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Small Business and Health Reform: Christina Romer Takes Your Questions
Poziom:
Temat: Biznes
Representative:
Good afternoon.
On Saturday, the president's
council of economic advisors
released a new report on the
impact of health care reform on
small businesses
and their employees.
In his weekly address, the
president asked for your
feedback on the subject and
the feedback was overwhelming.
We got hundreds of
questions on whitehouse.gov
and more than 1500 questions
from among the small -- the
millions of small business
professionals who are part of
the Linkedin network.
Thanks to everyone who gave us
your questions and comments.
We left to up to linkedin to,
to pick the questions that they
thought were most representative
and insightful of the larger
group. They had several of their small business members comb
through the list and choose
about nine or ten.
We're going to go through those questions, but also keep an eye
on the chat happening now through Facebook. And of course
we'll be looking for your feedback and questions, as well.
We should note for transparency
sake that since we wanted to
make sure that we answered your
questions as best as possible,
we looked over the questions in
advance to make sure we could
give you the information
that you were looking for.
It was a tough call between the
element of surprise and giving
you really the most
thoughtful answers possible.
But without further ado, we're
going to welcome CEA chair,
Christina Romer, with
the first question.
Christina Romer:
Great.
Well, actually let me start by
reminding you that what we are
going to be talking about is the
new report that the council of
economic advisors did put out
on Saturday about the economic
effects of health care reform
on small businesses and their
employees. And I highly recommend that people go to
whitehouse.gov or to the council of economic advisors
website and read the
whole report.
I thought what I'd do to begin
with is to talk a little bit
about the report. Actually, before I do that, I do want to
thank all of the people that sent in responses.
It was truly overwhelming. We had asked the question about
tell us about your experiences, and I have to say we have
learned a tremendous amount from hearing from so many small
business owners about the problems that they face.
And one of the really
interesting things is how much
it correlates with exactly what we were identifying in our
report. One of the things that our report talks about is, oh,
just the burdens that the
current health care systems
places on small businesses. I'll give you one statistic.
A small business pays about 18
percent more for comparable
coverage than a big firm.
All right.
So that automatically puts
them at a big disadvantage.
Either they have to pay lower
take-home wages to their
workers, and then they have a
harder time competing for the
best workers, or that extra cost
that they incur comes out of
their profits. And then they have less to invest and grow
their businesses. So it definitely is a problem.
One of the places that this
shows up is a lot of small
business owners are finding it
difficult to offer insurance to
their employees. And, again, to give you a number.
For firms that are
three to nine employees,
I think there's just 49 percent
of them offer insurance to their
workers. Where when you get to a firm with 200 employees,
basically 99 percent of them offer coverage. So that is a big
difference. It's showing up in where do we see people going
without insurance. It's often people that work in small firms.
And so absolutely the current
system is not working well for
small businesses. And so exactly what our report looked at is how
are the reform proposals that be being considered in Congress and
consultation with the
administration designed to help
small businesses to deal with
some of these burdens that they
face. And there are lots of ways. One is that the proposals
all call for the creation of an insurance exchange. A place
where individuals and small businesses can go to buy
insurance. A place where there will be no exclusions on
preexisting conditions. Where we'll spread the administrative
costs over many more people, so that the prices for good,
high quality insurance are much
more like what you'd get if you
were a small -- a
large business owner.
So that's certainly going to be
an important way that it will
ease the burden for
small businesses.
Another thing that the proposals
all have in common is some kind
of a tax credit for small
businesses that do provide
insurance for their employees.
That's a way to, again,
ease the burden on them,
help their bottom line, make
sure they can still grow
business -- their
businesses, create jobs.
We absolutely think
that's important. Another
benefit has to do with what we call the pay or play
requirements. Those are requirements being put in to a
lot of plans being discussed to encourage medium and large
businesses to keep providing insurance.
And one of the things that the
bills are being careful to
do is to exempt small
businesses, for example,
one of the bills coming out
of the Senate says that these
requirements won't apply to
firms with fewer than 25
employees. And again, we think that's important.
You don't want to put extra
burdens on small firms.
We want to make them more able
to do what we hear and certainly
saw in so many of your
responses, what you want to do,
which is to provide health
insurance for your employees.
