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Health Insurance Concerns and the Iowa Legislature

posted on January 11, 2008 at 4:52 PM

Small business operators face not only health insurance woes. They’re also concerned about the growing disparity between commercial and residential property taxes, securing an educated workforce, and competing with large out-of-state companies. The challenges to Iowa businesses are also challenges to the communities in which they operate.

Business is everybody’s business. That relationship has not gone unnoticed by the legislature. Lawmakers and members of the public comprise the legislative Commission on Affordable Healthcare Plans for Small Businesses and Families, which just this week released recommendations for the legislature to tackle.

With us today is the co-chairman of the commission, Senator Jack Hatch, a Democrat from Des Moines, and John Gilliland, Senior Vice President of Government Relations for the Iowa Association of Business and Industry.

Beck: Gentlemen, thank you for being here with us. You just saw Doug Livy, who was talking about how difficult it is for a small employer like himself to secure insurance for his employees. What can you do to help him? Senator?

Hatch: Well, we’ve heard that story often over the last nine months when we’ve been meeting as a commission. In fact, 81 percent of the uninsured in this state are employed, so we have a significant gap between businesses wanting to provide insurance, like you saw with Doug, but unable to secure it because either they can’t find plans that are affordable or they’re not available to them. And they’re really in a position where they have to eliminate other business activities or expenses, lay off employees, or just continue to muddle through, and most of them are muddling through. And our commission has made significant recommendations.

Beck: John, it seems like that last year the legislature passed legislation which would allow organizations to pool, to allow them to have a greater number of employees that are all in one pool, and then they can bring down insurance prices and buy insurance for their employees. But he’s having a hard time finding a pool that will -- you know, somebody that will take them. Can you talk to me about that?

Gilliland: Well, it was a very positive step by the legislature last year, and I commend Senator Hatch and his colleagues for passing that legislation. It does give small business people another option. Our association has now created one of these pools, working in concert with the Principal health insurance carrier here in Des Moines to offer an association pool, to give those small employers a little more bargaining power when it comes to purchasing insurance for their employees.

Beck: So can somebody like him join that?

Gilliland: Yes, if they become a member of our association, they could. I understand his frustration; when you’re a small group or a smaller association, you’re less attractive to a carrier to set up a plan. That’s a frustration that I sensed in other groups. Fortunately, we’re a large enough organization. We’re statewide representing various industries that a number of carriers were interested in working and putting together a plan for our members.

Beck: Well, that brings me to a question. Senator, did Iowa’s insurers take part in this commission, because I know they’re part of the solution or need to be? They’re also a huge industry in Iowa. Were they part of this?

Hatch: Actually they were. The Federation of Iowa Insurers participated, and they sent and named a represented from the Principal. But the largest health care insurer in the state., Wellmark Blue Cross Blue Shield, only participated through John Aschenbrenner’s representation. And they did not -- Actually they were pretty absent from even monitoring our program.

Beck: Are you frustrated by that?

Hatch: Well, yes, we are. They represent 70 percent of the insurance market in this state. And in other states, Wellmark Blue Cross Blue Shield actually not only participated in other reform efforts but actually led the way. And in this state we have to have all areas and all stakeholders involved. We not only had insurers, we had underwriters and independent agents participate in our commission report. But that didn’t stop us. We made some significant recommendations, and the insurers that participated really made pretty strong leaps, pretty large leaps to ignite some of the discussion that we had.

One of the major recommendations that John Aschenbrenner made in our deliberations was something that John was talking about, that if a state would go to mandated benefits, they would eliminate preexisting conditions. They would guarantee portability. They would guarantee benefits. Those are significant concessions that the insurance industry made to help us move universal health care along.

Beck: So they agreed that you could mandate this for Iowans? And how would you do that? How would you penalize them if they don’t pony up and get insurance?

Hatch: The insurance industry, of course, would like to see more people under the insurance umbrella. The problem was in this state, the largest insurer of health care benefits, Blue Cross Blue Shield, didn’t want competition. So I think they didn’t want to get involved because it would give some competition to the other insurers.

In all, we have to all give something up, but in our plan, we believe there are no losers for the State of Iowa. There are some winners and there are some givers, but there are no losers. Everybody benefits if you have insurance coverage.

If you have to mandate it, we’re prepared – Representative Foege and I are prepared to introduce into legislation, in a week or two, parental mandates, providing it mandated for all parents of children to be insured. Those that can’t afford it, we will help pay for it. Those that can should pay for it for their own children. And we can start our collection of policies that will lead us to universal health care for everybody.

Beck: John, let me ask you what do you think about that, mandating coverage for Iowans.

