SMC Launching Major Initiative To Fight Rising Health Care Insurance Costs
PITTSBURGH, Oct. 21 /PRNewswire/ -- Declaring that, "Health insurance costs are killing small businesses," Cliff Shannon, president of SMC Business Councils, today launched SMC's campaign to save affordable medical coverage for small businesses. Shannon explained the organization's program to curb rapidly rising healthcare costs at a meeting between elected officials and SMC members held in Churchill on October 21.
In his presentation, Shannon painted a grim picture for the elected officials of the future of employment-based health care coverage. "Health insurance costs for southwestern Pennsylvania small businesses have, for the past several years, been inflating at an annual rate of about 19%. At that pace, the yearly price tag for family coverage would leap from about $10,000 in 2003 to a stupefying $30,000 per year in 2010 -- close to the average wage in Pennsylvania."
Before reaching that point, however, Shannon predicted, "Skyrocketing costs will force virtually every Pennsylvania small business to reduce health care benefits drastically or drop coverage altogether. The threat of an explosion in the ranks of uninsured Americans is clear."
Describing these trends as "a rolling catastrophe that threatens millions of families in Pennsylvania and across the nation," Shannon explained that a series of recent surveys of SMC's member-companies and several months of discussions among SMC's Board of Directors led to his organization's decision to make an "all-out effort to persuade policy-makers in Harrisburg and Washington, D.C. of the urgent need for action."
The SMC effort will include group meetings with elected officials in their home districts, and multiple bus trips to Harrisburg and Washington, D.C. for meetings and events with government leaders. SMC will also conduct an active public media campaign -- billboards, radio and television, newspaper editorials and letters-to-the-editor -- in order to rally and educate business owners and Pennsylvanians generally about the crisis in health insurance affordability.
"SMC does not have all the answers, and SMC members' efforts alone won't bring about all of the needed changes," said Shannon. "We will need help from all interested parties in the community," he admitted, "but our organization and small business owners generally can take the lead -- by loudly pointing out that the economics driving health care costs are perverse, by pointing a collective finger at the most obviously perverse cost drivers in health care, and by putting forward common-sense, curative business principles to be applied -- now, before it's too late. What we can't afford is continued political stalemate on this critical issue."
SMC has identified four areas for action. 1. Outrageous Prescription Costs Are Killing Small Businesses. The fastest growing component of health care costs is a primary example of the perversity of health care economics: (a) the 100 most-popular brand-name medications -- made in the U.S. -- are 50% cheaper in Canada and Europe, thanks to international price-fixing; (b) Americans consume one-half of all medications, but account for all pharmaceutical company profits; (c) Fortune 500 pharmaceutical companies' profits are greater than the rest of the Fortune 500 corporations' combined profits. Laws and regulations that govern the pharma industry are hopelessly out-of-date; some FDA-protected drug patents are more than 50 years old, owing to sharp attorneys, out-of- date federal laws, and a compliant FDA. U.S. patent laws also encourage and protect highly profitable copycat and re-packaged versions of medications, rather than development of new antibiotics, vaccines, and other medicines that are urgently needed. SMC Business Councils recommends that: Pennsylvania follow the lead of other states (e.g., Illinois and Wisconsin) that are facilitating cross-border purchase of medications; the federal government pursue international trade complaints against foreign governments that unfairly fix drug prices; and Congress should immediately set about re-writing laws that govern drug patents and the pharmaceutical industry. 2. Medical malpractice laws are killing small businesses and their employees. Pennsylvania medical malpractice laws don't protect patients. Less than 0.5% of patients that suffer serious, preventable health care injuries pursue legal claims. Less than 30% of med mal liability premiums are paid out to injured patients; more than 70% of med mal liability premiums go to lawyers, expert witnesses, consultants, etc. The incentive under Pennsylvania law for health care providers to acknowledge and prevent errors is ZERO. Caps on non- economic damages are not a timely, realistic solution in our state. Caps require a Pennsylvania Constitution amendment -- an uncertain, highly politicized, four-step, four-year (minimum) process. In the meantime, physicians are leaving the state, health care costs continue to skyrocket, and serious patient injuries continue. SMC recommends that: Pennsylvania adopt stricter rules to eliminate frivolous lawsuits and mandate alternative dispute resolution during the initial six months following certification of a med mal lawsuit. Lawyers' contingency fees should be limited, and health care providers should be given partial immunity from liability if they provide prompt disclosure of medical errors and make sustained, measurably effective patient safety improvements. 3. Health insurance profiteering is killing small businesses. Pennsylvania and Hawaii are the only two states that allow for-profit insurance companies to obtain medical histories about small business employees and their families, and use that information to set health insurance premiums. This practice is known as medical underwriting, and it permits for-profit, mostly out-of-state insurers to quote stratospherically high, unaffordable insurance premiums for small businesses that employ older-than-average workers, more females than males, pregnant women, workers and dependents who have cancer, birth defects, chronic illnesses, etc. Insurers that are permitted to use medical underwriting in this fashion earn windfall profits by covering only healthy groups, eviscerate the concept of insurance, and make coverage unaffordable for those who need it most. As for Pennsylvania's non-profit "Blue" insurers, they continue to be singularly profitable, having accumulated reserves/retained earnings that substantially exceed actuarial needs and far surpass those of any other Blue affiliate in the country. SMC recommends that: the Pennsylvania General Assembly act as quickly as possible to parallel the model health insurance tenets adopted in 48 other states, and prohibit or strictly limit the use of age, sex, and medical status to set health insurance premiums in the small group market. SMC also recommends that the Pennsylvania Insurance Department move quickly to establish upper reserve limits for the Pennsylvania Blues, and establish a divestiture process, which has at its decision-making center employers and other health insurance purchasers (whose premium payments are the origination for all Blue reserves and surpluses). 4. Unsafe and inefficient health care is killing small businesses and their employees. Perhaps the most perverse aspect of the economics of health care in the United States is that health insurance purchasers and consumers pay not only for needed medical treatment, but also for the consequences of millions of serious, life-threatening mistakes in health care delivery. Mistakes that occur with intolerable frequency in every health care setting include hospital-acquired infections, medication errors, wrong surgical sites, and much more. This "model" exists nowhere else in our economy. Mistakes and re-work result in thousands of preventable deaths and millions of patient injuries. These problems also cost billions of dollars each year that contribute measurably to runaway health care costs and increasing numbers of uninsured citizens. SMC recommends that: private and public purchasers commit themselves to a fundamental reform of health care purchasing, and work with health care providers toward a re-structuring that would reward excellence, foment competition among health care providers on the basis of quality, and no longer pay a penny to providers for health care that results in preventable injuries to patients.
SMC Business Councils is a non-profit trade association representing more than 4,000 small businesses in western and central Pennsylvania. Established in 1944, its headquarters office is located in Pittsburgh with a branch office in Harrisburg. For further information on healthcare issues, please check the SMC website http://www.smc.org/ .
Note: The Power Point Presentation to be shown to legislators on October 21 is now available for review on our website. This presentation can also be copied and you'll find it at ... http://www.smc.org/pdfs/discounts/healthcosts.pdf .SMC Business Councils
CONTACT: Mary Heindl, +1-412-371-1500, Ext. 229, or Lee Taddonio,+1-412-371-1500, Ext. 230, both of SMC Business Councils