Health Care Stakeholder Discussion: Small Businesses

(cross talk)
Ms. DeParle: I want to welcome everybody, I'm really pleased that you could
all be here today and I appreciate that you've been --
do we need to press something here?
Do we need to press our mics when we're on?
A Speaker: Right.
So what you need to do is press the red button, you'll see the
red light come on, and then when you're finished talking just
press it again.
Ms. DeParle: Great. All right.
So now I have my instructions.
So I very much appreciate your coming to the White House today
to talk to us about small business and health reform, and
this is something that the President's very committed to
health reform that will help small businesses who are
struggling as the cost of health care continues to skyrocket.
And we are releasing a report today on www.healthreform.gov
called, "Helping the Bottom Line, Health Reform and Small
Business," and I think each of you has one of these at your
place, and it highlights how the high cost of health care burdens
small businesses, weakens our economy, and leaves millions of
Americans without the affordable health care
they need and deserve.
I was looking at this last night, I just want to mention a
couple of the facts in here.
You all will speak to these things, but these things were
staggering to me.
We already know that a large fraction of the uninsured
workers are in small businesses.
The last figures I saw are that about a third of the uninsured,
13 million people, work in firms with less than
a hundred workers. So it's right where you live.
Small businesses are burdened by rising health care costs and
Americans who run the millions of small companies around the
country have seen their insurance costs consume a
greater share of their payroll.
High costs are making it impossible for many small
businesses to provide insurance to their employees.
In one national survey nearly three quarters of small
businesses that didn't offer benefits cited high premiums as
the reason, and one reason that small businesses feel this pinch
is that they pay more on average for administrative services with
insurance like marketing, enrollment, and premium collection.
40% of small businesses said the health costs have had a negative
impact on other parts of their businesses.
And I'll be especially interested to hear about that from you.
For example, that it contributes to high employee turnover or
preventing you from growing your business.
And I'd be particularly interested in hearing how it's affected you.
I know I don't need to tell you more about the struggles that
you're facing with rising health care costs because that's what
you're here to talk about to us about how you face and deal with
those struggles in your personal and professional worlds.
So I just want to tell you the President's committed to
enacting comprehensive health reform this year that will help
small businesses with their health care costs.
He believes that comprehensive reform should lower costs,
guarantee choice of doctors and plans and ensure quality and
affordable coverage for all Americans, and we're actively
engaged with small business owners around the country in
regional forums and discussion groups like this one, in fact
that's how we found many of you, and through our website which is
called www.healthreform.gov, where the report that I just
mentioned is on today and where our discussion this morning will
be live-streamed right now.
So we really want to hear from you and want to keep hearing
from you as we work together to get health reform passed this year.
I want to first go around the room and let people introduce
themselves, and I met most of you out in the hallway, but I'm
Nancy-Ann DeParle, and I work for the President as the
Director of the Office of Health Reform.
And my colleague to the left here is Dr. Bob Kocher, who's one of the M.D.'s
who are working with us here at the White House and works
with Larry Summers at the National Economic Council, and
Larry Summers hopes to drop by here later, because he wanted to
hear from you as well, and hopefully he'll be here.
We'll start with you, please.
Dr. Bonelli: Yes. Good morning.
My name is Dr. Melba Bonelli, and my doctorate is in dental
medicine, and I'm from the Marlton, New Jersey area where
my practice is, and I live in the City of Camden, New Jersey.
Ms. DeParle: Thank you.
Mr. Wong: Good morning.
My name is Robert Wong, I own a small printing company in Falls Church, Virginia.
Ms. Calimafde: My name is Paula Calimafde, I'm the chair of the Small Business
Council of America.
We're a group that represents sort of the larger segment of
larger small businesses out there, and most of our members
do offer health insurance.
Ms. Hall: Good morning, I'm Jody Hall and I own a business in Seattle
called Cupcake Royale and we have four, soon to be four
locations, we're opening our fourth.
We've been around for five and a half years and we have about 60 employees. And I'm --
Ms. DeParle: What happened to the cupcakes? Because I saw some there.
(laughter)
And I was hoping they were for me.
Ms. Hall: We'll talk later.
(laughter)
Ms. Dimarob: Hi, Michelle Dimarob at the National Federation of
Independent Business.
We are the largest small business advocacy organization
in the United States and we represent about 350,000 small
business owners, average size of about ten or fewer employees,
all independently held, nobody publicly traded, and about half
of our members are in a position to be able to afford to offer insurance.
Ms. DeParle: Michelle, thanks, and I know --
(inaudible)
Ms. Dimarob: Thank you, and thank you for having us.
Ms. Borromeo: Jamie Borromeo with the National Council of Asian American
Business Associations, I'm the executive director.
We represent over 120 Asian business organizations
throughout the country, with a network of 38,000 small business owners.
Mr. Derbyshire: Hi, my name is Mark Derbyshire, I'm in the moving and storage
business, part of United Van Lines.
I'm in Aberdeen, Maryland, have about 30 employees, and provide health insurance.
Mr. Gardiner: Terry Gardiner, lifelong business owner, and now I work
with the Small Business Majority advocating for comprehensive
national health care reform that will work for small businesses.
Ms. Huelle: My name is Jane Huelle and I own The Dog Shop here
in Washington, D.C., and I have five employees and I do provide health
insurance, but it's a big strain.
Ms. DeParle: I already asked Jane if she brought anything for Bo,
the President's dog.
Ms. Huelle: I didn't.
Ms. DeParle: Because he might be able to arrange an appearance if you had
brought him something.
Ms. Huelle: Well, you know, I can make him, you know, do some tricks or
something -- teach him something.
Ms. DeParle: We'll do that next time.
Ms. Huelle: Right.
Mr. Dayway: My name is Bill Dayway, I'm with the Main Street Alliance.
We have 16 affiliate organizations in 16 states that
represent small businesses advocating for health care reform.
Ms. Hardaway: I'm Louise Hardaway and I'm from Nashville, Tennessee.
Ms. DeParle: Great.
Ms. Hardaway: Glad to meet another Tennessean, Nancy.
I actually work in the hemophilia home care business
and am currently not owning my own small business because I was
forced into working for a larger employer in order to have health
health care coverage.
Ms. DeParle: That's right, you're on.
Mr. Link: Chris Link with Imagination Branding,
Nashville, Tennessee.
We're a promotional marketing company.
My wife and Jan Nathanson started the company 20 years
ago, three women, and I had the good fortune of being hired in
by the boss, and you'll hear from her shortly.
Ms. DeParle: Great.
Ms. Link: And I'm the boss, Becky Link from Imagination
Branding in Nashville, Tennessee, and starting our 20th
year in promotional marketing.
Mr. McCracken: I'm Todd McCracken, I'm the President of
the National Small Business Organization, we're the oldest
national small business organization.
And we've been an advocate for comprehensive reform of the
health care system as the only way we're finally going to
grapple with the difficulties that small business has faced
for many years now.
Mr. Ferrera: Hello, my name is David Ferrera, I'm
Vice-President of the United States Hispanic Chamber of Commerce.
We represent about two and a half million Hispanic-owned
businesses, average size of 20 employees or less, and we are
very much looking forward to comprehensive --
a comprehensive health care reform.
Ms. Karameighan: Hi, I'm Kate Karasmeighan, I'm with the
National Gay and Lesbian Chamber of Commerce.
We have about 47 chambers across the country, and we represent
about 29,000 members who employ about 150,000 people.
Mr. England: My name is Brian England, my company is British
American Auto Care in Columbia, Maryland.
We've been in business for 31 years, and it's joint-owned by
my wife and I, and we provide health care coverage. Try to.
Ms. DeParle: Thanks.
Well, I want to get right to the topic that I raised at the
beginning of what you're facing right now as you look to try to
provide coverage for your workers.
Jody, why don't you start us off, you're out in Seattle, and
what do you find in the market out there?
Tell me again how many employees you have.
Ms. Hall: Yeah, we have currently, we fluctuate a little bit but I
think we're right around 55 to 60 right now.
We're getting into wedding season so we hire quite a few
more people, and we're opening a new store as well.
So I guess my story is that I started, I started for a small
business that became a huge business, I worked at
Starbucks Coffee when they were a tiny little company.
Ms. DeParle: Wow.
Ms. Hall: And grew up there, learned a lot about how to run a business and
how to treat your employees well.
And I spent 12 years there, amazing values.
They offered health insurance if you worked 20 hours a week, so
of course I took these values into my own business when I started it.
And when I offered health insurance it was, it was just,
it's a human thing.
