The Business Roundtable, an organization representing the CEOs of the largest companies in America, has said in a new report that the status quo in health care is completely unsustainable. It’s something that’s been forgotten as the debate rages in Congress, but the fight over health care is essentially a fight over what will be left standing when the current health care “system” collapses. There is no way individuals, businesses and the government could continue to operate if the assumptions in this report are true:
Without fundamental reform, there is little reason to expect that cost increases over the next 10 years will be different from the recent past. If the cost trends of the past 10 years repeat, by 2019, employment-based spending on health care at large employers will be 166% higher than today on a per-employee basis. This equates to an average of $28,530 per employee when employer subsidies, employee contributions, and employee out-of-pocket costs are combined. We estimate that if enacted properly, the right legislative reforms could potentially reduce that trend line by more than $3,000 per employee, to $25,435. If we are able to enact broader market reforms that eventually lower future cost increases to an average of 4% per year, we could potentially reduce average per-employee costs further to $23,151 per employee by 2019. (emphasis mine)
There is almost no chance for businesses to compete globally if the costs skyrocket like that. They would more likely opt out of providing coverage at all. That would put more people in an individual market which has proven to be a failure – most of the reforms in the health care bill are in that market. And government costs would explode as well.
Seeking to capitalize on this report, which does have some good things to say about the health care bill (“We estimate that these and other sound reforms could potentially reduce the rate of future health care cost increases by 15% to 20% when fully phased in by 2019.”), the White House, under the byline of the President, released a statement:
“A new report released today by the Business Roundtable underscores what experts and businesspeople have told us all along – comprehensive health insurance reform is one of the most important investments we can make in American competitiveness. It finds, for example, that if reform passes this year, businesses could see health care costs reduced by as much as $3,000 per employee in 2019. And that means more than savings for businesses: it will be vital boost to American competitiveness. The report also echoes widespread support for the cost-containment and fiscal responsibility provisions in current legislation, such as a new CMS Innovation Center, accountable care organizations, and reducing preventable hospital re-admissions.
The Roundtable’s report also makes clear the steep price that American businesses stand to pay if we fail to act. If we don’t pass comprehensive reform, the report finds, health care costs that are already squeezing our businesses will continue to rise, and in ten years, employment-based spending on health care for large employers will be fully 166 percent higher per employee than it is today. And the yearly health insurance costs for the average employee will rise to a staggering $28,530.
Christina Romer held a conference call with reporters today to tout the report.
The AP has more, including the President of the Roundtable trying to minimize the import of his own group’s report:
“It is not by any means an endorsement,” said John Castellani, president of the organization. “In addition to the reforms that help reduce costs, there are also provisions being considered that have real and serious risks of increasing costs.”
It doesn’t have to be an explicit endorsement. Knowing that health care costs would be impossible to manage if nothing is done is quite enough.
(As a side note, these per-employee health care costs would likely be much higher, on average, than the threshold for the excise tax on high-end insurance policies in the Senate Finance Committee bill. In fact, even implementing cost reforms would likely not be enough to stop that excise tax from reaching the average employer-based insurance policy.)
UPDATE: Harry Reid responds:
“Today’s report from the Business Roundtable is more proof that health insurance reform will lower skyrocketing health care costs for businesses. Their balanced analysis emphasizes what we’ve already known to be the case: our economy can’t afford for reform to fail. According to their report, passing reform this year could help lower the cost of health care for businesses by as much as $3,000 per employee within a decade. They also conclude that without reform, the skyrocketing health care costs that threaten American families will only continue to explode. In short, the status quo dooms the American people and our business community.
“The Business Roundtable understands how American businesses are disadvantaged in the global market because of rising health care costs. Their report underscores the high stakes for the business community if we fail to act. Health insurance reform will support growth among American businesses and will help them thrive in our recovering domestic economy.”