Editorial by Bruce Johnson of Arise Healthcare

August 2009

The United States has the finest health care in the world, which is primarily delivered through private insurance carriers. Competition, capitalism and choice have provided the health care quality and state-of-the-art technology that is the envy of the world. When King Abdullah of Jordan sought the best care in the world, he didn’t go to Canada or France, he came to the United States. Ambulatory surgery centers (ACSs) provide a critical role in increasing quality and containing cost. However, these achievements have taken place in an environment of competition and private payors. Can ASCs survive in a federalized single-payor system?

Proponents of the president’s plan claim it would leave private insurance in place, but the signs point ultimately to a different outcome. Hillary Clinton was upfront in 1993 with an aggressive plan that would have destroyed private health insurance and replaced it with a Canadian -style government-run plan. The plan was roundly repudiated. Has Mr. Obama learned from Mr. Clinton how not to introduce a Canadian- style plan to the American people?

While the American people have been occupied with the financial crisis and the recession, the Democrats in Congress have been passing provision after provision to nationalize health care. In early January, Speaker Pelosi rammed through a massive expansion of the State Children’s Health Insurance Program (SCHIP). The plan now covers pregnant women and automatically enrolls their babies. The Congressional Budget Office (CBO) estimates 2.4 million individuals could leave their private insurance for the government plan.

The program was originally intended for children of the working poor. However, in January of this year, the program doubled and now includes families who had private insurance and whose parents make $65,000 per year. This program supposedly targeted low income families. Now it has an eligibility ceiling higher than the U.S. median household, which, according to the U.S. Census Bureau, is $50,233. The bill also created a “contingency fund” to reward states that increase their (SCHIP) enrollment. The state of New York has already expanded their program to a level that is 400% of poverty.

The recession has allowed Democrats to speed up the government takeover of health care through the stimulus bill just passed in February. Medicaid eligibility has been expanded to include anyone who lost their job all the way back to early 2008, with the federal government forbidding states to apply income test in most cases. The GOP proposed amending the bill to exclude Americans earning over a million dollars, but the amendment was not included in final passage. The bill also, for the first time, requires Medicaid to cover those who lost their part-time-job. In addition, the stimulus has the feds paying 65% of Cobra payments. The CBO estimates 7 million Americans would have their insurance paid by the federal government in 2009.

Kimberley Strassel of the Wall Street Journal points out the stimulus bill takes a swipe at the private market under the guise of money for “health technology”. The legislation makes the federal government the national coordinator for electronic health records, able to certify what platforms are acceptable. She states this is an attempt to squelch a growing private market that is competing to improve transparency and let consumers compare providers and cost.

The president’s plan calls for expanding Medicare to include people of all ages. The plan will have penalties for business with as few as 10 employees, many of whom cannot afford health insurance for their employees. The government will be competing with private insurance. However, because the government can set prices and print money, the government will also play the role of referee.

According to Towers Perrin’s annual Health Care Cost Survey, the average corporate health benefit expenditure in 2009 will be $9,660 per employee. Most experts assume the penalty for not providing insurance will be similar to a payroll tax such as the social security tax and a percentage of the employee’s gross pay. If the penalty is 5% or less, in most cases that will be less than the cost of covering the employee through private insurance.

Assuming a 5% penalty, a person on minimum wage making $12,000 would be fined $600. For an employee at the upper end earning $150,000, the fine would be $7,500. It would take an employee earning as much as $200,000 before the fine would be $10,000, more than the average cost of private insurance. For most employers, it will be much less expensive to give up their individual private choices and let their employees go on the government plan.

If you take a Wal-Mart with 2 million employees, approximately 80% of the employees work in retail stores and earn $8-$15 dollars an hour. Providing those employees with full health coverage at $9,660.00 each would cost around $19.3 billion. Taking an average annual salary of $24,000 and a penalty of 5% the cost of giving their employees over to the government run plan would be $2,400,000,000. $19.3 billion vs. $2.4 billion. Wal-Mart could save almost 17 billion dollars by dropping their health insurance and paying the fine. How long after Mr. Obama signs the legislation into law wouldl it take for employers drop their private insurance for the government plan?

That could be the death nail to the private market and the creation of the “single payer system” in the U.S. In the very near future, Canadian- style government health care could be a reality in this country. With the government calling all the shots in health care, we know rationing and price controls won’t be far away. Can the ASC industry survive in that new reality?

The president’s plan is working its way through Congress. If government control of healthcare scares you, now is the time to act while we still have a private market to defend. All of us are stretched for time and money. But if we don’t take the time and money to lobby and educate ourselves and others today, we may not have an industry tomorrow.

Bruce Johnson serves as Vice President of Development for Arise Healthcare, LLC and is a member of TASCS. He can be reached via e-mail at BruceJ@arisehealthcare.com.