For the past 18 years, Cathey Sandman has owned her own small business, catering to as many as 18 children a day in her home-based child care center in Lockport, N.Y. To the 13 families who rely on her, she provides a critically needed service. Without the center, she knows many would be hard-pressed to find care elsewhere.
It’s one of the reasons she keeps working even though two years ago she joined the ranks of 27 million other people who own or work for a small business, yet have no health insurance. “Five years ago my husband joined my business as my assistant and business partner,” she told lawmakers at a congressional hearing this week. “We had to purchase our own health insurance and found it expensive but affordable.”
But after consecutive annual premium increases (up 100 percent in six years), they made the painful decision to give up their coverage. “It was not an easy choice, but after the last few premium increases the monthly cost for our health insurance was the same as the cost of our monthly mortgage payment,” she says.
Sandman’s story is not unique to upstate Niagara County where she lives. From the East Coast to the West Coast, more than 47 million people by the latest U.S. Census Bureau estimates have no health insurance. They include not just those in basic service industries like day care, but also accountants, lawyers, and even medical doctors in small practices. “The health insurance crisis is on everyone’s mind. I hear discussions about it constantly,” says Sandman. “It is necessary but unavailable to many. And, it is a heavy burden to many more. It is vitally important that something changes and soon.”
The hearing Wednesday (Jan. 23) before the House Small Business Committee broke no new ground. The plight of the nation’s health care system, itself chronically ill, has been part of the national debate for at least the last two decades. Those who testified put a decidedly human face on the crisis and dispelled many of the misconceptions about the extent of the problem.
Physician Stephen Eby owns Western Family Physicians, a small practice with 6 doctors and 25 employees. It provides primary-care health services to families just west of Cincinnati. Western has always paid for health insurance for its employees. Eby says it is critical to attract and retain good workers. However, the practice has never been able to afford health insurance for their families. As a result, the children of his receptionist are on Medicaid.
Over the past five years, the cost of a single policy has increased 80 percent, an average of 16 percent a year, for his firm. “This staggering escalation has occurred despite other steps we took, such as increasing the deductible to $500 and the co-pays by 33 percent,” he says. Even so, neither he nor his wife has health insurance through his practice. “The premiums are unaffordable,” he says.
Small medical practices face a double whammy because the federal statutory formula for determining physician payment under Medicare has been frozen at 2001 levels, and without congressional intervention that amount will be cut by 10.6 percent in July. “I am aware of medical practices in the Cincinnati area that are not able to get health coverage at any price because some of their employees have common chronic conditions such as diabetes, high blood pressure, or heart disease,” Eby says.
For them, the alternative is a visit to the hospital emergency room. The cost of such care is not only higher, but the government or the hospital often ends up footing the bill for treatment. Shortly after the Sandman’s terminated their coverage, Cathey Sandman came down with appendicitis. The bill for treatment came to $10,000. She’s now on a payment plan with the hospital.
Many small business owners who can afford insurance have made another disturbing discovery: their policies are decidedly tilted in favor of the insurance companies, especially if they live in rural areas. Donn Teske, president of the Kansas Farmers Union, is a fifth-generation farmer with deep roots in his community. He has health insurance thanks to his wife, who has worked at the local Onaga Community Hospital for ten years.
Only after hurting his back while working on a piece of farm machinery did Teske find out that farming activities are not covered under the hospital’s insurance plan. “After reading all of the exclusions on our policy I discovered the only time I’m covered is when I’m in town and not on the farm,” he says. “It’s scary to think what would happen if I had a serious accident while farming. It’s a serious problem for my family, and many rural residents.”
His brother was forced into medical bankruptcy because of health problems, and a recent survey of Kansas Farmers Union members found that 29 percent of those under the age of 65 had medical debt. While 95 percent had some kind of health insurance, their coverage failed to cover the full cost of their treatment.
Much has been made about the benefits of so-called association health plans, where small businesses can be pooled together to increase their bargaining leverage with insurance companies, but those plans have drawbacks as well. “As a statewide membership organization, our association health plan must be able to provide coverage to our CPA members in every corner of the state,” says Lee Groza, a certified public accountant and part-owner of a CPA firm in Kentucky. “With only one insurer with a provider network that is sufficient enough to maximize our coverage area…there is no room for negotiation and our annual renewal meetings have become an exercise in futility where the terms are clearly dictated by the insurer,” he says.
The health insurance crisis has risen to the level of national debate once again thanks to the looming presidential election. Several candidates have put forth proposals that include elements of, or are significantly based on, universal health care. In a nation that relies on small businesses to provide 80 percent of all new jobs, the next president would serve the nation well by making this issue the first order of business in a new administration.