It's important that the people who work for me have health insurance.
I mean, it makes me more valuable to attract great
talent, et cetera, but I was shocked at the high cost.
Working for Starbucks, I think we paid 25% and the company paid
75, so I kind of did a similar deal.
We probably paid about 45% more for quality, for the coverage
that was probably much less than half.
We didn't have vision or dental, it was more of like a
catastrophic kind of plan.
So, you know, I really, I really want to offer health care and
continue to do that.
Right now if somebody works 25 hours a week we offer that.
But what's happening is costs go up every year and because of
privatized insurance, they really have a corner on the market.
So I can't shop that.
I can't go to different brokers and get a better rate.
What I'm forced to do is decrease the quality of coverage
to continue to be able to afford some level of health care.
Ms. DeParle: How do you buy it now?
You go to a broker who shows you what's available?
Ms. Hall: You buy it through a broker. So, yeah.
And what I'd like to see and why I'm here today is just to ask
that you and the President listen to the options for
creating a choice for public health care.
And what that will do for small businesses, we are, we're the
majority of working Americans and we're the largest pool of
uninsured working Americans.
Ms. DeParle: Right.
Ms. Hall: So, but we're also the busiest.
You know, we're our own HR person, marketing person, et cetera.
We don't have a lobbyist to come to DC.
It's hard to get us out of our businesses.
So it's important that, for this meeting because we need to
organize and help you understand kind of what the real world of
our, of what we, what we face.
So I'm looking at 10% to 40% increases every year and I don't
have the option to shop that. It's incredible.
Like I can't, I can't do that to my customers, oh, we're just
going to increase, it's a free market.
They're going to go somewhere else.
Ms. DeParle: I was going to ask you, you said your premiums went up 40%, for
this, that you're paying this year.
So what did you do, did you raise the price of cupcakes?
Ms. Hall: We did end up raising the price of cupcakes a little bit
to absorb that.
I mean, we offer, we sell coffee and cupcakes, so I feel like I'm
one of the fortunate businesses that can afford it, but I'm just absorbing it.
So, you know, our opportunity to do other things, to grow our
company, et cetera, we risk that, that money.
And honestly we'll probably have to decrease our coverage, which
I don't think is good for this economy.
And I don't think it's good for other businesses.
If people want to start their own business that doesn't sound attractive.
You're going have to pay these high health care costs for less quality coverage.
Why would you want to go into your own business?
Yet that's the engine of our economy.
I mean, I think this would be a great opportunity to stimulate
our economy if we can have a public health insurance plan
where we can pool our resources and create bargaining power so
the big insurance companies don't have a corner on the market.
I mean the cards are stacked against us right now and I think
this is absolutely the time, we need this reform this year.
Ms. DeParle: Well, thanks for coming on our website.
That's how we met you, is you came on the website and gave us
some of your story. That's helpful to hear.
Ms. Hall: All right, thank you, yes. It's an honor to be here.
Ms. DeParle: Paula, you're from nearby and I met you at the
Chamber of Commerce last week.
So can you give your perspective?
Ms. Calimafde: What a great memory you have.
I figured you meet a couple of people a week.
We have a totally different perspective than you, Jody, and
I guess our perspective is that the system is not working as
well as it should be, for sure, but does not need to be
destroyed in order to fix it.
So I think one of the things that our group comes up with, I
think shocks a lot of people, is that we happen to think the U.S.
health care system is an amazing system, it's our number one
industry, and we should be helping that industry rather
than sort of looking at it like it's bad somehow, because all
the money in our health care system goes to Americans, all
those health care workers, that's dollars staying at home.
We think that small business gets hit with a double whammy.
One whammy is the cost shifting that takes place in the market.
If you look at a service and you say, okay, that service costs
the doctor $100 to do and everybody who's covered by
Medicare pays $55 for that service, and maybe folks pay,
who are covered by Medicaid pay $45 for that service, and then
the uninsured probably only with catastrophic care pay zero for
that service, you know that the medical system has to find that
$40 that's out there that wasn't covered.
So then you turn to large business, governmental entities
and small business and you say okay, you have to pick up that
additional cost because Medicare's really not paying the
true cost of that coverage.
And what happens next is big business and governmental
entities are pretty good at negotiating, and that leaves
small business picking up this enormous cost shift.
Ms. DeParle: So that's the 40% that Jody was talking about.
Her premiums go up in part because of that.
A Speaker: Exactly. Her little business is picking up that cost that other
entities, and particularly Medicare would be the big wheel,
I would think, is not picking up.
The second problem we have is that private insurance plans,
when they look at a business like yours, God forbid one of
your people is sick. Let's make it even more --
let's say you've got 20 people and one of those people's really sick.
Well, the insurance industry's going to say well we're going
to, you know, we don't like the risk we're dealing with in that
small pool and we don't like, we're going to experience rate you.
And so because of that we're going to charge you more.
And even if everyone's healthy in your business, you're still
such a little pool that any, any business would say, this is
just high risk than covering, you know, a great big company.
Well, Senator Kerry, if you go all the way back to the time he
was running for president, had come up with this idea of larger
risk pools, and that idea is actually, in my opinion, one of
the major answers for small business.
It doesn't require you to go to a public plan, which I think, I
mean I think I don't want to argue it but I think some people
could say that Medicare being funded at the levels that it's
being funded at is actually destroying the private insurance
system right now.
But if you switch to another public plan, I think you have
the potential to just kill this amazing health care system we have.
I think we need to change the rules so that small business,
we're able to go into big risk pools so we're treated the same
way as a larger business, and we would actually advocate some
kind of federal health care reserve board or something that
would set rules for the private insurance companies, and it
might be that one rule is you can't charge more than 100% of
the lowest premium you're charging in your whole region.
I mean, that's an idea.
And it might also say okay, every private insurance company
out there, you're going to have to pick up a catastrophic cost
to X dollars, but over that the government's going to fund a
special pool for the hugely catastrophic kinds of problems.
And so we think there's ways of fixing the system without making
a leap into the public health care plan which could have the
potential to really hurt the system.
Ms. DeParle: And Paula, tell me again you're, how many small businesses do you
have in your organization?
Ms. Calimafde: We have about 20,000 members.
Ms. DeParle: Great. Great.
Has anyone else here had experience like the one that
Jody was talking about or actually Paula referenced where
you had someone in your employment get sick and then
that caused your rates to go up?
Is that an experience anybody's had? Chris?
Mr. Link: We've had a situation close to that in that
we had a couple of employees have some significant health
issues last year, and it diminished our ability to
consider other options.
Looking to shop the plan, suddenly we had a group that
wasn't very marketable.
And we had to basically stay where we were and take the
percentage increase that they gave us.
So it definitely hampers our ability to negotiate even from a
diminished standpoint of negotiation.
So we did have that.
And it's certainly something to consider going forward.
What we're saying in our company now, we've reduced staff by
about a third, so our small group is getting smaller.
As the costs of our premiums go up, some of our employees have
taken, well, most of our employees have taken pay cuts.
We would expect them to evaluate their insurance needs, the
younger and healthier ones are probably going to start backing
out, I don't need this, I'll go to the doc in the box when I
need an antibiotic.
And then what we're going to be left with in our small pool is
the older group, the ones that have to have insurance, these
folks that I just mentioned that have some significant health needs.
So we're back to where we were when we started with a smaller
group not very attractive to an insurance provider.
Ms. DeParle: So you are up to, you had 50 employees, I think you mentioned
at one point.
Mr. Link: Fifty-two, yes, ma'am.
Ms. DeParle: And now you're down to what?
Mr. Link: Down to 33.
And definitely, because of that situation, we're very excited
about seeing something done right away.
We think that the health care situation is definitely going to
affect us, as we started making these decisions to cut
employees, that came up in our conversations a lot.
We have the pay and we have the benefits we're providing, and we
can save that by reducing staff.
And as things turn around, we're going to be looking at the
additional cost of providing the benefits because we believe,
like Jody, we want to provide health insurance.
We feel like that's something that folks need.
We've been in business, as Becky said, for 20 years.
We're like a family.
We've worked with these folks, we've helped raise their
children, and to suddenly pull that benefit off the table and
say we're just not going to do it any more is just not morally
for us the correct thing to do.
When the company started we wanted, as Jody said, we wanted
a place where people wanted to be.
In a small business that's what you have to have.
They're your life blood, those workers that come in every day
and work shoulder to shoulder with you.
And to not provide that benefit really is not very attractive to
us at all, but it is very difficult at this point to do it.
