COSE statement on health care reform

The following is a statement by Steve Millard, President & Executive Director, Council of Smaller Enterprises (COSE):

As Congress and President Obama continue to discuss opportunities to overhaul health care, we wanted to take a moment to reiterate the need to address key components of this issue: cost reduction, expanding coverage, and creating basic, affordable plans.  

Over the past year, we as a nation have come further with the prospect of heath care reform than we have in quite some time.  While we definitely need reform, it is important to ensure that it addresses the appropriate components of health care and health insurance.  COSE would like to see a focus on the following areas:

Focus on Cost Reduction

While a popular target, beating up on health insurance companies will do little to provide changes in insurance costs.  Insurance profits and overhead are just a small part of the insurance bill.  It's the underlying medical services, technology, tests and drugs that drive cost.   We must focus on reducing the real cost of health care with tools like pay for performance, comparative effectiveness research and minimizing avoidable mistakes and infections.

Increased participation by consumers in the health care system via the requirement for coverage and a connection to behavior and cost will lead us to reduced costs.  COSE knows that small businesses overwhelmingly want to be able to provide coverage for their employees--they simply can't afford it. Affordability is about increasing transparency and a focus on outcomes and as a result reducing the cost of delivering healthcare – not just the cost of insurance.  

Early innovation in creating better information and providing care in a more "retail like environment" have already begun to change care and its cost. Whether it's a "minute clinic" at the local pharmacy or a $4 prescription program at the supermarket, cost transparency and payment participation does change consumer awareness and behavior.

In fact, studies have shown that there is immediate and sustainable cost savings: Consumer Driven Health Plans' (CDHP) medical costs are 14% less than traditional plans the first year; cumulative cost savings rise to 19% in the second year, 23% in the third year and 26% in the fourth year.  We believe that health care reform should include mechanisms like CDHP's and other elements that connect consumers and their decision-making strategies with the cost impact on their health insurance.  Unfortunately, these are actively discouraged in the current version of reform.

Expanding Coverage and Creating Basic Plans

In order to make health care more affordable, we must initiate reform that will bring everyone into the system.  We understand the challenges many consumers see with regard to an individual mandate.  Small businesses often find themselves working within the confines of different types of mandates created in the name of the public good as they run their own businesses.  For health care to work, and in order to truly lower the cost of care, we must strongly consider a program that will bring everyone into the health care system and spread the risk over a larger group.  This will also expose consumers to the costs in today's system and help drive broader change as people become more educated on the impact of their own decision-making, lifestyles and utilization.  The coverage required, however, should be a basic plan that offers catastrophic coverage, and with a preventative care component.

Starting with today's federal plans as a minimum threshold makes the required minimum coverage too expensive for many individuals to afford and too expensive for the government to subsidize. Only by making a low cost plan available can insurers be required to cover pre-existing issues along with guaranteed issue and renewability.

Also, the current system of an open-ended exclusion from taxes for any and all health care benefits from employers has created a system in which some employees are "over-insured." This leads to increased utilization of health care providers and significant increase in the aggregate spending on health care. Additionally, insurance now frequently covers (on a tax-free basis) non-medically necessary services, which could otherwise be highly responsive to market forces.  

The individual tax exclusion for health insurance coverage should be limited to the value of the basic benefits package not only for employer provided insurance but also for individuals who purchase their own coverage. Benefits provided in excess of a basic benefit plan should be considered taxable. In addition, the tax deductibility of both health insurance premiums and actual health care expenses should be the same.

Ultimately, while moving closer the prospect of health care reform in this country is a necessity, we must continue to remember the important role these basic tenets must play.