Older and Weiser

I am fresh from Yom Kippur, which caps the Jewish High Holy Day period, known as the “Days of Awe.”  It is a period in which we Jews reflect on our personal and communal responsibilities.  Over the last 10 days, I have heard my rabbis talk several times from the bima (pulpit) about our responsibility for the health and well-being of the least-fortunate among us.  Given my deep respect for them, this morning I am as open to proposals about universal health care as I ever will be.

Health care is not a new subject for me or one that only exists in a theoretical world. For 30 years until this February, I owned and operated a small consulting firm that did a good business advising organizations on matters of media and messaging.  The Weiser Group, as it was known for most of those years, never employed more than 30 people but provided high-quality health insurance coverage to employees from the first working day of our first employee in 1979.  Notwithstanding its obvious benefit to me as a recruiting tool, I always believed that providing health coverage to my employees was part of my “social contract” as an employer.

My aggregate share of the cost of providing that coverage approached $2 million, the majority of which otherwise would have gone into my pocket, after accounting for taxes.  Double-digit increases in insurance rates tested my resolve to provide this benefit over time.  With the help of an excellent insurance agent (Gerald Gomberg in Chicago), though, I learned to “buy down” benefits, adjust deductibles and co-payments, and engage our employees in making benefit choices that required them to shoulder some of the cost.

Over 30 years I bought and paid for health care “lessons.”  In the hope that my hands-on experience might be of benefit to others – including those crafting health care legislation who might read this – I offer five lessons:

First, when the people who consume health care aren’t the same people who pay for it, what we really are insuring is higher costs. It was only when our employees began to share the expense that they stopped treating our health insurance plan as an entitlement.  Then, cost increases moderated to the point where our plan became sustainable.

Second, I had virtually no negotiating leverage as a small business. At contract time, it was just me and a Fortune 500 company sitting on the other side of the table.  Needless to say, I was a price “taker” not a price “maker.” Changing health insurance carriers, which was my only option, was expensive and time-consuming.

The idea of regional purchasing cooperatives for small businesses, which employ 50 percent of US workers and create a far-higher percentage of new jobs, makes intuitive sense to me.  I saw it work first hand in the 1990s, when I helped launch (with Employers Health Insurance Co.) the Health Insurance Plan of California (HIPC), the first regional health insurance purchasing cooperative for small business in the US.  It was begun by a unit of California state government, the Major Risk Medical Insurance Board, and later privatized.

Third, most employees in their 20s think they are “bulletproof” and, therefore, don’t “need” health insurance. In one sense, they’re right: they are vibrant, healthy and in no present need of “Vipitor.”  Even though our employees paid for just 25 percent of their own health coverage, it didn’t seem like the best use of $97 a month to the youngest.  Multiply that $97 (or the $135 a month that Humana charges for my 25-year-old son’s individual health policy) by many millions of millennials (those born after 1979) who don’t want coverage, and you get to billions of the dollars needed to pay for universal coverage.

Fourth, my cost in time and dollars of arranging and providing health coverage was a disincentive to employing people. Not only was I “one-on-one” with a giant health insurance company but with several state governments as well.  Internet technology allowed me to employ talented people in Illinois, New York, Connecticut, Pennsylvania, Delaware, Louisiana, New Jersey and Florida.  Each state has its own insurance regulations. As an employer, I had to comply with them.  It makes me wonder how much more efficient it would be to have a single, national market for health insurance, just like we do for 401ks and airline tickets.

Fifth, I consciously paid health insurance companies to manage access to health care for my employees and their families. I don’t see where this is a bad thing.  In 30 years, we had four serious illnesses in our group.  Each time, our carrier did what they were contracted to do: provide access to quality care within a network of pre-qualified physicians.  Thankfully, all four patients recovered.  Yes, forms had to be filed and approvals sought but no one waited in a government line for a medical procedure or had to go to another country for care.  Perfect it was not; effective it was.

Before I would trade that “private” experience for something “public,” I would have to be convinced that it would work demonstrably better for those closest to me.  I am nowhere near convinced.

To look at the debate about health care legislation, I think Abraham Lincoln might have said: “Now we are engaged in a great civil war, testing whether this health care system or any other system can long endure.”  The current system, which leaks money and contains many uninsured, surely can’t be sustained over the long term.  Both congressional proposals on the table, however, seem even farther from the truth.  The debate is so complex that I am suspicious of those who seem surest about the “right” answer.   The verbal fisticuffs – from both sides – only make it worse.

Occasionally, though, I see something that resonates.  The following is a link to a column on the subject in this week’s Barron’s by its thoughtful Editorial Page Editor Tom Donlan.  In it, I think, are other health care “lessons” worth considering.

Filed under: Uncategorized by Michael Weiser