Ms. DeParle: Todd?
Mr. McCracken: I would add that I think part of what you're
hearing is that because of the way the insurance market works
in the small group market for small companies, and especially
the smallest companies, you see enormous swings in premiums for
these small companies because it's based upon what's happening
in their business.
For instance, we're, where we may be a nonprofit association
we're also a small business that provides insurance for
employees, so I see this on that side as well.
And, you know, even if someone is not ill, if you have, say you
have a staff of eight people and someone who's 25 leaves and you
hire someone who's 50 to come in, the average age of your
workforce has gone through the roof, which all by itself causes
your premiums to escalate beyond the cost of the coverage itself. So --
Ms. DeParle: So you have to think twice about hiring someone who's older.
Mr. McCracken: Even if nobody's sick.
Ms. DeParle: Right.
Mr. McCracken: So there is this thing where you always have
in the back of your mind as a small business person, you know,
how are the people who are working for me, they're, you
know, the people who are their family members if you provide
family coverage, so, we've got to get to a point where we're
closer to true community rating where the insurance companies
don't have the ability to underwrite and to rate people
closely based upon age and illness.
And of course that means we've got to get everybody in the
system because you can't expect insurance companies to do that otherwise.
So, that's essentially why we're for a universal coverage system.
And so I mean we see it in the association, we see it in small
businesses all the time.
When you really look at the average premium increase of
small companies overall, it's only a little bit higher than
for big business, but big business has the advantage, if
you can call it that, of seeing a fairly steady, 10, 12, 14%
rate increases year after year, where a small business sees 7%, 38%.
It's totally unpredictable, and it also means that a new
business who's starting up is going to say I'm not sure if I
can continue to afford insurance, so maybe it's better
off if can I find a way not to offer it to start with.
Because it's a whole lot easier to find people who maybe have
some other access to coverage to come work for you than to tell
people after a year or two, guess what, I can't afford this anymore.
So it does create this dynamic that really undermines the
employer-based health care system.
Ms. DeParle: It's not really what you want entrepreneurs
to be thinking about.
Mr. McCracken: No, not at all.
Ms. DeParle: With how they're going to do that. Louise?
Mr. Hardaway: I work in an industry, the hemophilia home
care industry, that is, that works with catastrophic health care costs.
The average cost to treat the disease is about $300,000 a year.
If you have complications of a inhibitor it can go up to in the
millions per year.
So it's just catastrophic, unbelievable costs.
Because I work for a company that provides services to those
people there are also some persons with hemophilia who work
with my company, and because of that, we have this very, a
fairly small pool and these very high risk people in it.
And so that makes the health care premiums just go
through the roof.
And even though I'm relatively healthy, even though I am over
50, you know, my cost is about 20, for my employer is about
$2100 a month to cover my family.
That's a pretty high insurance premium.
I mean, you know, it's doable for me but it is, it is expensive.
So the whole issue of the people with catastrophic costs, the
reason that I think we need a public plan option is, and I
agree with what you say, is that way we can have a larger pool of
people, and those persons with these catastrophic costs can,
you know, it can even out and they're not going --
what often happens with persons in that community that work for
a small business, and I see this, I see the small business
owner's side of it, but they find themselves out of a job.
Now I know that's not legal, it's not moral, and, you know,
good people wouldn't do that, but sometimes for the survival
of the business, you know, they find a way to get rid of that
person with those catastrophic costs.
So discrimination in the marketplace as far as holding on
to jobs with employers is just rampant in that community.
So that's a whole other issue.
Ms. DeParle: It is, but Paula pointed out earlier it's probably a little
bit short sighted.
I mean, this is, this isn't the kind of system we should have,
but when that happens, those people who lost their job are
still going to get sick and end up in the emergency room.
And somebody has to pay that, and guess who that is.
We all pay it.
Ms. Hardaway: Right. Because the cost is shifted, correct.
Ms. DeParle: Right. Right. Jane?
Ms. Huelle: I have a very small company and I got health insurance because I
believe it's the moral thing to do.
I have an employee who needs $1500 worth of prescription meds
every month, and she can't pay that, you know, and so we got
health insurance and we're paying through the nose for it.
But it's the only way she's going to make it.
And you can't just say, okay, I've got to reduce the benefits
so we're going to go with this cheaper plan that's not going to
cover everything for you, you know, and put it on her.
And she has to have those meds.
It's not like, oh, I just want to take these pills.
She has to have them to function.
And it's not fair that because I opened in DC I have to pay X
amount, when if I opened in Maryland they have different
laws and it would have been less.
You know, it varies from state to state, and it definitely
varies by who you have working for you.
I have five people, you know. Out of them I'm the healthiest.
You know, and so I may have reduced our rate a little bit,
but I'm not exactly a spring chicken and they're probably
looking at me like, oh, yeah, sure, you're not --
you know, I'm healthy now, but give you a year.
You know, I had an employee go into the hospital just after
getting the insurance. Thank God she had it.
Next year my insurance is probably going to double because of it.
And I don't know how I'm going to pay for that.
I can't hire another person because I'm already paying a
salary in health insurance premiums.
So, yeah, I could use another person, I could give somebody a job.
I could give somebody a great job.
But I can't afford it because I'm already paying it.
Ms. DeParle: I saw David, do you have a comment from the perspective of
the Hispanic Chamber?
Mr Ferrera: Obviously we all share in the same concerns.
In many cases in the small group and nongroup insurance markets
we're a captured audience.
There's, whether it's adverse selection, the administrative
costs that just simply drive a disbalance in the pricing and
the rate of premium growth for small business and especially
for the self-employed also.
Anybody that's bought in the nongroup market lately will, I
haven't met anybody that has a good story to say. But --
Ms. DeParle: I've met, I'll tell one after this.
I've met one person, I want to ask a question about that. But I hear you.
Mr. Ferrera: So, and somebody, somebody earlier
mentioned risk shifting, for instance, as one of the things
that everybody's been working on.
I know a lot of our members that provide care have been moving
targets, HDHP, HSA type deals, trying to lower the cost, but
there's only so far you can use that to lower the cost.
At some point you have to talk about what can you do to take
care of those inefficiencies that drive up the costs in the
nongroup and small group markets, and that's why we think
that pooling is a great idea.
And we, we very much like the idea of pooling.
Pooling unfortunately at the state level hasn't worked out very well.
Those states have tried to toy with it, but we think that it,
driving ESI, employer-sponsored insurance is very important
because we have a lot of small businesses that want to compete,
they want to attract and they want to retain employees.
And a public option, voluntary public option, which we're not
closed to, would not necessarily enhance the opportunities of
small business owners to be able to compete with large businesses
in providing good benefits to the workers.
And that's the, and then there's the, we wear the Hispanic hat.
Other than being -- the largest demographic of the uninsured in this country are
Hispanics, and over a quarter of those Hispanics are children.
We very much appreciate the President's leadership on
including IKEA and the S ship bill and helping push that
through Congress, and we very much appreciate that because
that will take care of a lot of uninsured children.
The noncitizen children.
And that's, I guess, where we also caution that.
When we talk about public options, we know the welfare
reform bill restricted immigrant eligibility --
noncitizen eligibility, and we're not talking here about
undocumented immigrants, we're talking about, you know, green
card holders that have lived in this country almost their entire lives.
And we want to make sure that public, that ESI becomes the
main driver because that allows not only competition and
businesses to thrive but it also ensures that protection against
noncitizens who may face nativist restrictions in
eligibility as we've seen in a lot of federal programs.
Ms. DeParle: You're using the term ESI, I want to be sure we all --
Mr. Ferrera: Employer sponsored insurance.
Ms. DeParle: Employer sponsored insurance.
So the President's plan does build on the current
employer-based system, and so I think we're talking about the same thing.
You said you hadn't heard any good stories, I wanted to
mention one that I'd heard because I want to see if anyone
else here has done this, but when I was in North Carolina
with Governor Perdue I met a small business owner in the
textile business and she was talking about facing sort of
like you, Jody, 40% increases, and really they were faced with
having to give up their insurance.
And she said they decided to fight, and what they did was
they instituted wellness and prevention programs that were
pretty aggressive where people needed to walk and do various
things to reduce their premiums, and she said they were able to
hold it flat for a year by doing that.
Now that's, it's a year-to-year proposition, it's not a silver
bullet, but they were able to do that.
I just wondered if anyone else here has any experience with, in
your market with those kind of plans being available where you
can lower your costs. Has anyone -- Brian?
