HHS Secretary Discusses Impact of Healthcare Reform for Blacks and Small Businesses
By most accounts, the healthcare reform bill that Congress is expected to pass in the next few days is by no means a panacea. There’s no public option, it doesn’t sufficiently rein in costs, and its impact on the deficit will be felt for years. But if Congress fails to pass a bill, warns Health and Human Services Secretary Kathleen Sebelius, the implications for minorities—already overrepresented among the nation’s uninsured–could be even costlier.
First, she noted in a roundtable discussion with black reporters at the White House this week, prohibitive rate increases are forcing more and more people out of the market. In the past 10 years, premiums have doubled, and Sebelius estimates that at the end of the next 10 years, the average policy could cost as much as $30,000. She recounted an insurance company representative telling a congressional panel that profitability trumps keeping customers. African Americans, she added, also disproportionately suffer from chronic diseases and other health conditions that push them into a high-risk pool. “So a larger percentage of minorities are going to be on the wrong end of the puzzle in a market that is unattainable or unaffordable and there’s, frankly, nothing that stops that,” Sebelius said.
Small business owners also often feel squeezed in the marketplace, she added. Without the bargaining power of larger firms, they face the highest rates from providers, doctors, and drug companies. If even one of their employees becomes seriously ill, their rates will jump up.
Reform legislation will enable small businesses to become part of an exchange that will enable them to negotiate competitive rates, and their lower wage employees will get direct subsidies to help pay for coverage. Sebelius also said that there’s a new provision under the bill being considered that will require insurance companies in the small-group market to adhere to a medical loss ratio that, with the exchange, would prevent end-of-year surprise rate increases.
“They’ll have to spend at least 80% of what they take in on health benefits and only allow 20% to go to profit, overhead, and administrative costs,” said Sebelius. “If they don’t make that medical-loss ration, they’ll have to rebate money, which will prevent this extraordinary differential we see in the market with jacked up rates.”