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The current health care system does not make life easy for lots of people and organizations.

Churches, for example.

The current issue of The Lutheran discusses the prospects for matching new pastors with congregations.   They do not specifically mention health care. They should.   The Lutherans are not unique.  They face the same challenges as other Protestant churches.

Congregations face declining worship attendance and, with that, declining offerings in the collection plate.  Senior pastors who saw their retirement savings seriously diminished during the recent recession, are staying on the job longer, reducing the number of vacancies.

Graduating seminarians, on the other hand, are graduating with larger debts.  They want and need more in a market of shrinking opportunites.

What does this have to do with health care?

How can a congregation save money?  Hire a minister who is married to a spouse with health insurance for the family.

Is that fair?

No.  Emphatically, no.

It limits the candidate pool for churches and it limits the opportunities for aspiring ministers.

Eleven faith organizations have endorsed a single payer solution to the health care crisis.  Most all offer theological reasons for their positions.  But churches should not shrink from their economic motives.

After all, they are in the exact same position as many small businesses and other non-profits.  Only 49% of private sector employees get their health care coverage from their employees.  Another 20%, of private sector employees get their coverage from their spouse.

The inability of too many employers to offer both competitive benefits and competitive salaries limits their candidate pool and restricts the opportunities of people who might otherwise be willing to work for those employers.

The Evangelical Lutheran Church in America should join with the other eleven faith organizations to support single payer.  It is not just the right thing to do theologically.  It is not just a social justice issue.  It is an economic issue that they share along with many other smaller organizations fighting for survival.

Photo credit     Truus, Bob & Jan, too

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Most people across the political spectrum agree that health care is a social good.  They agree that someone else’s health is in their interest.

People may not express it that way.  But as the adage goes- actions speak louder than words.

We support health care for old people through Medicare.  It was Republican President George W. Bush who partially filled the biggest gap in coverage for older people with legislation to add prescription drug coverage to Medicare.

We support health care coverage for poor people through federally supported state Medicaid programs.

We support the Children’s Health Insurance  Program (CHIP) that expands Medicaid programs to the children of the working poor.

We support health care for Native Americans through the Indian Health Service.

We just seem to have a problem with people who work.

It might seem logical that, since we clearly have recognized that health care is a social good, that we should require all employers to provide health insurance.  After all, we require employers to pay for workers’ compensation insurance, and unemployment insurance.

If health care is a recognized social good, then you might conclude that we would not permit companies to seek a competitive advantage by not offering health coverage.

You would be wrong.  In this debate, free market ideology prevails over social good, or notions of a level competitive market.  Loyalty to employers trumps any duty to employees.

Listen to those who speak for employers

The Chamber of Commerce Vice President Randel Johnson

I believe, the issue of a new employer mandate, euphemistically called ‘pay or play,’ has largely been lost in the debate and in the press. This is highly ironic given that this is, let’s be clear, a sweeping new burden on employers of unprecedented proportion in the benefits areas.

Or James P. Gelfand from the Chamber of Commerce

The Chamber of Commerce is not mincing words. The senior manager of health policy for the Chamber, James P. Gelfand, says: “The problem is instead of focusing on the 90% of issues that everyone can agree on, we’re getting stuck on the 10% ideological, uncompromisable, unworkable provisions… like creating a government-run insurance plan, forcing employers to provide health insurance. That’s the kind of stuff that reads like a poison pill.”

Or the National Federation of Independent Business (NFIB)

The mandates also impede business investment and effectively impose regressive taxes on both employees and owners of small businesses.

Or the Society for Human Resource Management (SHRM)

“Pay or play” proposals would limit employers’ flexibility and innovation. Under this approach, some employers may simply choose to “pay” rather than offer coverage, leaving employees without the coverage they have grown accustomed to.

How do the legislative proposals address this issue?

Not simply.  The Senate version has some weak provisions that have been referred to as the free rider provision.  The House bill is a bit simpler.  It requires employers who don’t’ offer coverage to pay a fee equal to 8% of their payroll.

But both have exceptions.  Exceptions are otherwise referred to as loopholes.

What is the problem?

In 2009 according to Kaiser Family Foundation 60% of all employers offered health insurance in 2009, down nine percentage points in nine years.  But firms not offering health insurance generally employ fewer than 200 workers.

So why offer a loophole to the very group you are targeting?

What are the loopholes?

If the loophole is defined by number of full time employees, employers will be encouraged to substitute part time employees or contract workers.

If the loophole is defined  by payroll size, employers could be encouraged to substitute contract workers.

There is experience with this. Hawaii is exempt from ERISA because it had an employer mandate in effect before passage of ERISA.  ERISA is the federal law that regulates employee benefit plans and has handcuffed state level experimentation with health care reform.  The Hawaii law does not apply to all part time employees or contract workers.  Guess what is happening in Hawaii?  Hawaii’s rate of uninsured, once the envy of the mainland, has doubled since the 1980’s as employers discover and use the loopholes available to them.

Is there another way?

