Poor Benefits Situation in the US Stiffles Innovation

I consider myself moderately on the right as far as US politics is concerned. I am exceedingly pro-business and think, as Thoreau said, “That government is best which governs least.” So you may be surprised to hear that when it comes to health care policy, I believe innovation in this country will continue to decline and shift to emerging markets if changes are not made soon.

The Ugly Face of Our Current Situation

Why am I bothering to point this out? If you work for a company of decent size, I am on the front lines of your current health care plan and let me tell you something: things aren’t going so great over here. Costs continue to skyrocket and companies like yours are struggling to shoulder that cost effectively. You may have noticed:

• Rising medical premiums coming out of your paycheck
• Rising deductibles, increased burden of payment, and out-of-pocket maximums
• Reduced coverages, more stringent limits
• Wellness plans and incentives to do anything healthy
• The push to consumer driven plans (health savings accounts and high deductible plans)

Sorry about that. I feel bad that we have to do these things but we have very little choice in the matter. When faced with double digit increases (increases that are anywhere from three to six times the rate of inflation in many cases), we have to take action to try to stabilize our costs in this whole thing.

Innovation and Small Business Go Together

Rising costs are difficult to deal with but you can typically figure out a way to cope and adjust your budget. Do you work for an employer with less than ten employees? Are you an employer with less than ten employees? Then you know the real difficulty here: decent health insurance is just plain difficult to find much less afford. I know too many entrepreneurs that depend on their spouse’s insurance because there is no way they can get it for their employees. And if you are a small employer, you know your recruiting job is going to be much more difficult when you can’t offer competitive health insurance.

If you can’t recruit great employees and you have to take inordinate physical risks in order to start or work at a small business, it will end the bootstrapping era of entrepreneurship in this country. If you can’t get a business off the ground without $500k of venture capital, then we are going to see innovation limited to things that are nearly certain to pay for itself. If you ask me, that isn’t innovation at all. And in a globalized economy, that is just begging for people in emerging markets to grab the baton out of our hand.

When you make it more difficult to start or continue to run a business, isn’t that anti-business? So why is it that so many people who consider themselves “pro-business” are also against doing anything real about our wretched health care system? In the next five years, health care in America will become a leading business issue. Mark my words.

What Are Some Solutions Being Proposed?

There is a ton of chatter about this (especially since this is election season). The problem is that after elections, the chatter usually dies down. Potential solutions have typically been proposed along the following lines:

1. Tweak the current model — This includes either additional regulation or rule changes on the current system and sometimes an expansion of medicaid/medicare system.
2. Universal health care — Some sort of mandated system of care, often proposed as single payer system (i.e. primarily tax driven).
3. Consumer driven health care — Individual is responsible for health care. Similar to the way car insurance is handled (mandated, regulated with minimum levels).
4. Some sort of hybrid of these — A three headed monster of making the responsibility more on the consumer while still involving businesses and expanding tax payer funded measures.

I know what it is probably going to be (hybrid plan) and I know what I would prefer (consumer driven with protective regulation) but I am interested to know if you have seen any proposals that you’ve really liked. I’d also be interested if you are one of the people that say “we don’t need no stinkin’ change.”