There is little more to instigate a heated argument amongst business owners and consumers than the cost and distribution of healthcare. Little more has a greater effect on the lives of our clients and our businesses. To say nothing of the outcome of our economic recovery. To say nothing of our moral character.
Rick Unger’s March 15 Forbes article gave us an opportunity to review the 2012 CBO (Congressional Budget Office) revised projections for the Insurance Coverage Provisions of the Affordable Care Act. I realize there is a tremendous distrust on both sides of the political spectrum as to whose numbers are ‘real’. I choose to work with the projections of the CBO. I also keep in mind that 10-20 year projections are, to say the least, difficult to get right. I encourage you to read the report for yourself. It’s short, presented in plain english and taken on face value shows an overall net cost of the program at $1.1 trillion over the 2012–2021 period—about $50 billion less than the agencies’ March 2011 estimate for the 10-year period 2011-2020. This is significantly under the reports we’ve been hearing and reading stating the cost estimates have doubled from those made in 2011. You’ll find an overview of how the CBO and JCT (Joint Committee on Taxation) came to the new projections on page six of the report. Again, see for yourself what was really projected. This information confirms that healthcare reform in it’s present form will be costly. So will leaving the system alone. It also proves there are a lot of ghosts in the machine when it comes to the accurate dissemination of public information. The important take away here is to rely on multiple sources of information when considering what should be your perspective. Complicated? Yes. Time consuming? Sure. A national issue worth your time? You better believe it.
I want to offer the clearest information to my clients and I know you do as well. So let’s take it down from the 60k ft. level and look at the issue from a more personal perspective. I’d like to share my own family’s experience purchasing insurance through the state exchange program offered in our own Commonwealth of Massachusetts. It may offer you a look into how a similar program nationally might operate from the consumer point of view.
We made our first attempt at purchasing our own health coverage via the Massachusetts program in 2007 when we created SMGraves Creative Associates. Legislation enacting our state exchange system was passed in April 2006. At that time the cost of buying suitable coverage for my growing family of three (the cost that the state stipulated a person of my financial stature and family size could afford) actually exceeded what we could afford. Bummer. Cheapest cost directly from a provider was approximately $13,400.00. Double bummer. Dejected but not out of the game, we found other means to ensure we had coverage. Keep in mind it is a requirement to have coverage in the Commonwealth of Massachusetts or face a tax penalty of $1000.00. More importantly we had a newborn and a firm decision that one of us would leave the workforce to bring up our kid. Before you ask: we did not partake in any entitlements or receive any subsidies.
Revisiting the option in January of 2012 we found a different situation. An independent insurance broker representing the Commonwealth drove to our home to discuss our needs and offer quotes. The broker was well informed and had twelve quotes to discuss with us, ranging competitively in cost and benefits offered. The process was professional, the consultation was effective and within a short period of time we purchased better coverage for our family, now of four then I had as an insurance industry professional (oh, the irony) for approximately 65% of the cost of coverage offered in 2007. To boot, coverage was slightly better than that offered in 2007.
My personal experience as a consultant/licensed insurance professional from then to now was like night and day. Our sales experience was positive. The exchange allowed us to purchase private insurance at an affordable rate. Was it competition or state funding on the other side that lead to our annual premium? This is a hotly debated tenant of the program. Does the affordability our family realized come from real competition or by government picking up the tab. While our state’s healthcare costs continue to go up ($1billion in 2010 between Commonwealth Care Subsidies ($880m) and the Health Safety Net program ($475m) which reimburses providers for the uninsured) our current system has lead to a drop in state spending on residents who don’t have any form of insurance by 36 percent, while the demand for uncompensated care has fallen 48 percent. Keep in mind this or any other plan may be in jeopardy given what happens to medicaid funding and the reimbursement system associated with both medicaid and medicare.
Over the last five years I have had several clients go through a similar process through the state exchange. In two cases my clients were thrilled to be getting coverage for the first time in their adult lives. The subsidy offered known as Commonwealth Care is also working for those who are eligible to recieve, although from a fiduciary standpoint it has been a struggle here in Massachusetts to estimate and fund the subsidy. The cost for Commonwealth Care rose 31 percent between 2008 and 2009. The state budgeted for another increase of about 7.3 percent, or $880 million total, in 2010. FY13 funding estimates are set at $974m. Bottom line: more people have enrolled then anticipated in 2006 largely through job loss or employers opting out of providing coverage.
Placing politics and policy aside let’s focus on you the consumer . There are options right now for you small business owners and individual citizens so you’re not forced to make the lesser of two bad decisions. Position yourself to be a smart consumer, capable manager and community leader.
When purchasing insurance:
- Empower yourself by collecting all the facts. From factual sources. Call or write a guy like me for some stimulating conversation. Get several sources of information.
- Understand your sources whether making decisions for your employees, your family or on what to expect about healthcare reform and how to vote as a citizen.
- Empower your employees to understand the costs and process associated with healthcare coverage.
- Does your current insurance professional make a priority to understand trends in policy and industry as they relate to all of your coverages? Is your current insurance provider willing to work with you to answer all your questions? It’s a tough world out there. You’re the consumer. Don’t settle for less than you deserve.
As a citizen:
- Don’t take the latest news on face value. Get information from all sides. Get curious.
- Empower your legislators to do the right thing by voting. Get involved in the process of determining the future of healthcare.
I invite you to leave your comments. What do you think about the incoming healthcare reform? What about the MA system? What are your small business or consumer healthcare challenges? Is the cost of healthcare preventing you from starting a new business? Let’s connect to get answers to all of your questions.
Scott Graves is passionate about helping business owners. Tune in to his show ‘The No Boundaries Radio Hour’ with co-Host Dennis Mannone on the No Boundaries Radio Network. Meet him at the crossroads between strategy and innovation at scott@smgravesassociates.com or twitter @smgcreative.