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.”



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thanks for the link to the report, which i have not yet read. just want to point to the recent cms report that predicts the cost of healthcare (total national health expenditures) would be higher with reform (they were using hr 3200 for their analysis) than without.
here is a bit (more at the link):
no kidding.
EPU’d from Rayne’s post:
I’ve been thinking about income inequality, poverty and hunger, for quite some time now. And lately it’s crystallized in my head that there really should be a “Day Of Action” that has never been done before.
There was an FDL/Mike Stark post a while back about how lobbyists would pay homeless/unemployed people to keep their place in line at the Capitol for hearings etc. This is what I think now:
-That there would be a netroots effort to buy all those places in line in DC on a specific and crucial hearing or vote day, to ensure NO LOBBYIST had a seat in hearings/votes that day.
-That would be the only DC action. The rest of the action would be…
-At the targeted CEOs.
Just a thought experiment, but imagine:
If on the day DC lobbyists were denied, and the CEOs homes and Offices were targeted by protesters, very well coordinated, you wouldn’t necessarily need media, even though I think you’d prick TradMed’s attention.
What you would get is the attention of the CEOs.
1- We cut your access to Power
2- We know where you live
3- We’re organized, and YOU are accountable
I think behaviors would change, and really quite quickly.
the Health Insurance Reform Act of 2009 is already a failure, from the point of view of cost containment and international competitiveness.
See for example Ian Welsh’s take on things:
I don’t like what these politicians are saying:
comprehensive health insurance reform is one of the most important investments we can make in American competitiveness.
HEALTH INSURANCE REFORM!!!??? It appears the dems aren’t really going to reform HEALTH CARE which is what really needs reforming.
Per David Lazarus in the 11/01/09 LA Times:
So who are those guy?
Without a public plan, where do they think their ex-employees would be able to obtain healthcare?
selise, honey, I know you’re deeper in the weeds than many of us; could you remind us what you mean when you say “cms”? Is that report reliable?
Sorry, I don’t know how to read the conclusion you cite.
Shorter Biz Roundtable: uh-oh, who will be left for us to fuck if these health fucks fuck everybody first?
See this.
There’s a fundamental law of reality that what can’t go on forever won’t. Some see a “public option” as a stepping stone to single-payer. Others, think that the status quo will collapse sooner without a public option, and that would be a good thing. In any case, a lot of people and businesses are going to cease to exist in the interim.
Thanks. I knew I’d seen that “cms” before, but couldn’t remember what it stood for. I can only keep so many acronyms etc. in my brain, it seems.
Sharkbabe – love the word choice…and the sentiment. Well put.
Health insurance reform is what’s needed most, as in getting the insurance companies to stop charging us for moons on silver platters when they’re giving us cowpies on paper plates (and telling us those are really moon pies).
Health care reform is another matter entirely – that’s where we try to get the doctors and the hospitals to do better work, make fewer mistakes, and coordinate their record-keeping so people don’t get lost.
I sick and tired of TLAs (three-letter acronyms)
The health care ‘reform’ fight is absurd in a way. I do not say that the battles joined by liberals in this fight are wrong. They are right but they are right only within the context of the current system. A system that is dysfunctional. The system is going to go bankrupt. The very same thing applies to deficit spending as a stimulus for economic growth. Yes, borrowing will spur growth but the money to borrow doesn’t grow on trees. For the most part and more and more it is being printed.
This is unsustainable. In a week a month a year or three the system will collapse from printing money.
I don’t think that it’s been forgotten, but it can be used by Democratic Party leadership in taking the Stupak Amendment that is now part of H R 3962 out of the final bill that comes out of conference. Stupak will not be able to get more than 30 House Democrats to vote against the final merged bill just because his amendment was removed.
On the other hand, if the Stupak Amendment is part of the final bill that comes out of conference, it seems to me that the Democratic leadership would have to be blamed for caving when they didn’t have to.
Meanwhile, as the Senate version is being worked out, facts like those presented in this post should be emphasized again and again in order to dismiss Miss Connecticut (Lieberman), Nelson and Lincoln, and push them out of the way.
From the update above, it looks like Reid’s already on it. Reid might just pull it off in the Senate yet. And he should be roundly thanked if he does, or loudly blamed if he doesn’t.
I read the whole report and I do not find it credible. It is heavy on guesswork and light on quality research. The report was completed for the Business Roundtable by Hewitt, a benefits manager which has a stake in the outcome of reform, and their biases–in favor of flex spending accounts for example–come through clearly.
The main thing the Business Roundtable wants is that no one gets out of the individual mandate and that there be no public option. They are super paranoid that these things are going to cause terrible cost-shifting, even though CBO and others have said cost-shifting is a minor problem.
i’ve asked everyone who’s ever said that to me to please explain how that happens. no one has even been willing to attempt it. i’ve tried to figure out how it might be, but can not. in fact, i think it takes us further away from single payer. as far as i can tell the stepping stone idea is just wishful thinking.
i don’t buy this one either. in my book, it’s never ok to wish for disaster on any person. i’d rather work to limit collapse and the damage it causes.
my position is that i don’t think a public option, at least as currently designed will work. i think the entire reform will fail (as it is doing in MA) due to uncontrolled costs, but that it will take years before it’s clearly failed (with many “lets give it another year” delays). and in the end we will be back to square one, only the country will be in a worse situation and no one will trust either the dems or progressives with healthcare reform because we screwed it up so bad.