Mr. England: Well, in Howard County they've come up with,
they've got a Healthy Howard program and they're just sort of
beta testing a program where employers will be able to have a
gold, silver or bronze certification for healthiness.
Just yesterday morning, just by coincidence, I met with the
insurance broker, and he's in the Chamber of Commerce, he
hadn't heard about this program but they're going to be
sponsoring it, evidently, but one of the things he talked to
me about was what we're going to do this year.
Now I don't know what my new rates are until August.
Well, 45 days before August.
So he said, he was warning me that they could go up 17% to 20%.
So last year to counteract, just like you said, holding back,
just like these people held it back --
Ms. DeParle: For a year, yeah.
Mr. England: He suggested we go with these HSA savings accounts.
Ms. DeParle: Health savings accounts.
Mr. England: Yeah. So we had, with the HMO is a $1500 deductible, and a $4,000
on the PPO if you chose that option.
That just made just a nightmare in paperwork.
It just, it seems like every time you just go and get a drug
you get three pieces of paper.
They have a website and it's got a one-line item but all the
stuff comes in the mail, then it tells you what they're going to
cover, what they're not going to cover, and then of course
finding out what actually goes towards your deductible is
confusing as well, and I took in the folder to show him, it was this deep.
And bear in mind, we're only seven months into this new plan.
Ms. DeParle: This folder was for you or for your --
Mr. England: Just for my wife and I.
Ms. DeParle: For your personal file.
Mr. England: Yes, just my personal file.
Now, luckily we've got younger people in there that don't use
it as much, and so we're going to do a little survey and see
just how much they use it. But it's very difficult.
But then the other thing is he said well we're going to need to
do a survey of your employees and see how we are.
So I said, oh, okay.
He says, have any old people, older people left?
And I said, well, yeah, one person did, they moved on to a different job.
He said, oh, that's good.
I mean, this is, because it's going to bring it down.
But, you know, he's offering, what do we do this year?
What do we do this year to keep the premiums down?
I don't know. I'm just wondering.
He says well maybe one of the other companies is going to be helping us.
By coming into the market and being more competitive and maybe
that will bring it down.
You know, I just wonder what the next thing I've got to do.
Now the Healthy Howard one is a good idea.
I mean, we've got, maybe the insurance company will embrace
that and say this is a great thing to do, we'll drop your rates.
But that's only going to be one time.
Ms. DeParle: Right.
Mr. England: It's not -- unless, of course, if we go to gold and we go, you
know, if we work our way up, maybe they can offer us really big discounts
for having healthy employees.
Ms. DeParle: Remind me how many employees you have?
Mr. England: We have 20. And 12 are on health care.
Now, just bear in mind I employ auto technicians that have quite high salaries.
So just because one person we provide health care for, you've
still got to compensate the money for the other person
because it's so much money that giving someone health care is,
works out so many dollars an hour more, so you can't have a preference.
So what we did a few years ago in another effort to bring down
our costs was we let people opt out for a certain price, and
they opted out and picked their spouse's plan or some other, or
firefighter's plan or whatever it was, but we're still paying
that money in the form of extra wages.
Ms. Calimafde: Nancy-Ann, we have a completely different, we're sort of a
success story on the wellness plan.
Ms. DeParle: Oh, good.
Ms. Calimafde: And we worked with a company that I think started out in
South Africa and they've really got their act together on wellness.
And they offer points, and for doing certain things like
preventive care or if you run in a marathon.
The more points you get you can actually get stuff, like sports
things and TV's, and I'm amazed around the office, listening to
the kind of dialogue going on in the hallway, you know, so-and-so
just got a TV and he just ran the marathon, are you doing the marathon?
And now we have groups of our employees running marathons.
And I would never have believed it except I realized that even
myself, I was looking at how many points I had and figuring
out, gee, if I just read this thing on such and such I'll pick
up two more points, and that's all I need.
And I thought, there's something to this.
Ms. DeParle: It motivates people.
Ms. Calimafde: Yeah.
It really, so I think the, I think there's a lot to these
wellness programs, and in fact we were able to keep our
premiums down quite a bit, and attribute it to the wellness
because they were giving us credit for so many of our
employees actively participating in this program.
Ms. DeParle: Well, that's got to be part of comprehensive health reform, I
think, some kind of focus on prevention and wellness,
whatever we do going forward.
Melissa, or Michelle, you had your hand up, I think? Oh, Jamie?
Ms. Borromeo: Hi. I wanted to discuss how everyone's talking about
low-risk/high-risk employees, although I am representing small
business owners I myself an am employee and I'm considered the
low risk because I'm in my twenty-somes.
But I do have to let you know that a lot of the twenty-somes
have sexually transmitted diseases that are rampant at
this point, and because there's this assumption that
twenty-somes are low risk, you know, our employers don't feel
that they need to cover our health insurance, and it's a big
thing that's going on with people who have recently graduated.
And this new workforce, they're not going in for their annuals,
you know, the men and women, you know, they don't know that they
have these diseases and it's just, you know, it's being
passed on from one partner to the next.
So we have to not create these silo's of low risk/high risk.
I think everyone from a human standpoint and a moral
standpoint should have health insurance, no matter what age you are.
So I just wanted to throw that out there.
Ms. DeParle: No, that's helpful. Terry?
Mr. Gardiner: Yeah, I also wanted to speak up in the voice
of the self-employed.
I myself started a business when I was 18 as a commercial
fisherman, so every time you go to a restaurant and have
seafood, remember a self-employed American caught
that fish, or maybe somebody overseas.
But also when you go to the grocery store you've got to
remember all that food you're buying, 85% of our farmers,
nearly two million farmers, are self-employed. And --
Ms. DeParle: That's an important voice.
Mr. Gardiner: And you can go on to realtors, a lot of realtors, yeah, there's a
big name there but most of them are working on a commission, are self-employed.
And where do they have to go?
They have to go to the individual market.
So if we all think it's bad out there in the small group market
where we've all had companies, it's only worse in the
individual market where you have to go, and we have 21 million
Americans that are self-employed.
It's a big percentage of our total workforce.
So they're part of this small business population and their
story's a little bit different, and a little bit more magnified.
But I think we've got to, as we design health care reform we've
got to make it work for all the small businesses, including the
21 million self-employed, the 80% of small businesses, there's
nearly 5 million that are under ten employees, and then on up.
It's a real diverse group of companies that we've all got to
try and make sure they're included and it works for.
Ms. DeParle: Well, and I think we almost run the gamut here, because I know
we have some, well, Jane's five and Jody, you have 50 or so, right? 55?
And the Links do as well.
But since you brought up the individual and the
self-employed, talk to us for a second about what do you think
is needed in comprehensive health reform for that group?
Mr. Gardiner: Well, I think you've got to echo what everybody says
here about cost.
It's got to be affordable for the employer and the employee,
if the employee's going to pay 25% or whatever your policy is,
and a lot of people the reality is we have a lot of low-wage
employees as part of our company or in some companies in retail,
that's why we see such a low offer rate in retailers, they
have massive amounts of lower wage employees, that's part of
the reality of our economy.
So it has to be affordable for employees in the plan.
And I think small businesses want more choices.
A lot of times you don't in reality, they tell you, oh,
there's this money companies offering insurance, but when you
as the individual company get down to how many offers do you
have, and some of them are really outrageous and you
realize there's nobody actually competing for my business.
So when we say choice it's not like a theoretical choice, but
there's actually competitive bids like the gas stations, you
know, they're pretty tightly, you can see there's competition.
It's not, one's not double the other.
And ultimately, the cost shifting, you know, we're not
going to get to where we want if everybody's not covered.
So there can't be a small business solution ultimately and
stop all this expensive cost shifting if we don't have everyone covered.
I think, and that's why we advocate it's got to be comprehensive.
That you can't just take on one piece, the cost piece or the,
you know, have more offerings.
So it's got to go together and be comprehensive.
Ms. DeParle: Tell me a little bit more about your group, by the way, the
Small Business Majority.
How long has it been around and --
Mr. Gardiner: We're a new group, and we're an advocacy group,
we're not a membership group.
We've done a lot of public opinion polls, two national
polls, eight state polls of all the universe of small businesses
out there to gauge what kinds of alternatives they would support.
And I think the major finding out there is small businesses
are bottom-line oriented.
They want a solution. That's what they really want.
They're expecting the leadership that is elected, ask the
presidency and the Congress to figure it out, do something that
provides them affordable options that they can, and they're
pretty flexible on what it is.
They want a solution more than they want to hear a battle about
the ideology of what the solutions are.
Ms. DeParle: Thanks.
