SEMA eNews Vol. 12, No. 13, April 2, 2009

Health Care Reform Takes Center Stage

SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress will soon being drafting legislation intended to reform and expand the nation’s health care delivery system.

The letter praised the President’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.”

The letter observed that employers have a direct stake in the outcome since they have been relied upon for decades to provide access to coverage.

“Since 1999, however, employment-based health insurance premiums have increased 120%, compared to cumulative inflation of 44% and cumulative wage growth of 29% during the same period. If we fail to improve our health care system, rising health care costs will threaten the viability of U.S. businesses of all sizes and put job security, pay increases and other vital employment benefits at risk for millions of Americans.

“Faced with a severe and continuing economic crisis, employers simply cannot absorb new burdens, such as specific coverage levels or payment requirements, no matter how well intentioned.”

The letter to President Obama stresses that the nation’s economic security, along with its health security can be strengthened if it is easier for employers to provide access to quality coverage for their workers.

Under the current system, nearly 27 million small-business owners, employees and dependents are left uninsured. Skyrocketing premiums have made it especially difficult for specialty automotive companies to offer health care coverage to their employees. In January 2009, SEMA members responded to a comprehensive survey with a clear message that the nation’s health care system is broken.

The survey results underscored the need to make tough, balanced decisions to help solve the problem.

A Congressional Roadmap to Reform

Legislation must be enacted into law in order to achieve any significant health care reform. Previous attempts have failed so success this time is not guaranteed. Here are some contemplated steps on a path to reform:

Step one has been accomplished: gaining widespread agreement that the health care delivery system is broken. Unlike in years past, the major players are all willing to talk: politicians, health care providers, insurance companies, drug companies, big and small businesses, individuals, etc. Reasons vary: the current system is unsustainable, the number of uninsured is increasing, there are profits to be made by providing care to the uninsured, etc.

Step two is reaching agreement on a direction for reform. President Obama wants to expand the current employer-based system and implement other structural reforms to promote market-based competition, reduce costs and simplify paperwork. Under this approach, companies would be required to provide minimum health coverage to their workers or pay a percentage of payroll to fund a nationwide health insurance program for uninsured Americans.

The payroll tax would probably not apply to “small businesses," but that term has not been defined.

If there is to be any consensus for large-scale reform, expanding the current employer-based system is the likely candidate. The other approaches would likely be very disruptive and controversial, whether creating a single-payer government system or switching to individual coverage. Nevertheless, any reform will pose difficult hurdles.

For the employer-based system, sample deal-breakers include: What is the payroll tax? Will small businesses with 25 employees have to pay a tax? Will all individuals be required to secure coverage? Will competition drive down insurance premiums?

Congress will attempt to craft legislation to address these and other questions. Lawmakers in the U.S. Senate and House will hold hearings and discussions this spring. The goal is to draft legislation in Congress during the summer and complete work this year. It is a very ambitious if not impossible schedule, since the issues—taxes, health and commerce—are under the jurisdiction of multiple committees.

Additionally, there will likely be significant political differences on the role and scope of government intervention in the marketplace. Whether these differences can be bridged is unclear. Lawmakers view the current window of opportunity to achieve success as narrow since the momentum created by the 2008 elections will slow and we will soon be caught up in the 2010 election cycle. The nation’s economic woes may further slow progress.

SEMA is actively engaged on Capitol Hill and working closely with the National Federation of Independent Business (NFIB) and as a member of the Small Business Coalition for Affordable Healthcare to represent and address small-business concerns during this critical debate.

For more information, contact Stuart Gosswein at stuartg@sema.org.

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