Small business people who are self-employed often have enough on their hands just trying to get their business off the ground, and finding the extra cash to pay for health insurance may not be possible. The cost of health insurance is particularly burdensome for self-employed people who have pre-existing medical conditions.
“One of the things that is a given with self-employed people is that it is very difficult in Mississippi, and probably other states, too, to get insurance for pre-existing conditions,” said Dr. Jeanne Lebow, a writer and artist from Ocean Springs. “That means that in order to treat a pre-existing condition, you have to set aside cash for that. Then when you have to go to buy insurance, you already have a certain amount of your income that you can’t use to purchase insurance.”
Lebow, who has asthma and allergies, said that in order to afford insurance at all, she had to purchase a policy with a $5,000 deductible. That leaves her with large out-of-pocket expenses for monthly medicine, and for yearly mammograms, office visits and physicals.
Lebow also feels it is unfair that people like her end up subsidizing Medicare and Medicaid. For example, Lebow recently was charged $1,800 by a physician for two tests that took less than an hour. Medicare sets a limit of about $500 for the procedure, and the doctor has to accept that.
“But I have to pay $1,800?” she asks. “Where’s the equity in that? So I’m subsidizing Medicare and Medicaid. The insurance companies would have paid a percentage of that if I’d had a lower deductible.”
The charges for Lebow to have two medical tests that included a colonoscopy totalled between $5,000 to $6,000. She had checked on the cost of the procedures a year ago, and the cost then was only $3,000.
“The point I want to make is that right now in the U.S. doctors are saying a colonoscopy can save lives,” Lebow said. “Someone living on minimum wage with no insurance is not likely to save their life if they have rectal bleeding because this would be a fourth of their yearly income if they were making $12,000 per year. If they pay for the test, what are they supposed to do for housing and food?
“It is wrong in the U.S. that we can go to Canada to get surgical procedures for less than half the money we pay here, and wrong that we can go to Mexico for prescription drugs that cost 50% less than what we pay here.”
Lebow thinks it also isn’t fair that small business people can’t deduct the cost of health insurance as a business expense, while big corporations can deduct that expense. Congress has passed legislation that gradually phases in allowing deductions for the self-employed, but it will be years before the cost is fully deductible.
Wealthy people in the U.S. can afford health insurance and pay for the best medical care available, and people who work for the best companies are covered (though the amount of out-of-pockets health care expenses is also growing for this group). And people who are on welfare are covered for health needs. Lebow said it is the working, middle-class sector that is getting squeezed.
“The growing middle-class sector is having less and less coverage unless they want to hand out 50% of their income,” Lebow said. “The gap is widening, and I don’t think there are too many who would contradict me on that.”
She believes one positive is that the primary care physicians who are on the front lines of health care are still a great buy as far as medicine goes. She said primary care physicians provide office visits for reasonable charges, well-baby checks, help patients get blood tests that aren’t too expensive, and the costs of mammograms and yearly check-ups still aren’t too bad.
“But once you get beyond that, the cost of prescription drugs and of special procedures are going out the roof,” Lebow said. “I’m really mad at the medical establishment for going crazy. I’m mad at the insurance companies and the hospitals.”
Another self-employed person, David Johnston, Johnston Photography, Ridgeland, said he went for years without having health insurance coverage while he was building his business. He said he is healthy, and hasn’t needed medical care. So his biggest problem now is the escalating cost of purchasing health insurance.
Johnston said he switched coverage several times because he would join at one rate, then have his monthly rate jacked up 25% after six or eight months went by.
“I had to keep changing to find one that is more reasonable,” Johnston said. “I have found something reasonable from State Farm that has not increased at the rate others have. It is not a group plan, and is just for individual hospitalization. It isn’t for minor things, but for basic hospital surgical coverage. I know other people who have a $500 deductible for the year, and if they encounter $2,000 in medical bills, they pay only out $500. Mine doesn’t cover all that. I could get that if I wanted to pay a lot more money. I’m in good health and haven’t required it. But it is a roll of the dice. I have 80/20 coverage. If I have $10,000 worth of medical bills, I’m out $2,000. It is real tough to have adequate coverage.”
Johnston said it is difficult to be self employed these days. In addition to health insurance, he also pays for disability insurance and disability overhead expense insurance that would pay his overhead in case an accident sidelined him from work.
“You can spend 20 years building up a business, and then something beyond your control like an automobile accident can take it all away,” Johnston said. “If I was sidelined from an accident, and didn’t have disability overhead insurance, not only would I be broke, I would lose my business and everything else.
“I didn’t have health insurance for the longest time. I was just trying to pay attention to paying my bills. I couldn’t think about having the luxury of peace of mind that comes from having health insurance. I was lucky I didn’t get sick, and that I was able to grow my business. It’s amazing. The majority of Americans are two to three paychecks away from being homeless. Any of us can be in that spot.”
Johnston said that while financial analysts advise that people should keep at least three months of living expenses in the bank as a hedge against inflation, many people don’t do that.
“I know people who have made tons of money, and have nothing to show for it,” he said. “Whatever you can save is worthwhile.”