Mark, Terry made a comment about, you know, some people
work for big companies and you, your company, are you a franchisor, franchisee?
Mr. Derbyshire: No, no, we're independent. Sorry, it's independent.
Ms. DeParle: And it's a moving and storage, is that what you said?
Mr. Derbyshire: Moving and storage, part of United Van Lines,
but's it not franchised.
Ms. DeParle: Great. And how many employees do you have?
Mr. Derbyshire: I have about 30.
Ms. DeParle: So how long have you been around and what's been your experience?
Mr. Derbyshire: Well, we've been around for a long time, it's a family
business my dad started in 1956, and we always had health
insurance, and it used to be just a very small expense.
And now it's a very large expense.
I think what we had to do recently is, and which I'm
finding to be the norm in the business community I belong to,
with, you know, CEO's, is just strip the benefits away and just
leave it to individual plans because you can pay $3,000 for a
individual plan or $12,000 for a family, you cannot ask employees
to pay anything more.
And, you know, in this economy businesses are really thinking
in the survival mode, there's so much uncertainty, so, and so
that's, that's where I've seen --
Ms. DeParle: So you no longer cover the families of your employees?
Mr. Derbyshire: No. I grandfathered in this existing employees but I won't offer it further.
Ms. DeParle: To new ones.
Mr. Derbyshire: Yeah, to new ones.
I think the other point if you wouldn't, I'd like to make, is I
think it was already brought up is the hidden cost of the
premiums, the all-payer type system where, you know, the
uninsured that go into a hospital and the premium, the
costs are passed on to the insurance company which goes on
to the premiums to the ones that provide it, so, you know, it's
the small businesses holding the bag and the bag's getting
heavier and heavier because, you know, more companies are dropping it.
So it's just a vicious cycle that, you know, it's right, this
bag is ready to burst.
But, but that's, you know, so therefore what I advocate to a
large degree is it's your responsibility that, you know,
companies somehow, some way, all participate in health care.
And I'm so glad to hear when I did walk in, that the, in your
introductory, that, that you're very sensitive and you
understand the urgency, so I really appreciate your staff and the administration.
I thought there would be a bit of a persuasion factor here, and
there wasn't. So --
(laughter)
Ms. DeParle: Well, I hope you'll be persuaded, but --
Mr. Derbyshire: So that's a relief.
Ms. DeParle: No, we want to hear your stories and we're glad
that you could be here.
Mr. Derbyshire: Sure.
Ms. DeParle: Yeah, Becky?
Ms. Link: I'd like to speak to the expense side of health
care, as he was saying.
Health care coverage is the top, is the number 3 expense on our financials.
Ms. DeParle: So what, give me 1, 2 and then you told us it's 3.
Ms. Link: Well, we have our payroll and then our rent, our
leases, and then our health care insurance.
So our employees pay 15% of their individual premiums, but
they pay 100% of their spouse, children or family coverage.
But what was interesting when I was preparing the budget for
this fiscal year and got to the bottom line, the number, the
loss that was there was identical to the number that the
expense of health care was going to be for that year.
So I could have said, you know, no health care and we would
have, we could have a break-even budget, but we had to look at other things.
We had to lay off some people, we had to cut everybody's
salaries, we did away with our 401K match, we did away with any
other employee recognition programs, so, you know, it
changed the culture of our company quite a bit.
A lot of the employee benefits side of it, because of a lot of
the cuts that we had to make.
And as Chris said, with being in business for 20 years and a lot
of the people who work for us have been with us a long time,
the effect, I think the emotional effect it had on them
to see their co-workers leaving and everybody getting pay cuts
has been tough.
Ms. DeParle: Is that the first time you've had to do that?
Ms. Link: We had --
Mr. Link: Two after 9/11, in that slowdown.
Ms. DeParle: Two people, yeah. Does it feel like you're going backwards?
Ms. Link: Yes.
Ms. DeParle: Sort of -- I mean, you've built this up and you must be very proud --
Ms. Link: Yep.
Ms. DeParle: But it's a very tough situation. Yeah, Michelle.
Ms. Dimarob: I just wanted to comment on what Becky and I saw Jody nodding her
head said, and, you know, your number one cost is payroll, your
number two ecost is rent, and then there's your number three
cost, and what we found in talking to our small business
owners is that is the fastest growing and most unpredictable
cost of doing business.
You know what your rent's going to be and you know what your
payroll's going to be, and I think it kind of keys in on a
very big point, and that is that it's the one thing that is
completely out of your control and you're at the behest of the
insurers and one of the things that we've advocated for very
strongly from an NFIB standpoint is some serious and significant
insurance market reform in comprehensive health care.
That's something that I think we've worked on for a long time,
but now that we're looking at comprehensive I think this is a
true opportunity to take a look at some of the things that we
have done for the insurers over the years, you know, they've
been very successful in carving out the types of policies that
allow them to keep a very good profit margin and too in a lot
of states because there is such a significant amount of market
concentration, there's only a few places you can go and a few
carriers you can go to to buy your policies, that now there's
a significant amount of concentration and we don't have
enough competition and I think by coming up with a national set
of rules which is something that NFIB advocates for, some serious
insurance rating rules, that goes back and looks at how we
get to some of that uniformity and taking health status out of
the equation, you can get to some of that premium
predictability that I think people are really looking for.
We hear it from our small business owners all the time,
and every story that we've heard today is very similar to what we
hear when we go out on the road and talk to our members.
And they're tired of not understanding why they get a 16%
increase one year and they get a 36% increase the next year, and
the only thing that they know is that somebody had a birthday and
nobody got sick and nobody had a NICU baby, and they just don't
understand what's going on.
Ms. DeParle: So it could just be the aging of their workforce.
Ms. Dimarob: It could be the aging of their workforce and, you know, it's
like Todd said, if you lose a 26-year-old employee and you
hire a 52-year-old employee you've really changed the
cosmetic makeup of your workforce, and that has a huge
impact on your premium.
And so I think that a big part of this conversation has to be
insurance market reform not only in the small group market but
also in the individual group market because for our members
about 10% of our members fall into the nongroup market and
they purchase there and, you know, it's a very, it's the most
broken market but then the rest of our members purchase in small
group, and, you know, it's broken and there's 50 different
sets of rules and there's no uniformity, and there isn't a
great amount of motivation on the part of the insurers to do
anything to make it easier because they know that they only
have so much that they can negotiate on with the large
employers because they're afraid of losing that business, you
know, it's hard to lose a 2,000 employee business, it's easier
to lose 20 if they have to go shop somewhere else, and then
you have the nongroup, and then the small group market is where
a lot of insurers are making the vast majority of their profit.
And, you know, we aren't supposed to be insulating them
so that they can make a profit, they're supposed to be
delivering on quality and value.
And so I think we need market reform rules that really suggest
that motivation on their part.
A Speaker: Can you say more about the market reform rules that you
suggest for the smaller, the individual markets?
Ms. Dimarob: Well, I think that you do need individual and national --
individual and small group market reform rules, and you
know when we think about it at NFIB, we think about it in the
context of a connector exchange type setting.
So, for instance, if you're going to have something like a
connector exchange then you should be able to allow --
Ms. DeParle: You might explain that a little bit because people have been
talking about pooling, but this is related, I think, if could
you explain it.
Ms. Dimarob: So pooling, you know, I mean, I think everybody knows, this is
such an arcane analogy but it's the one that I find everybody
can visualize, so you can buy one soda at a time or you can
buy a case of sodas.
So you can pay 75 cents, or you can pay, you know, $3.60, just
for the sake of math.
And the idea that if you buy $3.60 that that's a case or, you
know, 24 employees coming together with their, 24
employers with their employees coming together, they get a much better deal.
There's a lot more people, there's a better ability to
spread risk, and you have better bargaining power, and all of
those things in our mind lead to more competition.
So in a connector exchange type of approach, what you're doing
is you're allowing individuals who currently buy outside in the
nongroup market and small employers who buy in the fully
insured market, which is the state by state by state products
that you all buy, unless, you know, you guys are suddenly
self-insuring or something, and it gives you the ability to go
in there and get a better price.
And in our mind in the connector exchange you would have a set of
market rules that would provide some set of consistency.
Right now if you want to offer a plan in Wisconsin you follow one
set of requirements.
If you want to offer a plan in Arizona you follow a different
set of requirements, and I'm only going to guess that in
Tennessee maybe you have somebody that's, you know, from
Kentucky or maybe somebody who works some place else and you
have to really go to a huge effort in order to be able to
find a plan that works in both states.
