Crunching the numbers on health care reform

by Dollars and Sense

The latest from the Economic Policy Institute:

During another week of intense debate over the affordability of health care reform, EPI economists analyzed original and publicly available data and found that the proposed House health reform bill would pay dividends for small business and other groups, and that costs incurred by the federal government would help reduce total health spending over time.

In Health Care Reform: Big Benefits for Small Business, EPI's director of health policy research Elise Gould and economist Josh Bivens note that only 35% of businesses employing fewer than 10 workers offer health insurance, and those that do usually pass on a higher share of the cost to workers than do larger businesses. A key problem is that small businesses typically pay more for health insurance because of the way policies are sold. The authors conclude that reforms that would create more competition among insurers and reduce their administrative costs would significantly reduce the cost small businesses incur providing health insurance. An independent analysis by the Lewin Group of EPI's Health Care for America plan -- which closely resembles the House reform bill -- finds businesses with fewer than 10 employees that provide health insurance would save about $3,500 per worker.

In a related piece, Small Business and Health Reform, Gould challenges the assumption that the proposed surcharge on high incomes contained in the House health reform bill would discourage entrepreneurial activity, and cites research from the Joint Tax Committee finding that nearly 96% of taxpayers who report business income would not be affected by the surcharge.

And, in Seeing the Big Picture in Health Reform and Cost Containment, Bivens shows why a federal government investment in health care reform could produce big savings in total health costs over time. Cost analyses that focus strictly on the cost of health reform to the federal government, he argues, are misguided. "Fundamental health reform is worth doing even if it does not pay off in big federal budget savings," Bivens writes. "Health care is an area where the more costs are loaded up on the federal government, the more efficiently care tends to be delivered overall." Politico quoted Bivens explaining why the main focus of health reform needs to be on reducing total health spending over time, since health spending is currently rising faster than gross domestic product.

Labels: Economic Policy Institute, health care reform, small businesses

 

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7/30/2009 01:44:00 PM