Another important fact about the
plans working their way through
Congress is that for a small
business owner that doesn't
provide insurance, the exchange
is going to be a place where the
workers can still go to get coverage, right, where they
won't have to pay those high rates that they face in the
individual market. Where they won't face exclusions for
preexisting conditions. Where if you are a low income worker,
you'll get a subsidy from the
government to help you be able
to buy insurance. And we think that that's why we talk about
this is a win, not just for small business owners,
but absolutely for
their employees. The last thing
I'd mention in terms of the things in the bills designed to
help or to encourage small businesses has to do with labor
mobility. One of the things we know now is that some workers
are afraid to leave jobs or to start their own business because
they're afraid of losing their health insurance, they're afraid
of not being able to get health insurance because of a
preexisting condition. And so one of the benefits that we can
anticipate if we get a better working system is a place where
everybody can be sure they can go and buy low cost, high
quality insurance, are the people who will unleash, really,
really entrepreneurial talent,
people willing and able to
strike it out, start
a new business,
a small business that is so inportant for job creation,
and we think that's going
to be a big benefit.
The only other thing
I'd mention, again,
I'd love for you to
go to the CEA website,
because we did a report back in
June about more generally about
how health care reform is
important for the entire
economy. And I think we don't want to lose site of that,
that we're talking about small
businesses today, you know,
we're all part of this country and we're all going to benefit
from the health reform proposals
that we've been talked about,
that will expand coverage and
will absolutely slow the growth
rate of health care costs. And that is so important for the
economy. That by slowing the
growth rate of costs,
we anticipate that's going to
have a big impact on standards
of living, again, for everybody,
not just for small businesses
and their employees. We also expected to have some benefits
on the budget deficit, right. We know that going forward, the
biggest fiscal challenge we're going to face is the fact that
government provided health care in the form of Medicare and
Medicaid, those costs are going up along with all the health
costs in the economy. And that's going to put a real strain on
the federal budget deficit. The kind of reforms that we're
talking with designed to slow the growth rate of costs will
have a big impact on the budget deficit going out 20, 30 years,
and that's just crucially important. Lastly, I would focus
in on jobs. Because one of the benefits of slowing the growth
rate of costs is we do think you can go through a period of time
where unemployment can be lower, where employment growth can be
higher, without generating inflation. And so that's
something that we can look forward to as we return to full
employment. And if we could then get our health care cost growing
more slowly, we can absolutely look for a period of improved
labor market performance. So all of those, again, are things that
every American citizen will benefit from, and small business
owners and their employees are part of that family.
All right. Well, with that, let's turn it over to questions.
Representative:
Great. That was a fantastic overview. Our first question is
coming from Abraham Jenkins, president and CEO at launch pad
careers in Los Angeles. And he asks, how will the current
health care proposals level the playing field so small
businesses can effectively complete with large corporations
for human capital?
Christina Romer:
Again, it's a great question.
It's exactly what -- what I was
just talking about. Remember how I said that -- that small
businesses today provide or pay about 18 percent more for the
same coverage. That absolutely hurts them in the labor market,
right. The normal way that it shows up is they pay less in the
form of take-home wages to their employees. Well, that makes it
harder for them to compete with a big firm to hire the best
workers. Or we see, you know, one of the other phenomena that
we see is typically in small businesses, the health insurance
plans are less generous. Well, that again, is less of a lure.
If I have a choice between
a big firm and a small firm,
I may well go with the big firm
with the more generous health
insurance package. So any of the changes that we've been talking
about, the exchange where small
businesses can go and buy really
high quality plans that
fit their workers needs,
at a much more reasonable price
because they do get the benefits
of risk pooling with the
lower administrative costs,
that's going to help them in
finding and attracting the best
workers. Here, let me just give you one interesting fact.
Remember I talked about the
phenomena of sometimes you don't
get -- people may be afraid to
join small businesses because of
the less good health insurance
or the fear that they have a
preexisting condition and
so they won't get covered.
One fact that we discovered is
there are a lot more people over
65 who are working in small businesses. Well, what happens
when you turn 65? You qualify for Medicare.
And so one of the things that we
think that shows is there are a
lot of people that would love
to start their own business,
but they're being held back for
fear of what -- will they have
health insurance coverage. If we can put in place the reforms
we're talking about, so everybody could be sure they
would qualify, they'll be able to get a high quality,
reasonablely priced plan, we do
think it will really increase
entrepreneurial talent and
help us to create more small
businesses, which I didn't
even talk about that.
But in our report, we do talk
about how small businesses
really are engines
of job creation.
They really are a
source of innovation.
Those aren't just buzz
phrases, that's the truth.
And so anything we can do to
help this crucial sector of the
economy prosper and grow is
good for the whole economy.
Representative:
Thank you, Christy.
The next question
comes from whitehouse.gov.
