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Tuesday, September 13, 2005

Un-American Plans for Health Care

President Bush is, at least at his words, very fond of small businesses. He is very fond of saying that he is helping them. However, his idea of help them get healthcare is allow them to band together to buy health insurance. While this noble idea fits well with the free-market ideology it doesn't really deal with the reality of the situation. How likely do you think it is that, say, 100 small businesses to gather together to do anything?

The term "small business" is intentionally vague. According to the US Census Bureau about five and a half million firms and just over seven million establishments are considered small businesses. Together, they employ some one hundred and fifteen million people and contribute close to four billion to the economy through payroll. Obviously, this is a significant segment of our economy.

Of this number, only some seventeen thousand firms and slightly more than a million establishments actually employ more than five hundred people. The vast majority of these actually have less than a hundred employees. Why is this important? Because, referring back to my earlier posting, one of the primary ways of keeping insurance costs down is to spread the costs over a large number of people. An employer with five thousand employees can demand a much better price for insurance benefits than can a firm of only five hundred. The difference is so much more exaggerated when only a few dozen employees seek benefits.

At this point, it seems like the President's idea is a good one - why not let these small businesses pool their buying power to ensure better benefits for their employees? The first reason is that many of them are in direct competition with each other. If you run a convenience store, how likely are you to go to the owner of the convenience store across the street and agree to pay for each other's employees? (Hint: Don't hold your breath.)

Of course, some are not in direct competition. However, they still must budget valuable time to create a group of businessmen to work together. More time would be needed to decide which one will bargain on their behalf. More time still to work out a benefit plan with an insurance company. More time to come back to the group with no assurance that any given offer will suit the needs of any specific businessman. In other words, it is a huge investment of time and energy with no guarantee of return.

You can also see that small businesses are at a disadvantage when dealing with insurance companies. Companies with small numbers of employees not only pay more to start with, but they face greater percentage increases in buying insurance than do larger firms. The gulf in the ability to provide benefits increases at an ever increasing rate. This is the President's plan for small businesses.

If you've followed my posts, you know what I'm about to suggest. There is no need for the President to throw these brave businessmen and women upon the vagarities of the market. Rather, a system already exists by which they could provide their employees a modest level of benefits for a reasonable price. Opening the system to these small businesses would create a stream of revenue that would help drive down the cost of providing insurance to the elderly and disabled. It would immediately create a system where benefits are 100% portable.

Medicare B currently has a full cost of less than $4,000 per person. Split between employee and employer, that drops it to a very affordable $2,000 per person per year. If employee and employer are both allowed to pay for this benefit with pre-tax dollars - as are most health benefits - then the affordability quickly becomes a non-issue. Suddenly the small employer can offer health benefits that are close to being on-par with those of larger companies. Smaller businesses are now more competitive and more profitable and employees are healthier and less likely to leave employment for a better opportunity.

All that stands between this idea and its implementation is an ideological opposition to government acting in the best interest of those whom it governs. A blind adherance to such ideology would naturally claim that the health of the citizens are of no concern of the government. If so, then let it be said and opposed on these grounds. However, the government of the United States was created to guard the rights of its citizens - chief among these are life, liberty, and the pursuit of happiness - to steal a certain famous line.

How can we claim to have a right to life if we have no right to maintain that life? In a modern society, where reasonable health care can arguably increase the length of life, the breadth of liberty, and is crucial to the pursuit of happiness, how can we turn a blind eye to the forty million plus citizens who move in and out of coverage every year?

When we have the means of doing this cheaply, including as many as we can, the continuing inaction becomes a violation of the public trust. It is a destructive cancer at the heart of our country, slowly destroying true economic opportunity. It is the proof of hollow words, hollow leadership, and hollow ambition. It is un-American.

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