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Get Health Care Reform Right

When the first session of the 111th Congress concludes later this year, no domestic issue will have dominated the scene quite like health care reform. Little wonder; health care in America is a $2.4 trillion dollar industry, about 16% of our gross domestic product, and left unabated its price tag will soar to over $4 trillion, or 20% of GDP in 2017. America’s per capita spending for health care and the portion of our total economic output health care consumes, are tops, by far, in the industrialized world.

The adverse affects of this are apparent wherever one looks, but let’s focus for just a moment on employers which are the largest source of health coverage in America today. Employers’ premiums more than doubled over the last decade causing erosion in employment-provided coverage particularly among small and medium-size businesses. In wholesale distribution and, presumably other industries as well, employers have responded to spiraling premium costs with higher co-pays and deductibles and requiring greater employee participation in paying the premium. All of this has had the effect of increasing their workers’ out-of-pocket health-related expenses at a time when health insurance premiums paid by individuals more than doubled.

Government hasn’t been and won’t magically become immune from the effects of rising health care costs either. In testimony last summer before the Senate Finance Committee, then-Congressional Budget Office (CBO) Director Peter Orszag, now Director of the Office of Management and Budget (OMB), identified rising health care costs as “the single most important factor influencing the Federal Government’s long-term fiscal balance.” In earlier testimony before the Senate Budget Committee, Mr. Orszag projected a 114% increase in Medicare and Medicaid spending over the next 10 years, a pace far exceeding the projected 64% growth in gross domestic product. This could not have come as welcome news to the states which, on average, already devote more than 20% of their budgets to Medicaid.

So there’s a lot at stake for a lot of folks in getting health care reform done correctly. Just saying “no” isn’t an option for the business community. But getting it done “right” doesn’t mean getting it done by some arbitrary, quick deadline (when Congress opts for quick action on complex, big-ticket items – the $700 billion TARP and the $787 billion economic stimulus packages leap to mind – it seems that “right” is a victim) but make no mistake: a good health care reform package needs to get done and the sooner the better, because the status quo, which works for no one, simply isn’t sustainable. Trouble is the legislation evolving in both houses seems to be making the problem worse. Politico reports thatin a recent Senate Budget Committee hearing, current CBO Director Douglas Elmendorf “said plans being considered in the House and the Senate health committee (the Senate’s health committee has since passed out its bill) would drive the nation further into debt – not create savings, as repeatedly promised by President Barack Obama.” The Washington Times quotes Director Elmendorf as saying, “The (cost) curve is being raised.” Seems that in their haste on President Obama’s top domestic priority, Congressional Democrats – and maybe even the President himself – have completely lost sight of the purpose of doing health care reform in the first place!

Reforming health care is a complex proposition to be sure, one made even more difficult by its hazardous political crosscurrents. Grace-Marie Turner, president of the Galen Institute, a prominent, Alexandria, Virginia-based non-profit health care research organization, touched on this in a recent column published in The Hill newspaper in which she walks through data compiled by five different polls and concludes, “Americans want reform – but they don’t want it to jeopardize their existing coverage, require additional deficit spending, or result in new or higher taxes.” To make matters worse, the health care reform process has been slowed by Washington’s insatiable appetite for making things even more complicated than they need to be. But there’s a reason for this: some key lawmakers are more interested in accomplishing liberal policy objectives than they are in passing a bipartisan bill that gets at the central problem which is cost. The lack of “universal coverage,” while terribly important and a problem – it’s both a symptom of and a significant contributor to health care’s upward cost spiral – is not the core issue here.

The most frequently used numeric definition of the uninsured in America is 46 million people, or 15.3% of the population. 46 million uninsured is a lot, but it is not an accurate or even reasonable description of the uninsured problem. If Business Roundtable president John Castellani is correct in describing the makeup of the uninsured population, which he provided in recent testimony before the House Energy and Commerce Health Subcommittee, the real problem here is more in the 11 million – 12 million range, or 4% of the population. This doesn’t mean that the other 34 million – 35 million aren’t uninsured at least some of the time; they are, but the solutions for them are certain to be far different and even simpler than what must be done to cover the remaining 4%.

To cite just one example, 11 million uninsured people are already eligible for public programs such as Medicaid and the Children’s Health Insurance Program (CHIP). Do we really want to reconstruct the entire health care system in the United States to serve this segment of the uninsured population? Wouldn’t it be a lot easier and more sensible to simply get them enrolled in programs for which they now qualify?

And another: what about the 9 million uninsured, millions of whom are young and healthy, who have annual incomes in excess of $75,000 but choose not to take-up their employer’s plan? Just how far do we need to go in putting the health care coverage of 160 million Americans in employment-provided plans at risk to reach those who are uninsured by choice? If having these folks insured at some basic level of coverage is a compelling public policy goal … and it is … perhaps an individual mandate would do the trick. It sure seems that an employer mandate, a government-run public plan and huge tax increases tucked into a $1 trillion - $2 trillion restructuring of the entire health system is overdoing it a bit!

None of this is meant to infer that comprehensive health care reform is not needed because it is. We spend too much on health care; that’s crippling our economy and we aren’t getting sufficient bang for the buck in any case. Reforms are needed to contain cost, emphasize quality over quantity, create transparency for consumers and patients, improve efficiencies, build the 21st century health care infrastructure and place greater emphasis on wellness and prevention. We also need insurance market and tax reforms that will help small and mid-sized employers overcome obstacles they encounter that make it particularly difficult, and in too many cases impossible for them to offer health insurance benefits to their employees and which leave their workers and their families uninsured.

Building on what works in our health care system can produce a meaningful comprehensive reform bill with bipartisan support. But the legislative road ahead will likely be long and bumpy with an uncertain destination as long as health care reform is hostage to the wrong-headed desire of some on the left to completely upend our free market system and re-make health care in the United States in the image of the postal service, Fanny Mae and Freddie Mac.

Take action – Your U.S. Representative needs to hear from you now about health care reform:

The Democratic leadership of the House recently unveiled its comprehensive reform bill; H.R. 3200, the “America’s Affordable Health Choices Act,” which has already passed out of two House committees and is under consideration in a third. While this NAW-opposed bill does contain some admirable features, it is as a whole a cure far worse than the disease it is supposed to combat. House Speaker Nancy Pelosi (D-CA-8) has indicated that the full House will take up and complete action on the bill this month. Please contact the U.S. Representative from every district in which your company has a facility to encourage Members to vote “no” on the “America’s Affordable Health Choices Act.” For talking points to aid you in crafting your message, click on TELL CONGRESS in the top right corner of your screen. Please contact your Federal legislators today!