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ALAN TURNER: Healthcare taking a toll on business

Insurance-Healthcare_rgbT he ongoing level of turmoil in the health care world is beginning to take a toll on business in Mississippi, and throughout the United States. The primary culprit in this scenario appears to be anxiety, i.e., a general fear and uncertainty about the long-term impact on businesses and employees.

From a business point of view, there is trepidation over the rules and regulations associated with the Affordable Care Act, and more appropriately, what that will do to the cost of doing business.

We’ve seen a variety of prognostications from various think tanks and policy experts on all sides of the political spectrum, but on some things, they all seem to agree. The cost of providing health care to employees is going to increase. The level of government regulation is going to increase. The cost of compliance is going to increase. From a business owner’s perspective, none of these are good news.

In response, it appears that businesses are taking steps they deem vital, such as delaying hiring, utilizing more part-time and contract workers, sharing more of the increasing costs with employees, and in many cases, looking at whether to keep providing health insurance at all. Businesses seem to be reducing expenses regardless of their current balance sheet numbers.

One wonders what the outcome from such changes will mean. If everyone cuts back, everyone will suffer. As the old adage suggests, a rising tide lifts all boats. Conversely, a sinking tide lowers all boats. And that may be exactly what we’re seeing.

From an employee perspective, many workers are seeing increasing costs, decreasing levels of coverage and a corresponding deterioration in their quality of living. For those folks who are thrown onto the mercy of the Health Exchanges, there is not much to celebrate.

We’ve seen numbers that have topped $1000 a month for a family of four, and yet, for that amount of money paid out every month, the family would still be liable for many thousands in deductibles and co-pays $1000 is enough to cover the principal and interest on a $200,000 home. Or, on an annual basis, it would buy lots of clothes and groceries and weekend trips to the Coast, cell phones, donations to worthwhile charities, and so on. Instead, it will go into insuring the family against potential health issues.

We’d think of that as an intangible, like all insurance. But the more money that gets spent on the intangibles, the less there will be left for the tangibles. Obviously, that’s not good news for business.

So far, the notable success in the Affordable Care Act seems to be in signing up millions of new Medicaid recipients in the states which opted to expand Medicaid.

While no one can argue with the need, one can still wonder about the escalating cost. The latest long-term estimates on providing this care now appear to be far higher than originally projected, and if too few healthy people sign up on the exchanges, insurance premiums are likely to soar. This is a scenario that Gov. Bryant and others in Mississippi warned about, and it appears that their caution was warranted.

No one seems to have the definitive answer on this whole challenging issue. We can hope that the Administration and Congress will work together to find the right answers that are supportive of the needs of business. But we’d better figure it out soon, or it’s liable to sink all our boats.


Contact Mississippi Business Journal publisher Alan Turner at alan.turner@msbusiness.com or (601) 364-1021.


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