Ms. Link: Right. We actually have employees
in six different states.
Ms. DeParle: Wow.
Ms. Link: We have three offices, but we also have sales
reps, you know, out in the field in other states, so we have to
consider many different states.
Ms. Dimarob: And in our mind we just think that having those national
market reform rules, whether it's, you know, taking health
status out of the equation --
Ms. DeParle: So no preexisting exclusions.
Ms. Dimarob: No preexisting conditions because especially for our
members, you know, we tend to be, our members tend to be
older, they tend to come into owning a business independently,
a small business after they've had another career, and so we do
think that taking age and health, well, you have to be
able to rate appropriately and give appropriate faction to age,
but at the same time you cannot exclude people because they've gotten sick.
And so I think those kinds of things and taking geography and
other factors into account, I think one of the other things
you have to be able to do for small businesses is really look
at how they rate small businesses from an insurer
perspective versus how they rate larger businesses, and it's
really easy to go into the class of business and start dicing up
and dissecting so that you can apply a certain segment of the
premium increase to them.
And I think that we've got to get away from that practice
because I think it's abusive, and especially bad for small
businesses and nongroup.
Ms. DeParle: We need you negotiating for us. Bill, did you have a comment?
Mr. Dayway: I wanted to raise an aspect that hasn't been
talked about much here, and that's the small businesses that
don't provide any insurance at all.
We have a number of our members, I'm pleased to see you quoting
our report in your analysis this morning.
We have many who simply are unable to provide insurance at
all or provide insurance to a very small part of their, of
their employee base.
It's very difficult for us when we look at the numbers, the
profitability of the business, their ability to pay, their
ability of their employees to pay, it's very difficult for us
to see how we can get to universal coverage without a
very strong intervention by the government.
We need help.
Our members, as you saw when you looked at this report, believe
that the government can and should be participating in
helping and really support a public option that drives the
kind of competition that's needed, as she just described.
So I hope when you look at this we don't get into just a
ideological debate about this, this is not an ideological
question, it's a practical question.
It's how can we get there from here.
And unless we have that kind of intervention in this
circumstance, it's difficult to conceive of how we can actually
get from where we are now to universal coverage and to take
care of these people.
Ms. DeParle: Which, your organization, which states are you,
do you have members from?
Mr. Dayway: We're in 16,they're listed back all through here.
We're in, I can just, Colorado, Idaho, Illinois, Iowa, Maine,
Montana, New Hampshire, New Jersey, New York, Oregon, Rhode Island, and Washington state.
Ms. DeParle: So in all those places you have small businesses who are members
who are just not providing at all, they can't do it.
Mr. Dayway: Well, some of them do and some of them don't.
Ms. DeParle: Right.
Mr. Dayway: Jody is in fact a member of our organization.
Ms. DeParle: Great.
Mr. Dayway: As is the doctor in New Jersey.
So some do and some don't.
Many of them, I'm most familiar with Washington where I'm from,
we have about 1,000 people affiliated with the organization there.
A lot of them, about half of them do in fact have insurance,
the other half don't.
Ms. DeParle: But they, but they'd like to?
Mr. Dayway: They join with us in trying to advocate for change
that would bring it about.
Ms. DeParle: Got it. And you talked about Dr. Bonelli, so I'd like to
recognize her for a second.
Dr. Bonelli: Yes. With my organization in New Jersey, my corporation's called
Dental Choice, P.C., and we have seven employees.
And I've found over the years since I started, we've been in
existence now for nine years, and over the years I've found
that the policies that I've been able to negotiate have been
where the premiums have been higher in my earlier years in
the organization and my employees weren't able to afford
the higher monthly rates.
And I had one employee in particular within the past year
that had to have major surgery and she did not have insurance,
and it was unfortunate, and in the bed in hospital and I spoke
to her she said Dr. Bonelli, promise me that you're going to
do something that we can all have dental insurance that we
all can afford it.
And that really touched my heart when she said that to me laying
in a hospital bed without dental insurance at the time, having major surgery.
And I said to her I will really try.
And I polled the different staff members to find out what they
really could afford on a monthly basis and we, my administrator
and I, we started the trek of trying to find a plan that they can afford.
And we found one that we were able, they could afford the
monthly premiums, but the deductible is now somewhere from
$2500 to $4500, so they all believe in God that they never
have to have major medical use of the plan because they don't
know how they're going to afford the deductible, although they
can use the preventive side of the plan because of the low premium.
So that's one of the things that I really had to deal with.
And over the years, most of my employees have been single moms
because I haven't been able to attract, well, I would say
single moms that I've had to train in the workplace and bring
them under my wing and teach them the fundamentals of dental science.
And I've found that the more, the older population that have
been in the profession, to recruit a staff like that where
I did not have to train where they came with the expertise I
would have to offer them a full benefits package because that's
what they needed to come on board, and I was not able to do
that over the years because of the cost.
So that pretty much is my story in New Jersey, and I really, I'm
looking forward to the public health option insurance
coverage, because I find that it will be, I'm hoping that it's
going to give us a more diverse ability for everyone to be able
to participate where they're able to fully utilize all
aspects of the plan if they need to, and there's a peace because
I think my, really I've offered my employees a false sense of
security that they have something that they can use, but
in essence they can use part of it and they're scared to use the
other parts of it if they have to have, have to use it.
And that's unfortunate at this time.
But that's what is available to us in the State of New Jersey. And it's, it's really --
Ms. DeParle: It's terrible. So they're scared to use it?
Dr. Bonelli: Yes. That's where we are right now.
Ms. DeParle: That's not what you want. Now, you were nodding.
Mr. Wong: Yeah.
Ms. DeParle: You have a printing company, is that right?
Mr. Wong: Yes. We've been in business for 22 years.
And we have to offer insurance because these are the people who
help us, our success story.
And at the same time, how can you keep your skilled employees
if you strip them of coverage.
And how can you attract new employees if you plan to grow.
Those are the questions that we face every day, you know.
If we don't have any plan to expand we got to keep the core
of our employees, the people that know what they're doing.
And, you know, those are the things that we face.
So it's hard to say that, you know, a small company, I will --
let's just say cut this and cut that but not the health
coverage, because that's the reason why these people are
working for us. They want health insurance.
If we don't offer health insurance why should they work for us?
A bigger company will have a better plan and, you know, if we
don't have the skilled worker, we will go out of business.
I just wanted to add that.
Ms. DeParle: You're in Virginia.
Mr. Wong: Yes, ma'am.
Ms. DeParle: And so what have you seen in terms of your premiums?
Mr. Wong: Double digits every year.
Ms. DeParle: Double digit increases?
Mr. Wong: Increases every year.
And the average age of our employees are 45 or older.
You know, we have people in their 60's.
You know, it's --
not much we can do, you know.
But, you know, these are the people who are working with us
over the year, you know, we just like a family.
And, you know, I will do whatever I can to keep them on
board, but I can't wait until, you know, your plan to go into
effect, you know.
Ms. DeParle: Michelle's plan. Exactly.
Mr. Wong: You have one vote right over here.
Ms. DeParle: Dad will be real alarmed when he hears the NFIB plan. But, no.
I mean, I think she's, I'm teasing Michelle because she's
very articulate about the insurance market reforms that
need to happen in Virginia and all over the whole country.
It's just, I'm struck in hearing about, it just sounds like you
don't feel that you have any leverage here.
Mr. Wong: No, ma'am.
We only have six employees, full-time employees.
Some have high, you know, claims experience.
We don't have any leverage to negotiate the rates with our
current carrier or with other carriers.
Because nobody want to take us, you know.
A bunch of people in their 50's, you know, it's just higher risk,
you know, you get penalized when you get older, you know, whether
you're healthy or not.
It's just statistics that, you know, once you pass 50, there's
more potential health problems.
Ms. DeParle: What do you do to try to deal with the increasing cost?
You said you cut back in other areas, but where can you go?
I mean, your rent?
Mr. Wong: Not much. Not much.
Well, if it keeps up, you know, we'll cut back the work hours.
I will volunteer to take a pay cut, or have to lay off some
people, which we don't want to do.
Ms. DeParle: All right. Louise?
Ms. Hardaway: I just wanted to add a word about the expense,
the premium expense, just my experience, and the reason that
I'm not a small business owner today but working for an employer.
Is last year, like I said, I've worked in this industry for more
than 20 years, but last year had had an opportunity to set it up
as my own business with a partner, and when we sought out
health insurance and worked with a broker, the quote that we
received from a major carrier was $13,000 a month.
