Posted by marykeating on August 28, 2009 under Employment benefit issues, Pending legislation | 
The Baltimore Sun reported last week on the plight of small employers in the Baltimore area, and the cost of health insurance. Without market power, small businesses have a difficult time providing health insurance to employees. Still, it’s a very popular fringe benefit, and most people believe having health insurance indispensable. That is, until they can’t afford it.
I commented on this last month. Small businesses not only have smaller profit margins, often, but also have less favorable access to affordable health coverage. The new article by Jay Hancock cites this sobering statistic: “in metro Baltimore, … CareFirst and UnitedHealth control nearly 80 percent of the trade. That’s not a market. That’s oligopoly – market failure.” Anecdotally, the article notes that the number of companies offering health insurance for small businesses has diminished, and the rate of increase is in double digits annually, far higher than inflation.
The market conditions create a prescription for failure. I’m dismayed that the public health insurance option appears to be dying in Congress.
Posted by marykeating on July 30, 2009 under Employment benefit issues |
The Department of Labor has kept busy, this time releasing a report from the Bureau of Labor Statistics. The report summaries data from the National Compensation Survey that show the rate of health care coverage through employment insurance, as well as other fringe benefits. The high points should come as no surprise: government and highly paid private sector workers were the most likely to have health insurance coverage through work. Government workers were more likely to have sick leave (90%) than private sector employees (60%). Statistics fans can peruse some detailed tables at the report linked above, or wait until later in the summer when a more detailed analysis will be ready.
Obviously this report is being released in conjunction with the current debate on a national component to the available health insurance coverage. This morning’s Bob Edwards show on satellite radio featured Wendell Potter, a former CIGNA executive who spoke to Congress last month about his experiences in an industry more concerned about its bottom line than the health of its insureds. You can read the testimony here.
One of Mr. Potter’s claims is that insurance companies cull their rolls of sick individuals and families, and
“They also dump small businesses whose employees’ medical claims exceed what insurance underwriters expected. All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year’s premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether – leaving workers uninsured. The practice is known in the industry as ―purging.. The purging of less profitable accounts through intentionally unrealistic rate increases helps explain why the number of small businesses offering coverage to their employees has fallen from 61 percent to 38 percent since 1993 . . . “
As far as I could tell from his interview with the great Bob Edwards, Wendell Potter is not out hawking a book, but is speaking out in reaction to the lobbying efforts of insurance companies trying to avoid a national health insurance option. The small business effect is similar to what I posted about several days ago, here.