According to the CEA report,
the government plan offers
exemptions to many of the
smallest companies that
collectively employ a large
number of our workers.
What prevents these small
businesses from simply not
offering coverage or outsourcing
their work to other countries at
a lower cost?
Christina Romer:
All right. So there are a couple of things. One is, it is true
that the plans in front of Congress do exempt small
businesses. And that is, you
know, very much aimed,
we're not -- we talked about
the burdens that are already on
small businesses in the
current health care system.
We don't want to do something
that will burden them further.
And so that absolutely
is why, for example,
the Senate health education
labor and pensions draft of the
bill exempts firms with
fewer than 25 employees.
And so that is very much
designed to make it -- make it
easier for them to deal
with the current situation.
The other thing, of course,
is that we are proposing tax
credits to help and certainly
the bills include tax credits to
help small firms pay for health
insurance for their workers.
And so that's something
that will be a benefit.
You know, one of the things
that I've been really struck,
I've done a lot of work and
talking with Karen Mills who is
the administrator of the small
business administration.
And one of the points that
she makes is that, you know,
workers in small businesses,
well, often are family,
but often, if not
family, feel like family.
And so you know what we hear,
and what I saw in so many of
your responses, is small
business owners want to provide
health insurance
for their workers.
They're being dissuaded or it's
made very hard for them by the
fact that it's so expensive.
And so one of the things that
we're exactly trying to do is
create institutions like the
insurance exchange where we can
bring down the prices, much
more to the level of bigger
businesses so that they can do
what they want to do for their
businesses. In terms of the outsourcing, I mean,
I think the crucial thing is
most small business owners,
they want to create
the business.
They want to grow
their business here.
And so we absolutely think that
they will keep doing that.
Another thing that we certainly
discovered in our study,
small businesses are
throughout the economy.
They are everything from
manufacturing to construction.
But there are also a lot of
them in the service sector.
And things like construction and
service sector jobs like food
service and professional services, those are things that
really can't be outsourced. And so it's another way in which
the small business sector is so important to the economy and
helping us to grow and stay a healthy economy.
Representative:
Great point. Okay. We have a question from another Linkedin
member, an A. J. Vasquez from Miami e-mailing in from his law
firm. He has a question on
affordability and availability.
A small business owner should
not have -- should have a
competitive selection of
comparable health plans to
choose from. As a small business, taking care of my
people is important to me, creating an environment that
focuses on wellness is also a priority in my law firm.
Healthy, productive employees
are not only great for the
company, but ultimately great
for their families and their
communities. It's a win-win situation and it's well worth
the effort. How will you or the proposed health care plans
improve competition in health care to allow for more
competitive health care plans, and what will this plan do to
promote a more healthy environment through wellness?
A lot of questions in there.
Christina Romer:
I know, I have to look over and
make sure I get all of them.
You know, the big point of the
question, which is, you know,
so much in the president's
mind, is, you know,
one of -- the number one
benefit of expanding,
why do we talk about
expanding coverage.
It's because we think when
people get health insurance
coverage, they're healthier and
they have access to primary
care. They do have -- and primary care physicians tend to
put more emphasis on preventative care rather than
just treating a problem after it develops.
So that is a big part
of why, you know,
the president has always
had these two goals,
expanding coverage
to improve health,
and putting in reforms that are
going to slow the growth rate of
costs to ensure the health
of the over all economy.
And those are two crucial goals.
You know, on this issue of health, one of the things that's
important is it's particularly
-- the health of workers is
particularly important, you
know, well obviously for
everyone, right, so it's a win if we can have healthier people,
they're better workers, they're more productive, they're less
absenteeism. But it's also, it's particularly important for small
businesses. As those of you that have small businesses know, you
don't have, you know, lots of other people when someone is
absent who can fill in the slack. And so we think that
changes that lower absenteeism and increase productivity by
making people healthier are particularly important for small
businesses. Now, about the affordability. We've talked
about how the exchange is one way to help make health
insurance more affordable by spreading administrative costs
and pooling risk. The president's also talked about
the importance of competition. He has said that, you know, he
thinks a public option, a public plan in the exchange is going to
be a useful thing, right. He actually says that a public plan
has to stand on its
own two feet.
It can't be subsidized
by the government.
It needs to be played on a level
playing field with the other
insurance providers. But he does think for some markets,
especially where you might
only have one or two insurance
companies that want to provide
coverage in that market, making
sure that there's always competition, that there's
another, another -- another provider, the public plan,
can be useful in keeping costs
down and providing leadership.
