Just Put a Band-Aid On It

As an economic flyspeck, Curio City doesn’t give me any special insights into the effects of health care reform on small businesses. So I’m coming at this from the personal, demand side.

Some people assume that I’m conservative because I’m a small business owner, so let’s get this straight up front: I’m not much of a capitalist. I’ve never been a money-driven person. In my youth I was a hippie communist (in principle, at least; in reality I enjoyed the fruits of middle-class materialism). My politics have ranged widely since then, but I’ve consistently been socially liberal and financially conservative.

When my wife lost her job in February and we had to start buying health insurance out of pocket, I drifted back toward liberalism (without the embarrassing youthful naiveté this time). To do otherwise would be hypocritical. Praise Obama that the federal government is subsidizing our COBRA coverage, and praise Kennedy that COBRA exists at all. Without those two social programs I’d have had to fold Kraken Enterprises months ago to beg for some degrading minimum wage job. And I'd probably not even have found one.

COBRA lets you keep your previous coverage at the employer’s group rate for 18 months after the layoff. Although it’s less expensive than equivalent coverage would be for individuals, the price is still ruinous. Imagine getting a new bill that’s more than your monthly mortgage payment, at a time when you’re scraping by on unemployment checks, self-employment income, and a pittance from your moribund home business.

The federal government has been paying 65% of our COBRA bill since March. Anne’s cheap-ass former employer only ever subsidized 50% of the price, so we actually pay less for insurance now than we did while she was employed. This subsidy has kept our household budget liquid so far this year.

The COBRA subsidy expires in November. I haven’t heard a peep about extending it. We will face a major budget crisis if Anne’s still unemployed when those federal dollars run out. (After being out of the mainstream workforce for five years, and with no education to speak of, and with the job market dead, I’m unemployable).

The obvious remedy is to join the ever-growing legions of the uninsured. But Massachusetts state law requires us to carry health insurance (federal reform will duplicate this mandate). Even if we choose to pay the penalty instead of insurance bills, letting your coverage lapse for more than three months gives future insurers the right to require a physical exam and exclude pre-existing conditions. By age 52 virtually everything that can befall a body is a pre-existing condition, so going uninsured would effectively make us uninsurable in the future. (Federal reform would forbid insurers from excluding the sick and the old).

We need subsidized, group-rate insurance – without an employer -- in a system that’s based upon employment. None of Anne’s professional associations provide insurance in our state, nor does the AARP (yes, we’re card-carrying fogies). Sure, Kraken Enterprises is technically an employer…but the insurance moguls don’t offer a one-man, chump-change corporation the same deals that the big players get. (Federal reform would enable small businesses to band together for leverage).

Fortunately, Massachusetts has a “public option” of the sort that makes conservatives froth at the mouth. It works like this: Commonwealth Care negotiates group rates with private insurers who offer a range of health plans. The state subsidizes premiums for those of us whose income is low enough. Thanks to our state’s health insurance reform, we will not be left twisting in the wind. The “public option” is insurance of last resort. It keeps us legally insured without going bankrupt (while providing only the most rudimentary coverage, of course). I’ll need to look into the details of Commonwealth Care if Anne’s still unemployed late this month. If it comes to that, I’ll post a follow-up. Here’s a Boston Globe article summing up the results of our three-year-old reforms if you’d like to know more.

High co-pays and deductibles make it too expensive for us to actually use our pricey COBRA insurance plan. We already have a pile of medical bills worth thousands of dollars, all of them due to billing errors. Anne has spent hours making phone calls and writing letters to set things right. And yet, the same providers that screwed up their billing are now turning us over for collection. This would not happen anywhere else in the civilized world.

Only government can fix an overpriced system that rations rudimentary care at badly inflated prices, and then screws up the accounting. The status quo is clearly unacceptable. Everyone should be able to agree on that much. Don’t feel too smug about your affordable job-based health plan. One serious illness or defective child could ruin you. Medical bills cause the majority of personal bankruptcies.

I haven’t read the Byzantine bill currently being shaped by Congress. I wouldn’t understand most of it if I tried. But from what little I do understand, it merely tinkers around the edges of our capitalist system without addressing its inherent flaws…and it gets more watered-down every time Obama tries to compromise. Congress is too timid to enact the real reforms that we need and the president is too conciliatory.

First: Health insurance must be separated from employment. We could eke out survival on our self-employment income if health insurance didn’t compel one of us to hold a conventional job. Nobody should be trapped in a job just because of health insurance. And, as an employer, why should I be in the insurance business at all?

Second: Health insurance should not be a for-profit industry. The profit imperative conflicts with granting payouts and the marketplace can’t work when consumers don’t see the prices, don’t pay them directly, and lack the knowledge needed to comparison shop. Health care is a service that everybody needs and nobody can afford, and therefore the payment mechanism should be a public utility with a bias toward payment, not denial. Let’s get capitalism out of the health insurance sector entirely.

OH NOZ!!! Socialism!!!! Yup. So what? Capitalism has failed an estimated 50 million Americans. Can government really do worse? The success and popularity of Medicare suggest that government is not as incompetent and inefficient as the capitalists want you to believe.

But Congress is not addressing either of these core flaws. Is their tepid tinkering better than doing nothing? Not if token reform props up the old wobbly system and kills the momentum for revolutionary reform. Maybe it’s better to let the whole system fail catastrophically.