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Crisis, What Crisis?
09/18/2009
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Is there really a health care crisis in this country?

We recently suggested in this space that some people maintain there isn't. Some think all the hue and cry for reform is overblown and that the status quo isn't as bad as it is being portrayed. We suggested that this was one of the reasons for the political inertia to enacting health care reform.

As small business owners we're not in that camp. We've watched health care costs skyrocket over the last decade to the point where decent health care coverage is out of our reach for many employers -especially small businesses. We know because we are one of them. Like many companies, we provide coverage, but at a shadow of the level we once provided. The insurance coverage we are able to provide comes with high deductibles and steep CO-pays. We hear the same thing from other business owners.

If you consider exploding costs as a factor in defining whether there is really a health care crisis, then there really isn't much room for debate. Rising health care costs are killing small businesses, it's that simple. It's also restraining our economy as conservative commentator David Frum noted this week.

Frum, who worked for President George W. Bush, argued that one of the reasons for his boss's dismal economic record was because exploding heath care costs stole all the wage gains. Frum made this assertion after the U.S. Census Bureau delivered its report on American incomes in 2008.

In terms of income growth and poverty reduction, Bush performed worse than any two-term president of the modern era. Even in the best year of his presidency, 2007, the typical American household still earned less after inflation than in the year 2000. The next year, 2008, American households suffered the worst income drop since record-keeping began six decades ago.

So what went wrong? According to Frum, the most plausible culprit is the surge in health care costs. Over the years from 2000 to 2007, the price employers paid for labor rose handsomely: on average, 25 percent. Yet for the typical worker, none of that extra cost translated into higher wages.

Between 2000 and 2007, the cost of the average health insurance policy for a family of four doubled, from about $6,000 to over $12,000. That took a big bite out of the gains available for wage increases. More than a bite: the health-care system gulped down every morsel, and forced employers to raise co-pays and deductibles for good measure according to Frum.

Rising heath care costs are strangling small business and if you believe Frum they are also strangling our economy. It's an argument shared by many economists. It's also one of the reasons why many pro-business groups would like to see the responsibility of providing health care benefits shifted from employers to individuals or even the government.

That is why any meaningful heath care reform plan must include mechanisms to control costs. It's also why Senator Max Baucus's $856 billion health care plan announced earlier this week won't work. The watered down compromise proposal may, and we stress may, be deficit neutral, but it proposes virtually nothing in terms of cost controls - the key to any real reform.

We can't ignore the central problem that plaques our present heathcare system. Restraining heath care costs isn't a liberal or conservative concern, its an economic inhibitor that is holding back our economy and ultimately making our country less competitive in the world market.

If you disagree with this premise consider these two predictions.

The Congressional Budget Office has estimated that job-based health insurance costs could increase 100 percent over the next decade absent any change. Employer-based family insurance costs for a family of four will reach nearly $25,000 per year by 2018 absent health care reform.

We would call that a crisis.


©Washington Missouri 2009

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