that’s why i think, even if we can’t block the current reform, progressives, rather than supporting it, should be very critical (only honestly of course) and distance ourselves from it — all the while using the opportunity to say why we don’t think it will work but that other options, like single payer would. making clear that the public option is NOT single payer is really important if the public option is going to, as i think, be a massive failure.
i’m so sorry for my incomprehensible comment and for not being around to answer it. jon at fdl action has been writing about the cms (center for medicare and medicaid services in the dept of health and human services) report and i forgot i wasn’t there. to my knowledge, the cms is probably the best gov source of reporting and info we now have about health care costs (does’t make it infallible though).
see MA. we don’t have a public plan, and i don’t see what it would add. it all depends on the quality of the regulation. (i live in MA and i purchase my insurance policy as an individual).
and here’s the scary thing, i think the MA reform is better is almost all ways than the house bill. when i called the aide in my rep’s office to ask about that, i was assured that MA would get to keep our exchanges because we already have a waiver from the HHS (health and human services). they apparently had it all researched and also think we’d be better off keeping our own exchanges and rules.
in other words, it looks like romneycare may end up being better than obamacare.
Appreciate your attention to the impacts on the employer-sponsored system.
One of the absurd disconnects of financing reform is assumption by CBO and JCT that any health care cost decreases to employers will pass-thru to workers in the form of higher wages.
I can guarantee that employers see this $3000 savings as theirs and not the workers.
Shorter Biz Roundtable: uh-oh, who will be left for us to fuck if these health fucks fuck everybody first?
*
:-) :-) :-) :-) :-) :-)
the Health Insurance Reform Act of 2009 is already a failure…
*
The inartful compromises have ruined it.
Progressives have to stand against a bad bill.
As someone said last night, there has to be progressive activism in Congress for the creation of voting blocks to take a stand on the various issues being subsumed by compromise, like the one that’s being formed demanding that there be no decrease in access to abortion.
The portions of the CMS report cited above seem to tell a different story. As I read it, it seems to be saying that there’s not much in the original House bills to lower the cost curves per person. It then goes on to say that the percentage of GDP devoted to health care will go up slightly — but that’s primarily because the bill provides health insurance (or Medicaid) to 34 million people who wouldn’t otherwise get it. If you don’t change the cost per person, but you add more people, then that’s exactly the result you’d expect.
Moreover, since the system would be asked to provide care to the 34 million people who now have some insurance to pay for it, there would be disruptions in “supply” — we could have shortages of health care providers. that too seems predictable: before, we weren’t providing much care for these people, except in emergency rooms, but now they have access to much broader care, so we’ll need more providers — and if they don’t show up right away, there would be disruptions.
That seems to parallel what Massachusetts discovered. Their mandate help lower the total number of uninsured, so a lot more people started demanding care because they had some insurance to pay for it. But the mandate (plus an exchange) alone didn’t solve the cost problem, and the reforms outlawing rescission/denial for prior condition meant people got coverage, and increased care compared to the situation before. Total health expenditures went up and there were disruptions in provider supply.
These are entirely predictable consequences of solving only part of the problem, but they are not arguments for NOT solving that part.
If somehow, the reforms provided true universal coverage, not just 34 million more, so that 40-50 million more people could get more care because the insurance system now covered them, then we could expect these same logical consequences to occur, minus the savings we’d expect from a unified accounting system (presumably, sp has lower admin costs) plus transition costs (unknown) — so we’d also expect temporary shortages/disruptions in providers because they’d now have to provide care to 50 million more people that they’re not currently caring for. If per-person provider costs were not addressed, then the total National health expenditure would go up, just as the CMS report predicts for 3200.
That wouldn’t be an argument against sp; it’s an argument for thinking through the consequences of insuring millions more people and what it costs to give them adequate care, compared to what they get now, and taking steps to deal with those predictable consequences.
thanks, another great comment.
in MA these were in place prior to the 2006 reform (we also had community rating prior to 2006). so the associated costs involved can’t be attributed to the 2006 reform. the mandate came later (in 2006), along with commonwealth care for subsidized plans (medicaid was rolled into this – imo a very important and good element of the reform).
not controlling costs in MA has resulted in taking $$ from hospitals that provide free services to the very poor and/or disabled, scaling back on coverage for legal immigrants and i was just reading about how people in commonwealth care would no longer be automatically re-enrolled every year, even though they continue to qualify, because it would save $$ by covering less people. these cost savings all affect the people who are most in need.
wrt to the cms report on disruptions in provider supply – my reading of it was that the disruptions were based on cost (possibly as well as capacity – at least i’d expect capacity would also be an issue). since medicaid pays providers less than medicare which pays less than private plans, what happens in effect is that care would be rationed by cost, but instead of based on an individual’s ability to pay (as is now the case), it would be based on ability of the individual’s plan to pay. so we get healthcare rationed by class (which as an aside fosters the opposite of social solidarity — something we could use more of in these times especially).
in the case of true universal healthcare, via sp for example, in addition to the cost savings — there is also the time savings of healthcare providers (in not having to spend so much time with the various insurance related issues). i recently saw a paper on this issue, and the time saved was not iirc small (will go looking for the reference later). this would have the affect of providing a boost in effective healthcare capacity. would it be sufficient? i have no idea, especially without reading the paper again.
finally, if there are to be disruptions in provider supply, my preference is that they fall on all of us so that rationing can occur wrt to need and not social class (which is the case with people segregated into medicaid, medicare and various private insurance plans). in this way we’re all in the same boat with our interests aligned — changes that help one help us all. when it’s only the sick and poor and unconnected who suffer, finding the political will to do the right thing is much harder.