That was the premium cost.
And that was to cover two employees and our families.
So it was family coverage for two employees.
When I got that quote, I just thought to myself, this
shouldn't be legal.
They shouldn't even be allowed to offer that kind of a quote.
It's the same as a denial, but it's not really a denial, so,
you can't become an uninsurable and get into any kind of program
for, you know, for someone who is an uninsurable if you have
those options in your state, you know, a high-risk pool or something --
Ms. DeParle: Right, right.
Ms. Hardaway: You can't go there because it wasn't a
denial, but yet those kind of costs are just astronomical and
there was no way that we could, we could do this business
because we had to have health care for ourselves and our families.
My husband is self-employed, so I've always carried our health
care through all of our 30 years of marriage through my employer.
And the same with, with my partner.
So we ended up just having to go back to the blackboard and
became, actually we're able to continue in business, but became
employees of a larger company.
And, you know, and are working in that way.
So our dream of being able to have our own small business
really was not possible because of health care costs.
Ms. DeParle: Chris, and then I want to get Kate in here.
Mr. Link: Just to follow up on that, and what Terry and Bill
said a few minutes ago, we don't know a whole lot about the
individual policy side, but we're about to find out if
something isn't done because that's where the small
businesses are headed.
We're not going to be able to carry it, our folks are going to
be left with that alternative, and owners of the company are
going to have to go out and seek their own insurance, and I'm
afraid our story's going to end up looking a lot like Louise's
if we're not careful.
The other thing that I wanted to mention, I've heard a few folks
talk about HSA's.
And while we're focused pretty much on the premium side there's
another dimension to it.
We tried that option a couple of years ago as an alternative to
have a smaller percentage increase, we went to the high deductible plan.
We made our deductibles the same.
We set up the other part of the deductible paid by the company
for an HSA, we thought, okay, now we've got something.
Then our folks went out and started using it, and we went
through that money very quickly.
We were, theretofore we were using co-pays, but when we had
to start going and buying those services, going to the doctor's
office, we were told they were discounted rates, but we had
some sticker shock.
And then folks started going to the pharmacy, and we started
ripping through that money, and that was not an option for us.
So cost containment on that side, buying the drugs they
need, buying the services they need, even when they had their
own account to do it, it didn't take very long until we depleted
those, and we got away from that option.
It was, it was a bureaucratic situation, too, folks never
really understood quite how to make it work, there was a lot of
continuing education that needed to be done.
Folks did not defer in the money that we hoped they would to keep
the account balances up.
Young folks took it as free and gave themselves a raise, that's
what I would have done, probably.
But it just didn't work.
And that was a serious problem for us.
One other comment I'd like to make in closing, too, on this.
We are delighted to be here and to tell our story, and we've
been brought out into this debate, Freida Player from the
Service Employees Union first contacted us and we attended a
group of small business owners in Nashville and started sharing
these stories, and it was really encouraging.
It wasn't a lot of good news, but to know we had folks out
there that were facing the same problems and trying to come up
with solutions, and Lori Smith at the Tennessee Health Care
Campaign, she continued on.
So I really appreciate the attention that we're getting,
and I know a lot of the folks that are working with small
businesses now are sort of coming to our rescue.
I feel that we're being heard, we've got to have some help, and
now's the time because with the economic situation that we're in
the problem that we had two years ago is three or four times as bad.
Ms. DeParle: Yeah, that's the sad thing.
I want to introduce my colleague Larry Summers, who's head of the
President's National Economic Council.
Larry, I really appreciate your coming, and he has been spending
a lot of time working with our team here at the White House who
are looking to try to move forward on health care this year
for the President.
And of course has a special expertise in looking at our
economic situation and how health care is making that worse
and how we need to do comprehensive health reform to
make it better.
Larry, do you want to say something and then we'll
continue to hear these stories.
You need to press the --
Mr. Summers: I suspect I know less about what's happening on
the ground than anyone else in this room, but I'll say a thing
or to from an aggregate point of view.
I think we as a country can do much, much better than we are.
A hundred thousand Americans die each year due to medical errors.
Hypertension is something that's completely solvable.
There was a study done at Harvard while I was there that
found that of all the hypertension in the United
States, only one in four cases was being properly controlled.
And that down the road that meant strokes, which would cause
children not to know their grandparents.
It meant emergency room visits, and it meant incredibly
expensive rehabilitation medicine.
And that you could tell similar stories with respect to diabetes
and a number of other conditions.
It can't be right that the richest and best and most
powerful and most innovative and most flexible economy in the
world has infant mortality and health statistics where we're
duking it out with Costa Rica to be in the world top 30.
It just can't be right.
And at the same time, small business, you all know better
than I, but first of all, there's never been a big
business that didn't start as a small business.
Second of all, if you look at where the jobs come from and
where the majority of the job growth in our economy comes
from, it's small business.
If you look at where people get their start, it's heavily small business.
And frankly, if you look at the economic interactions that touch
people's lives, really touch their lives, it's not usually
going to Wal-Mart. And it involves a small business.
So in a real sense you're the backbone of the nation's economy.
And the system we've had hasn't worked well for you and the
people who work with you.
Too often it's created situations where people didn't
get insurance; too often it's created situations where taking
care of one ill member of a business family existentially
threatened a business's ability to exist.
Too often it's created a situation where you were
rendered not competitive by the fact that you felt an obligation
to provide health insurance and you couldn't get it in a reasonable way.
And that's been mirrored at the national level.
You know, you can have uncontrolled and unsustained
growth in health care costs.
Maybe it shows up in the fact that businesses have to pay more
and they can't compete in the world, and maybe it shows up as
the competitiveness, maybe instead it shows up as lower
wages for all the workers, because they're able to push it down.
And so we don't see incomes of middle class families grow.
And my friends in the economics profession find it a fascinating
subject to debate which of those two things happened, and which
of those two things happened over what horizon.
But it seems to me that it's really not that interesting a
question because both are unacceptable, and that what we
need to do is get on with the task of reforming the health
care system. There's only been one year since --
one other year in the last 50 when if you look across the
presidential election and you look across the Congressional
elections there was such a consistent mandate for change
in our country.
And that suggests to me that this is really the moment to
bring about major change in the health care system.
If you compare this moment to 1993, we've got a lot of things going for us.
We've learned the lessons from a set of mistakes that were made in 1993.
Health care is a shared GNP, is a quarter higher than it was in 1993.
State models that work much better on both the cost and the
access side have been developed that weren't present in 1993.
A set of constituencies, whether it's private health insurers or
other groups who weren't at the table in 1993 are now at the
table, and so I think there's a really very good chance of doing
this, and I think it's a moral issue for our children, but I
also think it's a deeply practical issue at both the
microeconomic level in terms of letting businesses survive,
businesses like yours, and let's not forget that the largest
supplier of General Motors is Blue Cross of Michigan.
So it is a business survival issue, and I would also suggest
that it's a competitiveness and national economic strength
issue, and that's why it's one I'm devoting a lot of my time to
as head of the President's National Economic Council, and a crisis
like our current broad economic crisis is an opportunity to do
something about it.
What better way to stimulate demand than by getting us past a
world where a grocery store has more information technology than a hospital?
What better way to stimulate demand than by creating all
kinds of jobs, giving all the people who need preventive care
and don't get it the preventive care they require?
What better way to create jobs than by ensuring that people who
need health care can get it in a cost effective way?
So I just am really glad to be here, I'm sorry that the set of
global economic meetings in Washington kept me from being
here sooner, and thank you for what you're doing to make our economy stronger.
Ms. DeParle: We've heard, Larry, from a number of businesses here who
have said in a micro level exactly what you just said.
They've laid, the Links here are from Nashville and they've had a
business for 20 years and had to lay people off this last year
because they couldn't afford the health care increases they were seeing.
I mean, pretty much everybody around this table has had a similar story.
Kate, I wanted to get you in here for some comments.
Ms. Karasmeighan: We've heard from our members all of the
issues that we've heard around the table already, but one side
of the issue that we hear about most often is the question of benefits equity.
A large percentage of our members employ a large
percentage of gay employees, and for those that don't know,
employers who offer family benefits to their gay employees
then have to have those employees' benefits for their
families taxed as salary.
I was shocked to find out from many of our members when we did
a survey a few months ago that these employees who are --
employers who want to give full benefits to all of their
employees have either stopped giving employees benefits for
their families, so they aren't extending that option for all of
their employees' families, or they are not giving that option
to their eligible BT employees who have families.