Gilliland: Well, I think that the idea that – Well, philosophically our association is traditionally against mandates of any kind. You know, certainly in this case – And I’ve visited with Senator Hatch about this numerous times, the idea of mandating that employers purchase insurance just perpetuates the problem that Doug has. It’s just such a significant cost factor in running a business that it will just literally put people out of business if we pursue that.

Beck: Is it time we just take it out of business, then? I mean should health care be attached to something other than your job, your paycheck?

Gilliland: Well, I think there are a number of employers that are starting to think that that’s perhaps the way to go now. If you want to have portable health insurance where you can freely change jobs – That’s certainly a hindrance right now that we’re seeing. You see people that, because of their family situation, they won’t change jobs. We like to see competition for employees. We like to see the free market for people to be able to do that, so that’s certainly an option.

Hatch: And I think John understands this; we’re not asking for employer mandates. We’re asking for individuals.

Beck: Okay, why not? Is that the next step?

Hatch: Well, what it does is that allows us to really talk about shared responsibility. We were very strong in our recommendations to have shared responsibility between the payer, the patient, the provider, the employer, and the individual. Only through shared responsibility are we going to get our arms around this problem of not having enough health care coverage.

If you don’t have enough health care coverage, you then lead into the problems that Dr. Carlisle, who is a member of our commission, laid out so beautifully the other day when he said chronic diseases are the highest single source of cost for people in this country. And that’s just not for adults, that’s for children. Obesity, diabetes, heart disease, these are things we can manage only if we know that we have it. And so one of our recommendations is not only coverage but providing a medical home.

Beck: But let me as you, if you say to a parent you have to provide insurance for your child, Doug Livy was already saying, “Look, some people won’t take a job from me because I don’t provide health insurance.” Now I’m the parent of a child who is uninsured, I’m definitely not going to take a job with him because he’s not going to provide me with insurance. Haven’t you just made it harder on these small businesses to find employees, then?

Hatch: Well, where we’ll end up with small business will be – A lot of our small businesses have low-wage jobs, and we have them in Des Moines as well as in rural Iowa. Those low-wage jobs are there because of supply and demand. So we’re not forcing them to pay more in wages. We’re asking them to share, maybe, the responsibility.

If they are below a certain poverty level, then they would be subsidized by the state pool, and that’s what we’d be creating is a structure in which the state would share in some of the responsibility, which would be the taxpayers.

Also, the employer would have a chance to apply to help. We would use tax credits. That has always been a good indicator of employer participation. Nothing would be a sole contributor. We would have a variety of strategies that we could help the small-business person and the individual.

And we found out with a survey just conducted by David Lynn for several business associations that over 80 percent of the employers would rather have employed a person who had insurance than not – and they would participate in providing insurance for their employee, but it’s very difficult if you have a part-time employee or a low-wage employee to provide that kind of assistance. So our program would allow that to happen a lot easier.

Beck: John, what’s one thing you’d like to see out of legislation on health care this session?

Gilliland: And I think there’s some good things in the report, and I commend Senator Hatch and his colleagues for the work that they did there. The thing that I think that we would find most agreement on is around chronic disease and health and wellness. In our pooling for our association, there’s an embedded wellness program component as part of it. You have to participate in the wellness activities or you can’t be in the pool.

Beck: And what are those?

Gilliland: Well, they do health screens. They set goals for smoking cessation, other -- weight loss, blood pressure, those kinds of things. We need to do more on the preventative side, and the senator is dead on on that point. We need to have more of a cultural change. To get back to the shared responsibility thing, we all have a stake in this, and so we’ve got to have more involvement by all the participants to be able to get – to really put the resources where it’s going to make the most difference.

Beck: Senator, let me just ask you, as somebody that’s covered the legislature, I know how hard it is to get things passed. We just talked about how the governor is asking departments to hold the line on spending. Someone from the governor’s office told me that when that report came out, their biggest concern was what price tag might be attached to it. What should we realistically expect you’ll get done this year?

Hatch: Well, realistically we know that we have to set up the structure and the backbone. And I’ve told the governor and our leadership -- and I’ve said this to both parties -- that we could establish the program of insurance coverage for all Iowans this year, and next year start funding health care for all children. And then as resources become available, we’ll have the backbone and the structure to add more adults into the program so that we can actually manage our resources and manage our budget.

And that’s where I think we’re different than any other state. Every other state, either they mandate everybody to get in. Then they’re fearful of the amount and the cost, and people get anxious. This way we’re going to create the system, and then we will bring people into the universal coverage plan as the resources are available.

Beck: Okay. We just have a few seconds. Is there another number one priority for you other than health care this session?

Gilliland: Defending Iowa’s right to work law is the number one priority for businesses.

Beck: Making sure that there’s not fair share.

Gilliland: Right.

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