A different model is suggested by the City of San Francisco and upheld by the 9^th Circuit of Appeals.  The City of San Francisco requires all employers to pay a flat amount per hour for all employees working in the City of San Francisco.  This payment can be offset with payments for employee health care.

It closes the loophole for part time employees but still leaves open a loophole for contract workers.

My proposal

I suggest a flat tax on all forms of compensation including wages and non wage income and payments for contract labor.  Absolutely no exceptions.

These payments are directly offset by health care coverage that meets some very minimal standard.  Low wage employers who provide health care benefits that cost more than the payments would receive a tax credit.

The value of this proposal is that it levels the competitive market somewhat.

It does not however begin to address those on the margins of the workforce, those between jobs, or those trying to enter the workforce, those marginally employed and self employed

That’s an additional challenge.

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Three reports this week about the costs of health care and health care reform caught my attention.  One said that health care reform will be a sure fire economic stimulus because it will replace jobs lost from the current recession.   Another suggests that a modest upfront investment will produce $530 billion in savings.  The third moans that without a commitment to hard choices, we are doomed to health care spending profligacy.

John Nichols in The Nation describes a report and follow-on campaign by the National Nurses Organizing Committee/California Nurses Association (NNOC/CAN) that attempts to bolster the argument for a Single Payer health care system by describing its impact on jobs and the economy.

A report in Reuters describes a report by DeLoitte that argues that a $220 billion investment in e-prescribing and electronic medical records will produce $530 billion over ten years.

Lastly, Robert Samuelson in the Washington Post reports on findings of a report by the McKinsey Global Institute that provides valuable insights into why US health care costs so much more than it does elsewhere in the world.  Unfortunately,  it was short on constructive “shovel ready” policies. 

So how does one react to such disparate perspectives.  Clearly, each study  support a specific ideological slant and approach to fixing our admittedly broken system.

The first study sponsored by the NNOC/CNA and completed by the Health and Social Economic Policy was disappointing.   It equates a single payer system with more jobs but, in fact, adds fuel to the opponents of single payer who argue that it will cost too much money. 

I generally support a single payer health care system.  But I support it for reasons that are opposite to those outline in this report, authored by Don De Moro.  A single payer health care system is the superior policy option because it can most effectively:

• Eliminate waste in the system
• Focus the system on patient care
• Provide coverage to those on the edges of the current system

It is by providing this secure safety net that a single payer system can provide an effective economic stimulus.

• It will make companies more competitive domestically and internationally by lowering health care costs and leveling the health care burden across all companies.
• It will energize the smallest entrepreneurs by giving them the freedom to test new ideas in the marketplace instead of limiting themselves to jobs with health care benefits.
• Free up capital resources for more productive economic investment.

The study by Deloitte is typical of the cure-all policy.  It focuses on one specific aspect of the current state and argues that if we can just fix this one thing everything else will fall into place.  It might be tax policy, integrated delivery systems,  the health of the population or a health insurance mandate. 

This study focuses on one of the more popular themes and one that many argue is championed by the Obama administration – the information technology infrastructure. As someone who has had some experience in this area, I am extremely skeptical.

Early on I learned a simple precept – automated stupidity is still stupidity.  IT integration has progressed light years since I was involved in an effort to promote a very limited community health information network (CHIN).  But the same integration issues that plague the smallest organizations will convert these visions of a super IT infrastructure into tormenting hallucinations – not to mention an economic boondoggle for IT firms.

Mr. Samuelson offers another strain on the thinking about the economic impact of health care reform.  The choice is either spending more money without any changes to the way we spend it.  Or make hard choices that primarily affect health care consumers – pay more for health care, pay more taxes and have fewer health care choices.

He dismisses the impact of administrative wastes by pointing to the study’s finding that administrative costs account for only 7% of health care costs.  That number seem preposterous to me.  Our plan purchases health care for 25,000 participants.  Seven per cent may be close to what our insurers charge our group – a very large group.  It does not account for the administrative costs of our office,  It does not account for the administrative costs of each of the doctor and hospitals .  And our group is certainly not representative of the larger insurance market.

This study offers some valuable insights in health care spending in the US relative to the rest of the world.  But the 7% number is not one of them.  And good conclusions can not flow from flawed facts.

The three articles reflect the three dominant approaches to health care reform – major overhaul, just fix this; and, it’s too complicated.

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Every health care reform proposal attempts to offer some relief for small businesses.  According to the National Federation of Independent Businesses (NFIB), small businesses create 2/3 of American jobs, yet half of the uninsured are in small businesses.

Look at President-elect Obama’s health care proposal on his campaign’s web site.  The first two items:  

• Require health insurance companies to cover pre-existing conditions so all Americans regardless of the health status or history can get comprehensive benefits at fair and stable premiums.
• Create a new Small Business Health Tax Credit to help small businesses provide affordable health insurance to their employees.

What’s remarkable about these proposals is that we are still discussing them.

Let’s look at the second item – a tax credit for small businesses.  In my opinion, it is a mistake to separate the small business market from the individual market.  Almost every small business starts out as a solo enterprise.  How many creative ideas never come to market because the would be entrepreneur is afraid to go without health insurance?