And it's a real physical pain that these employers are dealing
with because they can see it is a moral imperative that anyone
who is employing any group of people be able to provide access
to health care, and all of these employers understand that.
But the question of either taking that option away from
people so that they can be equitable to everyone or taking
more on in the cost of payroll so kind of making up the
difference in salary for their eligible BT employees or just,
you know, not giving those options to eligible BT employees
has been a huge problem that many of our members are facing,
and honestly, probably every person at this table is,
probably every person at this table who's a small business
owner has an eligible BT employee and is facing the same issue.
The eligible BT community makes up about 10-15% of the
population, and it's hard to imagine that there's not a small
business out there that's not being affected by this that is
offering benefits to employees' families.
So it would be great to see, you know, that's kind of more on the
tax side, but certainly a question of opportunity to take
advantage of health care and a change that would make an world
difference in the lives of many, many employers and Americans.
Ms. DeParle: Thanks. Paula?
Ms. Calimafde: There's one topic I thought we'd hear a lot about and we haven't
heard it at all as far as I can tell, which is deductibility of
premiums in companies and the difference between certain small
businesses and others.
So if you're a C Corp.
you're able to have deductible health care premiums and if
you're self-employed you're not.
And I guess there's some movement afoot to just say,
well, let's not let anybody deduct health care premiums, and
that's a way we can funnel, you know, get some costs into the
system that will help pay for other things.
I would suggest that if you took away deductibility of health
care premiums in the small business market you might end up
with a whole lot less small business employees covered.
I think that's a real incentive for coverage in that market.
But I think there should be parity so that whatever kind of
small business, whatever kind of entity running their business
they all should be able to deduct health care premiums.
Mr. McCracken: And just to clarify, it's not income tax
deductibility but FICA tax.
So people who are self-employed can't deduct their health
insurance premiums against their self-employment tax.
Ms. DeParle: Right.
Mr. McCracken: Which since they pay both sides is 15.3%,
and so we've seen that people can have premiums of more than
$20,000 a year individually, so that's a $3,000 tax on
self-employment tax that they pay that no other person working
getting health insurance has to pay.
Ms. DeParle: Got it. Yes. Brian.
Mr. England: Yeah, one of the things that's going to come up
is the cost of this.
And everybody talks about the costs, no, we can't afford it.
But as we've seen, the cost of doing nothing is far more, and
already I see the cost of doing nothing over last year was 17%
to 20%, so what's it going to be next year?
So this has to happen.
I don't see how we're going to manage if it doesn't.
Ms. DeParle: Couldn't have said it better. Bill?
Mr. Dayway: Dr. Summers and your comments and to some of the
others, back to a question here.
One of our small businessmen testified to the House Ways and
Means Committee the other day, endorsed a public option, and
the ideological heat that came into the room was palpable.
You know, it's a big room and the temperature went up. I just don't get it.
To us, this is a factual question.
This is not an ideological discussion.
How can we cut in to the GDP if we cannot bring down those costs
or at least cut the growth rate of those costs.
How can we bring these products to small businesses in a market
that has been unable to supply them.
And even with the reforms that are discussed.
That we'll not be able to supply them.
So I'm hoping that we can find a way to get the actual, some
actual numbers here to really deal with the economy of these
small businesses that we work with, the facts of the matter
that they face, and what really is going to happen when we bring
forward a health care reform and try and get away from some of that ideological --
Ms. DeParle: Well, that's one message I think we've heard loud and clear.
This is not, for those of you who are small business owners or
represent small businesses, this is not ideological, this is
making payroll, keeping people working, keeping going.
So I hear that loud and clear. David?
Mr. Ferrera: We're having words coming out of our mouth
that we never thought we would say, like universal coverage or
voluntary public option.
It feels very awkward for us to be able to talk about this.
But clearly the state of the nongroup and small group
insurance markets and the lack of reform of those insurance
markets leads us to see the sag of productivity and the costs
that it, how it burdens employers, and with that, as
long as the recommendations are flowing, obviously one of the
things that we would be very concerned about is that we still
try to drive towards the employer-sponsored insurance
model because that's what allows businesses to be able to compete.
We don't want the small business community to essentially be the
employers of public option employees while the larger
employers offer all the great benefits to be able to attract and retain.
And along those lines also, we would be just as concerned about
a coverage mandate for the small business community because in
the end, this, this same question of cost is, it very
much can put businesses under.
We've done our surveys of our membership of over the last six
months how they've fared in the current economy.
We've had an 11 --
a report of 11% of business, of survey respondents saying
they've dropped health care coverage for their employees in
the last six months.
It was a bit of a shocking number for us, too.
And I guess while we're talking about, for instance, a voluntary
public option, and again, I would restate that it's a
surprise to us that we would be talking about this, is that we
also make sure that if we're talking about universal coverage
overall that we don't forget that 22% of the uninsured
population is noncitizens.
And we can't really talk about universal coverage unless we
make sure that the noncitizen populations are covered.
I don't know anybody that's traveled to Europe as a
vacationer, I've never been charged a dollar when I've gone
to a European hospital.
I would like to think that we can consider noncitizen
populations in this country, many of which contribute to our
productivity an essential part of the labor force and of our
communities that need coverage.
Ms. DeParle: Thanks David. I think we're toward the end of our time
Jane, do you want to say -- a closing comment?
Ms. Huelle: Somebody brought up that, you know, they may have
to go to individual coverage.
And I would just like to stress that I compared the two before I
got group coverage, and there's huge differences in what's
covered, and it's not adequate when you get an individual policy.
When you go to e-insurance.com and get your little policy at
half what the group rate was, that's because they're covering
a lot less.
They don't cover prescription drugs, they don't cover, you
know, a lot of procedures, and so that's not a viable option.
So many people are forced with having to be in a group in order
to get adequate coverage, which means the small businesses are
forced to set it up if they feel for their employees at all, and
then we have to pay.
And the, the amount of unfairness in terms of this
state versus that state and what you're going to pay if you're in
business here and what you're going to pay if you're in
business there is huge.
So bare minimum we need national rules for rating because if I
had opened in Maryland my rates would be a lot less than what
I'm paying in DC.
And we're talking about two miles down the road.
So there needs to be reform on all aspects in terms of how the
insurance companies decide what to charge you and what they're
basing that on, and it shouldn't just be because you happen to
open up in this state and you happen to have unhealthy employees.
Or your employees workforce is over 50 because you specialize
in senior dancing. It shouldn't matter.
And unfortunately, that's what we get dealt, is this hand of,
you know, these are your employees and so now you're
going to have to pay.
And it's a choice between hiring another person or not hiring another person.
Am I going to make it or am I not going to make it?
And it's very real, and it shouldn't be whether or not we
should do this but how we're going to do this.
Ms. DeParle: Yes, I agree.
Terry, I'm going to give you the last word and then we're going
to, I think, have to wrap up here.
Mr. Gardiner: One of the things I know everybody is looking at is an
exchange or connector to pool small businesses.
I think it's very important that we keep in mind as we design
that that we're designing it to work for who is it, 21 million
self-employed, 6 million small businesses, and 80% of them are
under ten employees, it's got to be real simple, real accessible
to be practically available.
We can also look to the fact that Japan set up a small
business pool 30 years ago, and we know their health care costs
are half of ours and they have good outcomes and they have a
very robust small business sector.
So we can see that this can work, but we've got to make sure
we know who we're designing it for so that we get a lot of
choices and competitions and not fall into maybe 50 state
connectors because we've got small states, we have rural
areas where you aren't going to get the competition, unless it's
designed with all of our small businesses in mind.
Ms. DeParle: Thanks.
I just want to thank everybody for coming here and for the work
you're doing as small business owners and also for sharing your
stories and being willing to spend the time helping us to
understand what you're facing, and, you know, I'm left with a
lot of stories from this, Mark, what you said about your family
business having been around since your dad founded it 50
years ago and your feeling of shared responsibility in wanting
to continue providing, and yet the struggle that you're facing.
And Jody, you started us off talking about your dream of your
cupcake business and you're now up to five stores, is that right?
Ms. Hall: Four stores.
Ms. DeParle: Four stores.
But being unable to move forward and grow and get bigger in part
because of the obligation you feel and responsibility you feel
to help your employees with health insurance.
And just unable to keep up with the rising costs.
So that leaves me even more committed, and I know Larry had
the same reaction to let's get this done this year.
We really need your help.
I hope you'll all hang in there and keep working at it and keep
in touch with us as you continue to do what you're doing and
provide health care and help us get this done this year.
So thank you very much.
Speakers: Thank you.