You know, one of the things I've been surprised is when we talk
to private insurance companies,
they talk about the role that
Medicare and the public plan can
play in-kind of being innovators
in leading the way of, in, you know, more creative forms of
payment systems, how do you give doctors the incentives to really
get -- provide the best possible
care without the waste and
inefficiency that we know are
there in our system today.
And so we do think that the
government has a very positive
role that it can play and will
ultimately show up in a slower
growth rate of costs. Last one, again, I --you don't want to let
go because I love the point about prevention.
I mean, that is something the
president, the first lady,
have talked about so much, that
one of the great benefits of the
system -- one of the things
in our health reform system,
the proposals call for making
sure that preventative care is,
you know, that we encourage that. That both by making sure
people have overage, but also in sort of what the copays and
things can be for preventative care.
Because we do think that's
important, obviously for health,
but also for ultimately
reining in costs,
things like weight management,
smoking cessation programs,
those things absolutely
pay for themselves.
And that's an important --
that's an important point and
good for business, good for the
economy, and good for people.
Representative:
All right. So we have another question from a Linkedin
member, a Mark Young, who is the
president of Zantec,
which is a watch repair
company in Peoria, Illinois.
He asks, insurance was never
intended to be a perk,
but rather to be a necessary
component of running a business,
provided to compete
for better employees.
How did we move from health care
being a benefit to a requirement
that businesses
provide insurance?
Christina Romer:
All right. So first let's talk about the, I think,
one of the good points
that he makes is this idea,
it comes back to the level
playing field and hiring
workers. All right. That we do know that it is something that
workers care about. And one of the reasons they might not go to
a small firm is because they don't provide health insurance.
And so we do think that it is
something that makes small --
the current system, where so
many small business owners find
it hard to provide insurance
because it is disproportionately
expensive for them. It does disadvantage them in the hiring
of labor. So I think that one we
absolutely would agree on.
In terms of requirements, again,
we want to be a little bit
careful here. Absolutely, what we've been talking about is in
the health reform proposals that are working their way through
Congress, any of the employer
responsibility or the pay or
play requirements, they're
carving out exemptions for small
businesses. And just to give you a number, all right, so the -- I
think the -- one of the Senate version of the bill exempts
small firms with fewer than 25 employees. Well, that's about 91
percent of all firms in the economy. And if you think about
most of the firms in the other 9 percent are already providing
insurance, and really we're being careful to make sure that
we're not putting additional burdens on small firms.
Now, why do you
have these at all?
Why might you want to have
some employer responsibility
requirements, it does
come down to disruption. Right?
That sort of started
after World War II.
One of the things that we did
is to really give special tax
treatment to employer
sponsored health insurance,
and that's really kind of made
that the normal way that most
people get their
health insurance.
And so that is the system
that we're most used to.
It's kind of what the president
has described, the American way,
in terms of health care
insurance and provision.
And I think one of the things that the president's been very
worried about or wanted to make sure we prevented is any big
disruption, right. One of the things he said from the
beginning, if you like what you
have, you can keep it.
Because we know that a lot of
Americans do like what they have
and we don't want to disrupt a
system that's working well for a
lot of people. We want to take what we have and improve it.
And fix anything that's broken. And so that's been the
motivation for why we have certainly a lot of the bills
have some of these requirements, we want to make sure that we
don't change the incentives too much and have some of the big
companies that have been providing insurance for years,
we don't want them changing their behavior. And that's
really what those are aimed at, not putting new requirements
on small businesses.
Representative:
All right. We have a question from Donald Rossberg from Kansas
City, Missouri, who's the
president of data works, and he
asks is making a small business responsible for providing health
care simply giving a competitive advantage to big business? Why
not just start with tort reform and mandating insurers to cover
preexisting conditions and make all policies fully portable,
regardless of state, company or position.
Christina Romer:
All right. So, again, let me emphasize, exactly what we're
not doing is putting requirements on small
businesses. And if anything, where there are these employer
responsibility requirements, they're going on the medium and
large firms, that today the vast majority of them are already
providing insurance. And so that is absolutely what we're
designing to do. Not increase any of the burdens on small
firms. We're trying to create -- to get rid of the burdens that
are there. And I can't emphasize that enough, you know,
the people that talk about
not wanting to change things,
what they're really doing is
condemning small businesses to a
system that isn't working well
for them and their employees,
right. They're condemning small businesses to pay the higher
costs that they're paid now. They're condemning many workers
in small firms to not have insurance because of those high
costs. And so very much what we're talking about easing the
burdens on small firms. I think it is good to -- You know, the
president and Congress have been talking about lots of proposals
for slowing the growth
rate of costs.
