Is universal health care right around the corner? How will this change, if implemented, impact small business? Right behind the economy and the Iraq war, the Obama administration is marching steadily toward health care reform. Experts can agree on one thing: the current health care system is unwieldy, error ridden and complex. The 80 / 20 rule plays out in health care, according to one expert. Fifteen percent of the population accounts for 78 percent of the cost of health care. An emphasis on chronic disease prevention and educating the chronically ill patient regarding self care is critical in this debate. With health conditions like obesity and diabetes soaring, “We’re looking at a train wreck,” one expert contends.
The United States is the only industrialized nation without universal health care, and while wages remain flat, health care costs continue to climb. According to a 2008 PricewaterhouseCoopers study, medical costs will increase 9.6 percent in 2009. Affordability of coverage is in crisis in the U.S., where $1 out of every $5 of spending goes into healthcare, according to The Commonwealth Fund, a private foundation working toward healthcare reform.
With insurance companies “cherry-picking.” healthier individuals to insure, soaring premiums and limited access to health care for individuals and small business, many Americans are uninsured. Small businesses can no longer afford health care and even large employers are passing more costs on to employees. According to the 2006 Commonwealth Fund National Scorecard on U.S. Health System Performance, 12 states have more than 23 percent of their population uninsured. Texas is the highest at 30 percent. The lack of coverage load falls, increasingly, on low-to-middle income families and perhaps on small employers, who lack the leverage to negotiate costs.
According to a recent Associated Press article, the US spends $2.5 trillion yearly on health care, with an estimated one-third of that spending providing no real advantage to the patient. There is little incentive in the health insurance market for doctors to manage medical care, especially when Medicare reimbursement has been cut to the bone. Rewarding physicians that educate patients and help manage their chronic health conditions to avoid bigger problems down the road would require a major shakeup in the way health care in America is dispensed. Experts agree that the focus should be on chronic disease prevention. Improving the chronically ill patient’s disease-management skills will pay major dividends.
What would a national health care model look like? One expert believes that the Feds may model universal health care on the Children’s Health Insurance Program. One expert, however, believes that while health coverage expansion will occur, universal care may not be achievable in the U.S. “There are too many stakeholders with powerful interests,” he said. “You’re going to gore an ox.”
What can small businesses do to improve their health care costs? Implementing employee wellness programs that educate employees about chronic disease and weight management is the first place to start. According to PricewaterhouseCoopers article, “Strong Medicine Required: Prognosis for Employer Healthcare,”80 percent of large employers rated wellness services “Nearly as high in importance as the basic functions of accurate claims processing and provider discounts. This compares with only 50 percent of small-employers.” Surely the time is now for small employers to embrace the wellness model.
Although each company has a breakeven point where a wellness model improves costs, a one percent reduction in healthcare costs can pay big dividends for larger employers. Some experts believe that by spending from $100 to $250 per employee per year, a company’s return on investment can be substantial.
One thing is clear: change is coming. Familiarizing yourself with this important topic will keep you ahead of the curve as the train approaches.