Yet we don’t make it easy.  Anyone who has ever itemized deductions has experienced the limits on the deductibility of health insurance costs.  There is also something called a section 105 deduction that you can learn about elsewhere.  Yet business owners can deduct the full cost of their medical insurance.  I would welcome an explanation that justifies this disparity, or at least explains the politics to me.

The real nut is the first item.  That we allow insurance companies to only insure healthy people is the greatest tragedy of American health care.  This is called medical underwriting.   Jonathan Cohn in his book, Sick, has a wonderful chapter on this stain on American health care.  

That there is a logic to this is further example of the Alice in Wonderland character of American health care.  Unlike home or auto insurance, there is no requirement that people have health insurance.  So insurers will naturally expect those in the market for health insurance to need it more than others.  The best way to protect their profits – and they are in business to make a profit – is to not insure sick people.

The way around this is a combination of mandates and risk pooling.  If everyone is required to have health insurance, there is a greater likelihood that healthy and sick people will be spread evenly among all insurance companies.  Some sort of risk pooling could serve as a backstop for insurers with a disproportionate share of sick people.  Unfortunately most risk pooling proposals act as a dumping ground for severely ill people.

Small business groups also see salvation in Association Health Plans.  This is little more than an effort to gain some advantage to the programs they are already marketing.

One reason why little progress has been made on this issue is that the interest groups are conflicted.  The NFIB and the Chambers of Commerce represent small businesses.  They also augment member dues by selling health insurance to their members.  In addition, they represent insurance companies and insurance agencies.  

What may be in the interest of the entire small business community is undermined by these narrower interests.  The narrower interests are able to prevail because they all share a myopic knee jerk loyalty to a free market ideology.  Ideology trumps practicality.

Again simple is better.  A single plan for each geographic region can enroll both individuals and small businesses.  It would spread the risk evenly, reducing costs for all.  Health care dollars could be spent on health care, not marketing and medical underwriting.  

Linking premiums to income is a radical idea to some, but there are businesses who charge their employees for health insurance based on their income.  Why can’t it work in the public space?  A tax credit only makes sense for someone who is making money.  It does little to help the small business who has yet to show a profit.

If there is to be a solution for small businesses, policy makers will need to listen directly to those small businesses without insurance and not those who purport to represent them.  And certainly not Joe the Plumber!

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Instead of focusing on Joe the Plumber and his tax phobia’s, perhaps the presidential candidates should talk to Jesse the Artist and ask him or her about health insurance.  On Sunday, October 19th, I visited the Bethesda Row Arts Festival in Bethesda, Maryland.  I did just that.  In a very unscientific survey, I talked to a number of the artists about their health insurance.  

Why should anyone else be interested in artists?  Because they are small business people.  They are also very creative.  It is this creative entrepreneurship of small businesses that candidates like to support because it is the economic engine  that drives the American economy.

Artists as Small Businesses

I was curious whether health insurance was a barrier to entry for these artists.  Two of the artist referred to a study (but could not name the source) that 83% of artists had health insurance.  That was consistent with my own unscientific study. I talked to close to 20 people.  Only three had no health insurance.  But, on the other hand, only three paid for their own health insurance.

Perhaps they asked the wrong question.

How did the others get their insurance?   Two reminded me just how careless my methodology was.  Each artist’s booth had a sign on the outside identifying the artist and where they were from.  On two occasions I was drawn into the booth by the art work.  So when I popped my question about health insurance, I hadn’t noticed the sign that indicated they were from Canada.  They thought it a rather silly question.

The others fell primarily into three categories.  They were retired and were among the few very retirees with employer based health insurance.  They had spouses that worked and carried the artist on the employer coverage.  They were veterans with coverage with the Veterans’ Administration (VA).

One person was a dependent on his ex-wife’s employment based plan – something that most plans (and the tax rules) do not allow.  But in addition, he had VA coverage and was a few months away from turning 65 and becoming eligible for Medicare.

Almost all agreed that it was an issue that they took very seriously.  One of the artists who had his insurance from his employer’s retiree health plan, admitted that he was fortunate.  He also confessed to paying for health insurance for two of his children, one was unemployed and the other was starting a small business.

These Artists as Atypical Small Businesses

Although this small sample is instructive, it likely does not represent either artists or small businesses.  It is mostly successful artists who exhibit at shows like this because they know they can sell their work.  To what extent did good health and/or good health insurance allow them to advance their careers?  

Two of the people who admitted to buying their health insurance also conceded that they only recently have been able to afford it.  I remarked to one that she was fortunate that she had no serious health issues.  ”No,” she said, “that’s another story.”   Several of the artists reminded me that artists frequently work with materials that are toxic making health insurance even more important.

But unlike other small businesses, artists rarely compete on price.  If they did, those who paid for their health insurance would be at competitive disadvantage.

Support and Encourage Small Business

Small businesses provide the creative energy and initiative that drives the economy forward.  Now, when the economy is in the tank, is the time to rejuvenate the economy by providing affordable, easily accessible health insurance to all Americans.  Let the entrepreneurs bloom!  Artists won’t be the only ones to benefit.