SBE Council Ranks States According to Health Care Policy Costs

On February 3, the Small Business & Entrepreneurship Council (SBE Council) released its "Health Care Policy Cost Index: Ranking the States According to Policies Affecting the Cost of Health Care."

SBE Council President & CEO Karen Kerrigan declared: "Few understand the costs of health care better than small business owners. In the face of significant costs, they struggle to remain competitive, provide health care coverage for themselves, their own families, employees and the families of workers. Unfortunately, many policies that have been put into effect have only increased health insurance costs. That is the case not just with federal policies, but state initiatives as well."

SBE Council's "Health Care Policy Cost Index" ranks the states according to five policy measures that impact the costs of health care: 1) mandated benefits on insurers, 2) "play or pay" mandate on businesses, 3) community rating mandate, 4) guaranteed issue mandate, and 5) tax deductibility for health savings accounts. (Four of these factors were included in SBE Council's "Small Business Survival Index 2008: Ranking the Policy Environment for Entrepreneurship Across the Nation," which was recently published in December 2008.) The five measures are combined into a health costs score, upon which the 50 states and District of Columbia are ranked.

The best 15 states in terms of state health care policies are: 1) Idaho, 2) Utah, 3) Iowa, 4t) Michigan, 4t) Ohio, 6) Alaska, 7) South Carolina, 8) South Dakota, 9) Pennsylvania, 10t) Nebraska, 10t) Wyoming, 12) District of Columbia, 13) Kentucky, 14) North Dakota, and 15) Oklahoma.

Meanwhile, the 15 worst states are: 37) Minnesota, 38) New Hampshire, 39t) North Carolina, 39t) Rhode Island, 41) Florida, 42) New York, 43) New Jersey, 44) Colorado, 45) Maryland, 46) California, 47) Vermont, 48) Connecticut, 49t) Maine, 49t) Washington, and 51) Massachusetts.

SBE Council chief economist Raymond J. Keating, author of the report, concluded: "Whatever health care crisis there might be in this nation, its origins can be traced back to governmental policies that raise the costs of health care, and thereby limit the availability of health care coverage. If policymakers are serious about having a positive impact on health care, then they must significantly relieve the system of mandates and regulations at the federal and state levels."

The full state rankings are available in the "Health Care Policy Cost Index."

Lawsuits Jack Up Health Care Costs

Small business owners understand the costs of a runaway legal system. They have experienced, or fear that they will experience, a frivolous, costly lawsuit that damages or even sinks their business.

However, lawsuit costs affect small businesses, their employees and the economy in other ways as well. For example, there is the matter of health care costs. Again, small business owners understand the high costs of health care coverage. But a chunk of those costs are driven by lawsuits.

On November 18, the Boston Globe reported the following about medical practices in the state of Massachusetts:

A vast majority of physicians in Massachusetts say the fear of being sued is driving them to order unnecessary tests, procedures, referrals, and even hospitalizations, a phenomenon that is adding at least $1.4 billion to annual healthcare costs in the Bay State, according to a study released yesterday.

The Massachusetts Medical Society reported that 83 percent of physicians surveyed said they have practiced so-called defensive medicine and that an average of 18 to 28 percent of tests, procedures, referrals, and consultations, and 13 percent of hospitalizations, were ordered to avoid lawsuits.

The society said its findings, the first it has compiled on the issue, probably underestimate the cost of the problem because the 900 physicians surveyed, including family doctors, obstetricians, gynecologists, and general surgeons, accounted for only about 46 percent of the doctors in the state…

The medical society's study found that 28 percent of physicians surveyed said that liability concerns affected the care they provided "a lot," with emergency room physicians, obstetricians, and gynecologists leading the pack. From X-rays to ultrasounds, it found that roughly one in four doctors said they ordered excessive tests because they were worried about missing something and being sued.

Those are real costs that get passed on to individuals and businesses, making health care less affordable.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

HSAs: The Right Health Coverage Fit For You?

According to America’s Health Insurance Plans (AHIP), there are 6.1 million health savings accounts (HSA) set up in the United States. Small businesses, in particular, have been drawn to HSA plans as 31 percent that have opted for this coverage were previously without insurance. So -- is the HSA option a good fit for you?

At a House congressional hearing on HSAs last month, a Harvard professor essentially testified that most Americans were too dim to own a HSA. Are you? There are plenty of resources available for you to help make that decision.

Roy Ramthun (“Mr. HSA”) has announced that in addition to his FREE booklet – “The Common Sense Guide to HSAs” – that he recently released (it can be downloaded at http://www.hsaed.com/) he has also published a Spanish version of the guide – “Manual de sentido común Cuentas de Ahorros para la Salud.” Both of the guides are designed to help consumers better understand HSAs. There is a fee for the Spanish version.

In addition to basic information about HSAs, the guides explain how HSAs compare to traditional health insurance, and how to determine whether a HSA is right for an individual or family.

Ramthun is also hosting a one hour HSA webinar on Wednesday, June 25th at 12:00 noon ET (11:00 am CT, 10:00 am MT, 9:00 am PT) to explain the new IRS guidance on IRA-to-HSA rollovers and account funding issues. The webinar will provide an opportunity for Q&A. The cost of the webinar is $35. To sign up, visit http://www.hsaed.com/. For those who attend the webinar, the Spanish version of the guide book will be sent FREE of charge.

Many small business owners that we talk to say that HSAs are an affordable, flexible option to traditional health coverage. Employees also love them as they have more choice in the health and medical marketplace. They also serve as another vehicle for saving money. Millions of Americans are jumping on the HSA bandwagon. Check it out to see if it makes sense for you, or your business.