This post originally appeared on The Washington Post)
As the Senate prepares to vote on whether it should bring its most recent — and likely doomed — health care bill to the floor for debate, I watch. With a growing sense of panic.
Like many other business people, I’m watching because our elected politicians are not only voting on a bill that affects almost 20 percent of the country’s economy, but also a big chunk of our financial statements. According to the Kaiser Foundation, approximately 46 percent of private firms in the United States offered health insurance in 2015. For those firms, the cost of health insurance is among the most significant of their business expenses. What about the other 54 percent that don’t offer health insurance? Not providing health care because of its high costs could put these firms at a serious disadvantage. Most workers want health care and tend to gravitate toward those firms that provide it.
How high are these costs? According to more research from the Kaiser Foundation, the average company’s health insurance cost per employee in 2009 (the year before the Affordable Care Act became law) was $4,824 with workers contributing $779. Just six years later, the health insurance cost per employee was $6,435 with workers sharing $1,129. That’s a 34 percent increase. Do you know of any other costs that have risen as much in the past few years? Probably not.
Unfortunately, this alarming trend will continue next year. In Tennessee, Cigna is asking regulators to increase premiums by 42.1 percent for individuals in 2018. Delaware’s Highmark wants a 33.6 percent increase. Atrios Health Plan wants a 21.8 percent hike for Oregon residents. New Yorkinsurance companies are demanding a 16.6 percent raise. Insurance providers in Washington State want a 22 percent increase. Some health insurers in Maryland are requesting insurance premium hikes as high as 150 percent and providers in Connecticut want to raise premiums as much as 52 percent. Granted, these are individual rates for policies on the health care exchanges and not the rates that will be seen by companies. Regardless and whatever regulators ultimately approve, these increased rates will be reflected in both individual and corporate 2018 premiums.
I’m not sure if my business — which has seen double digit premium increases over the past few years — can afford this much longer.
The Affordable Care Act has tried to do great things, except for the one thing that its name promised. Assessing blame is useless because no one will admit their mistakes. Meanwhile, the high degree of uncertainty and riskiness in the insurance markets has forced the insurance industry — which is built on risk aversion — to respond by raising premiums. You can’t blame them either. Would you like to be fixing your prices for your products over the next 12 months in such an environment? If forced to, you would be building in plenty of cushions too.
The Democrat-supported Affordable Care Act has failed to make insurance affordable. The Republicans’ have failed to agree on a better solution. If the past six months have shown us anything, it’s that the answer will have to come through a bipartisan bill. As with any business negotiation, both sides will have to make concessions.
All problems won’t be solved. But only a bill that has been supported by both parties can succeed in the long term. When that happens, there will be less uncertainty, lower risk and the insurance industry can make better future assumptions that will stabilize premiums. Only then will my panic subside.