What we do hear is the
importance of tort reform or
having to do with lowering some
of the problems with malpractice
and the possibility that
there's defensive medicine.
A couple of things
to say about that.
One is certainly the experts
that we have talked to say that,
you know, defensive medicine
is a phenomenon that's there,
but probably is not
adding very much to costs.
So that in terms of what
are the big drivers,
why are health insurance --
why are health care costs and
therefore insurance
costs rising over time.
Well, there are lots having to
do with the incentives that we
give to doctors in terms of
valuing volume over value and
certainly we think that there
is a lot of things, you know,
technological change has been a
big driver in the growth rate of
health care costs. So we don't think that defensive medicine is
one of the really big drivers. But that said, the president
when he spoke to the American Medical Association, did talk
about some common sense reforms, you know, one of our -- one of
the things that we've talked about with Congress, the
importance of getting information. So you may have
heard, you know, competitive -- comparative effectiveness
research, just trying to find out what works and what doesn't.
What procedures really do
improve outcomes for patients.
Well, one of the things that
kind of fits into that that the
president has talked
about is, you know,
one of the things we could do
to help give doctors a sense of
what's a reasonable standard of
care, have doctors get together,
set guidelines, things like that, about what's -- what are
reasonable protocols, reasonable standards.
That that's maybe an in between
way of certainly giving doctors
some more protection so they
know what's a sensible thing, to
-- that is likely to be required of them, but not go too far in
terms of say capping payments in malpractice cases, something
that the president hasn't supported. So we do think
there's some good common sense things that could be done and
could be beneficial. I want to also, one of the points had to
be about, shouldn't we get limitations on preexisting
conditions. Absolutely. I think there's nothing we agree with
more and the president has said, you know, when we set up this
insurance exchange where small businesses and individuals can
go to get care, one of the things that he said is there
can't be an exclusion on preexisting conditions.
We need -- people need to have
the security that if they ever
lose their employer sponsored care, there is a place they can
go and be sure that they can -- can buy health insurance at a
reasonable price. So that, I think, is very important.
And then again, on
the portability.
Part of what goes into, again,
knowing that you have that
option through the exchange,
it does free you up.
You don't have to say, gee, do
I -- You know, I'm afraid of
losing this job, even though I see this other one that's really
good, but what if I can't qualify for insurance at that
new firm or what if they don't
offer insurance. By making sure
that we have a high quality reasonable price option for
people, does give them that kind of portability. And we do think,
one of the things we talked about in our earlier study, we
do think it will improve the efficiency of the labor market.
And that's good for people, and good for economic growth.
Representative:
All right. Well, although we still have many, many questions
left from the Linkedin community. We're going to turn
to Facebook and take one of the many questions coming in live
from Facebook before we have to wrap up. There have been a lot
of questions or there seems to be maybe some misunderstanding
between what the, misunderstanding what's being
proposed on the hill and by the president and a single payer
system. Can you differentiate a little bit of -- of maybe why
we're not looking at the single payer system and why the
president's emphasizing what he is emphasizing in
his healthcare proposal?
Christina Romer:
Sure. So when people talk about single payer,
what they have in mind is what
we see in some other countries
like Canada, the United Kingdom,
where the government provides
health insurance for
everybody, right. And that would
be -- and that is a model. As the president said, it's not the
American way, right. That we are used to private insurance and it
does -- that system has worked well for many Americans and so
you know he thinks that for preserving what's good and going
from there, that it makes sense to stay with what we have. All
right. And so that's why he's proposed sort of building on the
system that we have. And how to make it work better, make sure
that everybody can get coverage, make sure that coverage is more
affordable, make sure that we do the innovations and the reforms
that will slow the growth
rate of costs.
All of that, we do think
is -- is absolutely important.
The one thing the president has
said when he's talked about
having a public plan, his vision
of this is, right, when we have
this insurance exchange where you can go if you're a small
business, or if you're an individual, and you don't have
coverage from your employer. You know, one of the things he said
is among your range of options you'll have private firms,
you'll have nonprofit, a lot of insurance in this country is
already done by nonprofits. He said it makes sense to make sure
you have another option, which is a public plan, where the
government, again, on a level playing field with everybody
else, but just another option, as a way of making sure that
Americans do have choice,
making sure that there's always
competition in this exchange,
and so we do think that
that's important.
Representative:
Great. Well thank you, very much, Christina, it was a great
chat. We appreciate you taking your time today.
Christina Romer:
All right. Thank you so much.
