October 10, 2004
Joni Elliott has had a much harder time finding affordable health care coverage for her two-person business than she has washing the hundreds of windows she scrubs each week.
When she finally found a health plan she could afford for herself, her business partner and her 16-year-old daughter, the insurer wouldn’t cover her without a multitude of exclusions. Fibromyalgia and recent neck surgery made her an insurance risk.
"A lot of (of health plans) wouldn’t cover me. They wouldn’t even talk to me," said Elliott of Mesa. "I don’t know if we’ll ever have good health insurance."
President Bush and his Democratic challenger, Sen. John Kerry, are trying to convince people otherwise, and small-business owners like Elliott are their prime targets.
Both candidates have made better access to medical coverage for small businesses a key component of their health care proposals. In Arizona, where 93 percent of businesses have fewer than 50 employees, the issue resonates loudly with those struggling to keep revenue up and expenses down.
"In the business world, I’d put it right there at the top," said Sam Aguirre, whose two-person pressurewashing business in Mesa cannot afford to offer health insurance. "If there’s a candidate out there making it easier to afford health insurance, I’m all for it."
Only 28 percent of the state’s 110,000 small businesses offer health care coverage. The ranks of the uninsured continue to swell due to job losses and climbing premiums, which can force employers to drop medical benefits. From 2002 to 2003, the number of uninsured nationally grew from 43.5 million to 45 million people, according to the Census Bureau.
But whose health care proposal would provide the most help? Business owners, health care analysts and others say they are unsure, although small-business owners and advocates for the uninsured contacted by the Tribune said the best health care proposal will give coverage to the most people.
While the Bush and Kerry plans both rely heavily on taxes, either credited or reinstated, the similarities end there.
Bush’s plan would encourage individuals to "own" their own health coverage, offering refundable tax credits people could use to start health savings accounts, pay for preventive care or purchase lower cost, high-deductible health insurance. The plan also would give employers, church groups and other organizations the opportunity to band together in association health plans, which could have bargaining power similar to large employers when purchasing health insurance.
Kerry’s plan would open up the federal health plan used by members of Congress to individuals and businesses. His plan also would rescind tax cuts given by the Bush administration to families earning more than $200,000 a year and use that money to reimburse businesses for 75 percent of medical bills that exceed a certain catastrophic amount — costs that can drive up insurance premiums. In return, businesses would be required to provide health insurance to all employees, set up disease management programs and pass along savings to employees through reduced premiums.
Bush’s health plan would cost an estimated $128 billion over 10 years and insure about 7 million more people. Kerry’s plan would cost about $650 billion over a decade and cover about 27 million more people.
"I think it’s great" the candidates are focusing on employer-based health care coverage, said Michael Brosnan, Elliott’s business partner. "It’s about time."
Elliott and Aguirre leaned toward Kerry’s health plan but they and other business owners contacted by the Tribune didn’t feel they knew enough yet about the candidates’ proposals to make a decision.
Critics are doubtful, however, that either plan could work.
Bush’s association health plans have been tried by several states and failed, said Brad Kirkman-Liff, professor of health policy and biotechnology at the W.P. Carey School of Business at Arizona State University. The problem is that the health of association members affects insurance rates.
One group joining an association may develop health problems, driving up rates for another member group that’s healthier. The healthier group is likely to drop out of the association in search of cheaper premiums, leaving the original group unable to afford the higher rates.
"Those things just basically unravel," said Kirkman-Liff. "It’s been shown over and over again that it’s a failed model."
Bush has pushed legislation for association health plans, but the bill has stalled in the Senate.
Kerry’s plan to give people the same health care benefits their elected federal officials receive also could pose problems. It is unclear if health insurers contracted to provide benefits to federal employees would agree to substantially expand enrollment, said Kirkman-Liff.
And what about rates? Would the federal government share in the cost of premiums paid by the public as they do for federal employees? If not, it’s unlikely people will be able to afford insurance carriers’ rates, said Jeff Gennaro, legislative chairman of the Arizona Association of Health Underwriters.
"That’s a way of creating a nationalized health plan," he said.
Both candidates want to reduce soaring health insurance costs, making medical coverage accessible to more people. One way to do that, Bush and Kerry agree, is to reduce the cost of paperwork by moving to electronic medical records.
For Aguirre, being able to offer health coverage will help him attract employees as his business grows. Adding workers has been difficult, he said, because job candidates go to companies that offer health benefits.
"People want health insurance. They need health insurance," he said. "We want to be able to offer that."
Even if an employer can find an affordable health plan, there is no guarantee that plan will be affordable months or even weeks from now. Aguirre said the last two employers he worked for yanked health insurance benefits because rates became too costly.
Kerry estimates his plan to reimburse businesses for catastrophic medical expenses will reduce premiums. The savings would come from insurers who would lower costs to employers because of the federal government subsidies.
Bush’s cost-lowering effort would come from association health plans and refundable tax credits. By giving tax credits of $1,000 per individual and $3,000 per family, people would be in charge of setting up their own health coverage instead of employers.
"Making them accountable and responsible for insuring themselves, I think it’s progressive," said Sherry Azzarella, a spokeswoman for the Arizona Small Business Association, which does not endorse either candidate. "If we’re put in charge of insuring ourselves, we’re going to ensure we have a good lifestyle."
Gennaro said the tax credits would allow families to add their children to their policies at work, which could lower premiums because employers would have younger, healthier people sharing in health care costs.
But there also are concerns that the tax credits will not be enough for the uninsured to set up adequate health savings accounts and purchase individual health policies, especially for those who are older or have pre-existing conditions.
"I’m not sure how many middle-income people could (use tax credits to) do those kinds of things," said Carol Kamin, president and chief executive officer of the Children’s Action Alliance.
For either candidate’s health care proposal, taxpayers will be shouldering its costs, a price some in the business community said must be paid. But neither proposal matters unless the next president can get his plan through Congress.
"They can talk all they want, but to really put it in action is another thing," said Elliott, owner of the window washing business. "Anything would definitely be an improvement."
Bush health care proposals
• Establish tax-free health savings accounts and tax rebates for contributions to the accounts by businesses and employees.
• Provide refundable tax credits to set up health savings accounts and purchase high-deductible policies, from which premiums can be deducted on taxes.
• Establish association health plans.
• Limit pain and suffering awards in malpractice lawsuits.
Kerry health care proposals
• Open federal health care benefits to the public.
• Rescind tax cuts for those earning more than $200,000 a year to cover catastrophic medical bills for employers that insure all employees, establish disease-management programs and pass savings on through lower premiums.
• Establish a panel to screen malpractice lawsuits and restrict attorneys who file more than three frivolous cases.