1. Archive

Many fear health care reform

One of the oddities of the health reform debate is that even those who stand to benefit most are leery that it will cost them their job. Everyone seems to have bought the line that employers will lay people off rather than insure them.

Take, for example, Janice Walker, profiled in today's paper. Here's a woman who has no job and no health insurance, can't go to the doctor until she's sick enough for the emergency room and can't take many of the jobs she's qualified for because her ailing son would lose his state health care benefits.

Yet even Janice Walker worries that her job prospects will dim under President Clinton's health plan, which is expected to require employers to pay a premium or a percentage of their payroll to cover their workers.

And then there's William Baldwin, a Pasco printer who was profiled in the Times last week. He works 70 hours a week and would love to hire someone to help, but can't because insurance costs too much. Yet Baldwin expresses fears of the government telling him he has to provide insurance if he hires an employee.

"I don't think government mandates are good for anything, let alone health care," he said.

Talk of requiring employers to pay a 7 or 8 percent payroll tax to cover their workers has sent shudders through the ranks of business. Yet many businesses are paying 7 percent or more right now, what with insurance premiums, Medicare-Medicaid taxes and the health-care portion of workers' compensation. The Times, for example, has calculated that 10.7 percent of its payroll goes to health-care costs.

The small-business lobby already is fighting the reform plan, even before it comes out. Yet two-thirds of small businesses stand to benefit from the plan because they already provide health insurance for their employees.

"Right now they are being ripped off right and left by insurance companies that take advantage of their size," said Bob Boorstin, spokesman for the White House health care task force.

The job fears are understandable, but they may be misguided. The current health care mess probably is doing as much to harm job prospects as the health plan likely to emerge from the White House.

One health-care consulting firm has estimated that out of a 130-million-job economy, the net job loss will be 63,000. Another study pegged it at 50,000. To put that in more understandable terms, that means at worst the economy would lose one job in every 2,000.

But if nothing is done to reform the system, there will be more job losses than that because health benefits will cost so much that employers that provide them will be forced into layoffs. Already the high cost of health insurance is costing workers their raises.

Most of the employers who don't offer health insurance say they'd like to, if it were more affordable.

Under managed competition, the price of insurance should come down, for two reasons: By pooling businesses together to negotiate, they can get a better deal. And premiums no longer will be inflated to pay the bills of the uninsured.

Here's the example that the White House task force uses:

You run a dry-cleaning business and you pay for insurance for your employees. But the car wash down the street doesn't. Now, when the car-wash employees get sick and go to the emergency room, the hospital bills of your workers go up to cover the bills of the car-washers. And your insurance premiums soar.

"We just don't feel that that's fair," said task force spokesman Boorstin.

Companies that are paying for these "free riders" could see their insurance bills come down enough to add to their work force. And even the free riders will gain in some ways they may not have considered.

In addition to having secure insurance _ a benefit not to be sniffed at _ they would see their workers' compensation payments drop by an estimated one-half to two-thirds.

In the first year after health reform, businesses that provide insurance will save $10- to $20-billion because they no longer will have to cover uninsured working spouses, said Kevin Anderson at the Alliance for Health Reform in Washington.

The small-business lobby is talking like a train is coming and they're tied to the tracks, he said. But there's another side.

"A business that was paying $4,000 (per worker) may find its health insurance costs cut in half," he said. "They're going to expand, raise wages and expand economic activity."

Even considering all that, the White House knows that gloom-and-doom talk of job loss could torpedo its health reform plan even before Congress starts chewing on it. So the talk now is that the plan will include the following sweeteners for small business:

The program will be phased in over several years, so that no business has to go from zero insurance coverage to full coverage overnight.

A "rainy-day fund" will be set up to help businesses that get into trouble because of the plan. Hawaii, which for years has required employers to cover their workers, has such a fund. Only 2 percent of businesses have ever asked for help, according to Boorstin at the White House.

Self-employed people will be allowed a full tax deduction on their insurance expenses, for the first time.

So, when you hear the groans from free riders about how many businesses will go under if they have to insure their workers, think about all the people who would like to start businesses but can't because if they left their job they'd lose their health insurance.

How many new businesses might this country gain if health reform passes?