I mentioned in my last blog about meeting Elana Levin, the Communications Manager for the Drum Major Institute for Public Policy over at Justin Krebs' big "Please, God, Just Let Me Get Some Sleep" closing night YearlyKos room party. We had a great conversation (as far as I can remember), and after exchanging emails Elana forwarded me a link to the institute's recently released "Congress at the Midterm: Their 2005 Middle-Class Record."
I will admit to being highly skeptical when I approached the report. Given my history as a dittohead, I'm highly selective about where I look for those who are preaching the gospel. After allowing the lies of the Heritage Foundation to shape my political opinions for a decade or so (right now their `must read' piece is about why we don't have a ballistic missile shield, and why it's Clinton's fault), I'm hesitant to become the standard bearer for another `think tank.'
It's also generally hard to read the fruits of a think tank's labor. Consider the PIPA study from 2004. You remember the one? The gift that keeps on giving for Democrats about the very different realities of Bush and Kerry voters? It was a great report, but look at it! It's dull, it's black & white, and it's a data dump. Fortunately the DMI's reportis easy to read, attractive, full color, and easy to navigate. "Okay," I'm thinking, "maybe this won't be so bad."
Still, it's the content that matters, so I began to digest the material. The `meat' of the analysis is over in the `Introduction' section where they list the legislative activities that they view as either beneficial or harmful to the middle-class. I was curious to see if I agreed or disagreed with what the Institute considered good or bad for the middle-class. The `benefit' column, though short, made sense. Increasing the minimum wage is long overdue, and those states with minimum wages higher than the federal level have enjoyed a more robust economic recovery. People, after all, need to have money to spend money. Allowing Medicare to negotiate prices directly was another no-brainer. It's the Wal-Mart rule--if you buy in bulk you get a lower price. If it's good enough for Wal-Mart, then I say it's good enough for Medicare.
Then I got to the `harmful' to the middle-class category and something caught my eye. Under this category they included the Small Business Fairness Act of 2005. "Hang on there, Sparky. How could this possibly be considered bad for the Middle-Class?" I knew there was a reason why I didn't trust policy institutes! I supported HR525 because, while it wasn't perfect, it was at least doing SOMETHING to address the rising cost of insurance for small business owners and their employees.
A little background--as most of you know (and are probably tired of hearing me say it), I'm a Certified Financial Planner TM. Specifically I work with individuals and small business owners to help provide benefits for their employees and invest for retirement. One of the big killers for small businesses is the expense of providing health insurance. My dad is a small business owner, and this issue has had a serious and profound impact on my family. As such, I'm a pretty big crusader for anything that will help make coverage more affordable for everybody.
The first rule of insurance is `the larger the group, the cheaper the insurance.' It's about spreading the risks across the widest possible pool of insureds. This is why small businesses get screwed. The vast majority of small companies in the U.S. have 10 or fewer employees. As such, their risk pool is small, and they get hosed. The goal of any legislation has to be to create the largest risk pool possible. HR525 allowed SBOs to band together and buy group insurance "from trade, industry, professional, chambers of commerce or similar business associations."
I've never understood why health insurance risk pools are married to employers in the first place. Why can't we just have large, national groups that people can buy into and leave the employers out of it altogether? National group insurance eliminates the artificial and arbitrary sizing of risk pools and would result in lower overall premiums for everyone. Employers can still offer to pay 50%, 90%, or even all of their employee's insurance costs. Lower overall premiums would mean lower costs to the employer, and since the group is no longer managed `in house,' employers won't have to keep a health insurance expert on payroll. Some argue that you can already buy national insurance from companies like Blue Cross Blue Shield, and Humana. But this isn't group insurance, it's individual health insurance.
I could really bore the hell out of you with the intricacies of group versus individual insurance, but for the sake of brevity (and so you'll keep reading) I'll keep it short. Group insurance is like the Chuck Norris movie "Missing In Action"--Everybody goes or nobody goes. State and federal laws state that for group coverage employers have to offer coverage to everybody, regardless of your medical history. They cannot cherry pick the healthy and dump the sick. The worst thing they can do is, if you have a pre-existing condition at the time of enrollment AND you don't have any current coverage, they can exclude you from coverage ONLY FOR THAT CONDITION for 12 months. And no matter how sick you get, they can't terminate your policy. If you have an individual policy, then that's not the case. You get the sniffles on Monday, on Tuesday Humana's calling to cancel your coverage and there's not a damn thing you can do about it. The `uninsurable' are dumped to the state's Medicare plan. It's what insurance companies would like to do with group insurance, but are forbidden to by law.
That's why the best plan for solving the problem was, and still is John Kerry's (which is one of the reasons I supported his campaign, even during the `transition' period from independent to Democrat). Giving individuals the ability to buy into the Senate's group health insurance plan would have created the first `national group,' which hopefully wouldn't have been the last. But failing that, pretty much anything that allows small business owner's to create a larger risk pool will help lower the cost of insurance for everyone. And so, I supported HR525 The Small Business Health Fairness Act, going so far as to write my horrid representative (Marsha Blackburn) to support its passage.
Reading the Drum Major Institute report made me bristle. HR525 was far from perfect, but at least it let SBOs band together to form larger risk pools. Surely that will make insurance cheaper...right? I moved over to the "bill description" page to see why they thought this legislation would be bad for the middle class. I didn't have to read far...
Enhancing the ability of small businesses to offer quality health insurance would go a long way towards reducing the number of uninsured Americans. But the devil is in the details. By exempting AHPs from state regulations, studies indicate that this bill would increase average health care costs for small businesses and reduce the number of workers with health insurance. For example, state laws prevent insurance plans from cherry-picking only the healthiest people for insurance coverage, allowing businesses with relatively healthy employees to join for less money while charging higher rates to those with older and sicker workers.
Goddamnit...if I didn't know any better I'd say I can't trust Republican's anymore. You can't get group coverage to function this way. This won't create larger, more efficient groups. It'll just let healthy groups band together. Worse, it provides an incentive for employers to terminate the sick, even if they're still able to do their job. This thing is so bad it even gets panned by the notoriously liberal "National Small Business Association."
AHP legislation would likely increase premiums for small employers and their workers, and make it much harder, if not impossible, for small business owners with older, sicker workers to get access to affordable health coverage. We need a better solution for small businesses. This is not the answer.
The National Governors Association pans it as well, realizing as they do that this represents little more than an attempt by insurance companies to dump the sick onto Medicare rolls. God this thing is awful! We've got to stop this! Something's got to be done!
[Sigh] Fine. What choice do I have? [Picks up Drum Major Institute Standard] Looks like I just raised my level of wonktitude to `think tank.' Probably should have done this a long time ago.
Thanks to Elena for pointing this out to me, and to the Drum Major Institute for the report. This wasn't even the most pressing or most interesting thing I found in their report. This was just the FIRST thing! More to come.