Health insurance from an employer's viewpoint
COMMENTARY | October 09, 2008
Alan Jacobs, the boss of the Isaac’s Deli chain in southeastern Pennsylvania, is part of the single-payer drive in that state. Right now, he says, health care “incentives are upside down.” (Second of two articles.)
By Morton Mintz
Numerous strong and sometimes poignant questions that reporters could ask employers in their communities about health insurance are starkly visible in a recent talk by a businessman who operates 20 restaurants in South Central Pennsylvania.
"So I'm an employer being successful in the current system, but I think the system stinks," Alan Jacobs said.
Jacobs was among 15 panelists who addressed a health-care conference on Sept. 18 at Franklin & Marshall College in Lancaster, Pa. The sponsor, Progressives4Pennsylvania, is leading an effort to make Pennsylvania the first state to adopt single-payer universal health insurance, which is basically Medicare for all.
Jacobs went to work for Isaac's Deli in 1983, after graduating from Millersville University. He has been with it ever since and is now its president. About 200 of the approximately 650 employees are in its health plan.
Insurers sometimes "fight with each other to get the other to take on the cost," Jacobs said. "They each think they are doing me a favor, but I foot the bill for their dispute, and in the meantime, my employee can't get claims paid.
"From a health care perspective, it sure seems like the incentives are upside down."
In any given community, how many employers would say either that the incentives are OK or that they "are upside down"?
"Your employer—me—is bureaucrat No. 1. Every year, I make decisions for my employees about how much their out-of-pocket expenses will be, and how much their deductible will be, and what we will or won't pay for. Every couple of years when we change plans we give our employees a new lists of doctors that are on our plan. If they are lucky, their doctor is on our list. If not, too bad."
How many employers also see themselves, however unwillingly, as bureaucrats? Do they think it's right or wrong that they should be making decisions of the kind Jacobs has to make, such as deciding what employees' deductibles will be?
"When an employee gets sick and misses work, they go through the drawn out process of losing their job because they can't work because they are sick, and they eventually loose their eligibility and lose their coverage.
"This is a horrible occurrence."
How many employers agree that such an occurrence is "horrible"?
"When a person needs insurance the most, they lose it. This is the final brutality caused by linking health care to employment."
How many employers think it's fair and right for an employee who "needs insurance the most" to "lose it"? How many believe that health care should be linked to employment?
More such questions leap out from the full but brief prepared text, which follows:
I am Alan Jacobs, President of Isaac's Restaurant & Deli. We are a local employer with 20 restaurants and about about 650 employees. We have about 200 people on our health plan.
As a business person, I could talk about the economic advantages of a single-payer system, but that's not my elevator speech about healthcare. Here it is.
At Isaac's, we play the insurance game quite well. We offer health insurance for anyone working 25 hours a week, and that's helped us to retain a very loyal workforce.
So I'm an employer being successful in the current system, but I think the system stinks.
The way I see it, I am the ultimate health insurance consumer in our system. I buy insurance every year, and the insurance companies work hard to give me a product that I can afford and will buy. They try to keep my premiums low, which they do by trying to avoid paying medical bills. (It's like auto insurance: if you wreck your car, your rates go up).
So their job is to deny and delay paying medical bills as much as possible, which they think they are doing on my behalf, because they are keeping my rates low.
As a business, I buy several kinds of insurance – Medical, liability, workers comp, and auto. Each one of those insurances has a medical component, and each one wants to keep my cost low by not paying claims. Sometimes the companies fight with each other to get the other to take on the cost. They each think they are doing me a favor, but I foot the bill for their dispute, and in the meantime, my employee can't get claims paid.
From a health care perspective, it sure seems like the incentives are upside down.
This is not a partisan issue, but when I heard John McCain say he doesn't want any bureaucrat making decisions about our health care, I'm afraid he's a little late to the game.
Your employer – me – is bureaucrat No. 1. Every year, I make decisions for my employees about how much their out of pocket expenses will be, and how much their deductible will be, and what we will or won't pay for. Every couple of years when we change plans we give our employees a new lists of doctors that are on our plan. If they are lucky, their doctor is on our list. If not, too bad.
We also review drug use, and each year we give our employees something called a formulary. That's a list of drugs that we will pay for. If their drug is on the list, they're lucky. If not, too bad.
My insurance company is bureaucrat No. 2. They delay payments, deny payments, and get my employees all tangled up in paperwork so they can avoid payments in a particular year. If my insurance company can find a loophole so they don't need to pay a claim, that's good for them, and they think that's good for me. They are selling me a product, and they are trying to keep it affordable.
This might be all be well and good if the so-called free-market system was actually working to keep costs down. However, on a global scale, we as a country spend twice as much per person on healthcare, and our health outcomes are actually worse. If I had an employee who came to me with the results of his brilliant cost savings plan, and his conclusion was that it's costing twice what our competitors pay, and it's making it difficult for us to provide goods and services to our customers, but his conclusion is that we need to keep at it because it's the only plan that will work; I would tell him to hit the trail.
But I probably wouldn't fire him outright, maybe just demote him, because, he has a family, and he gets his health coverage from us.
Which brings me to my final point. When an employee gets sick and misses work, they go through the drawn out process of losing their job because they can't work because they are sick, and they eventually loose their eligibility and lose their coverage.
This is a horrible occurrence.
When a person needs insurance the most, they lose it. This is the final brutality caused by linking health care to employment. So that's why I'm here tonight, lending my voice to this movement.
Chief Noodge at JimPoland.com
11/18/2008, 10:47 AM
Mr. Jacobs is right on target!
I have consulted with employers to design their health benefits, select an insurer/or self-insure, and enroll employees. Citizens should be outraged that their is profit motive built into NOT allowing access to doctors, nurses, and medications in America.
31% every premium dollar that U.S. businesses and their employees pay to health insurers is destroyed in NON-CARE costs. That is, ONLY 69% of cash pushed toward health care actually flows into use for valid care such as nurses, doctors, technicians, clinics, hospitals, lab work, MRIs, CATs, X-Rays, & medications.
Some of the best performing American stocks over the last 15 years have been health insurers. That means that they are creating value by NOT creating health care. Their value to investors is measured by how much net gain they create from every insured members premium dollars. Think about the valid financial logic of that. Their profit motive is to not pay health care providers too much and to not provide to much care or medication to their premium paying customers/employers. Squeeze the premium dollar away from care providers, away from pharmaceuticals/pharmacies, away from American workers and their children. These insurers then spend those premiums dollars to promote healthier behaviors by their members, build their brand recognition, and help train nurses and doctors that they don't want to reimburse appropriately once they are practicing actual care.
American business leaders of the smallest firms and the largest firms should be telling their country club buddies who are senior execs at health insurers that they should expect to find employment in the new Federal Equal Access Health Plan or elsewhere, really soon.
The U.S. pays more for health outcomes per capita than almost all of our industrialized peers. We get worse results at those much greater costs than our competitor industrialized peer nations!
Outrageous, simply immoral, and dumb. All this folly is perpetuated in the name of capitalism . . . you know so that publicly traded corporation CEOs can rape their coffers, unethical mortgage brokers can rape homebuyers and investors, and American taxpayers can bail them all out on our great-grand children's backs!
Put Bill Clinton in charge of establishing the Federal Equal Access Health Plan and Hillary Clinton as whip of the Senate and we might be saved from our stupidity.