JUNE 1998

How health mandates will increase the uninsured: one scenario

Increasing pressure for government-mandated health-care coverage will increase the likelihood that the working poor will lose some or all of their health-care coverage, said Edward Reinfurt, vice president of The Business Council.

"The working poor tend to work for businesses which are small and marginal," Reinfurt said in remarks prepared for a June 12 speech at the United Hospital Fund Forum in Manhattan.

"The prospects for these companies vastly improving their bottom line so that they can afford a $10,000 family coverage or a $4,000 individual coverage are just not in the cards," Reinfurt said.

Noting that nearly three-quarters of individuals are covered by private insurance usually related to current or former employment, Reinfurt warned that employers may not deal with a new round of inflation in health insurance costs as they have in the past.

"Corporations which have been pleased with their involvement in the growth of managed care organizations are now seeing that they have less ability to work with these organizations on what they feel their employees want-because other advocates want government to ensure that these plans provide coverage for everything the advocates want," he said.

As these pressures to expand mandated coverage increase, costs will increase as a result, he added. One possible result of this financial pressure is employee-directed health care.

Just as many employers have replaced defined-benefit pension plans with defined-contribution plans, costs pressures may prompt employers to provide a fixed amount for health care, leaving decisions about coverage to the employee.

"Millions of individuals would find that they could no more afford a Cadillac policy than they could afford a Cadillac," Reinfurt said.

A core problem with government-mandated health care coverage is the tendency of mandates to obscure cost.

"Too many people still seem to disconnect when it comes to cost and coverage," Reinfurt said. He said many businesses are like the taxi industry, which has limited capacity to increase revenues and therefore a limited ability to sustain health coverage in light of mandate-fueled cost increases.

"There are only so many passengers you can pick up in a day and so many hours in a day one can work," he said. "Whether you are a taxi driver, a food vendor, a delivery service, or a deli, the realities of customers, price and costs are there," he said. "Our plea is that you recognize that these pressures are there for all employers."

"The tremendous pressure being imposed by many provider and advocacy groups to ensure that the coverage that does exist will include the coverage these groups want may indeed lead to an irreversible change in direction-which will add to the numbers of uninsured."

June 11, 1998