Sobering facts Featured

7:00pm EDT November 24, 2006

Is it too dramatic to suggest that U.S. health care is collapsing? That crisis is around the corner? We read (and know firsthand) that costs are soaring, that uninsurance and underinsurance are rising. But a collapse?

For answers, Smart Business asked Brian Klepper, president of the Center for Practical Health Reform. He spear-heads a national health care reform effort that has attracted the participation of business and health care leaders.

What is the state of U.S. health care?

To really understand it, a few facts are key. First, health care costs are exploding. Between 1999 and 2004, health care premium rose 5.5 times general inflation, 4.0 times workers earnings and 2.3 times the growth of business income.

Next, those cost increases are pricing purchasers — individuals, corporations and government — out of the coverage market and eroding health plan enrollment. Last year, the Kaiser Family Foundation reported that, over the previous five years the percentage of employers offering coverage plummeted by 2.6 percent per year. Employees who still have coverage have narrower benefits and higher out-of-pocket costs.

Florida, where I live, has a large percentage of small businesses. So it’s a good barometer of rising care costs that affect employers everywhere. Between 1996 and 2004, while the state grew by 3 million people, 130,000 small Florida businesses dropped coverage, a 53 percent drop, eliminating coverage for 760,000 enrollees, a 42 percent drop. These are huge numbers.

Third, falling enrollment translates to fewer health care dollars. As purchasers stop buying, the money available to buy health care products and services shrinks. The financing squeeze could destabilize the health care marketplace if funding slows to a tipping point.

Finally, health care is the nation's largest economic sector. At $2.2 trillion in 2006, America's health care industry -- the suppliers, care delivery system and insurers -- is one-seventh of its economy and one-eleventh of its job market. Disruptions in the health care marketplace would likely cascade to all other business sectors, threatening the national economic security.

What can be done?

Despite a lot of ominous handwriting on the wall, I’ve reluctantly concluded that the health care industry is still too profitable and conflicted to collaborate on the changes essential to re-establish market stability and sustainability. Only the non-health-care business community is strong enough to initiate meaningful reforms. By coming together, they could put pressure on the health care industry and Congress to create more transparency and take other actions that are required to effect real reforms.

I’ve been holding meetings with non-health-care business leaders around the country, talking about the things they can do in their communities and as part of a larger national effort. Employers are upset over this issue, and so they’ve been very responsive. I’m frankly more optimistic than ever that business’s leadership is the best shot we have.

And I wouldn’t be surprised if actions on health care clarify how business can mobilize to help America grapple more effectively with many other difficult problems.

BRIAN KLEPPER is a national speaker and writer and is president of the Center for Practical Health Reform. Reach him at (904) 246-9643 or bklepper@cphr.com.