The Health Care Squeeze

New Mexico Business Journal, Sept, 2001 by John A. Carey

We all know what it feels like to have our blood pressure checked. Our soup bone gets wrapped in Velcro while a smiling nurse pumps a pressure bulb until our arm feels like it's about to explode. We sigh as the slow pulse of relief accompanies a steady release of pressure.

Now it's the business community that needs some relief from the pressure of soaring, out-of-control, health care insurance premiums, largely due to a seriously underfunded state health care system. Businesses feel squeezed and taken advantage of, and for good reason. Whenever there is a money shortage in a government operation, business taxpayers are often the first group asked to help make up the shortfall.

New Mexico is a poor state and the revenue that funds our health care system flows largely from government sources: local, state and federal. Commercial health care insurance is only about 35 percent of the total state market.

When the federal government decreased Medicare and subsequent Medicaid provider reimbursement rates, New Mexico businesses, providers and individuals who can afford health insurance got the short end of the stick. They were all squeezed a little harder. Those who could pay watched their premiums steadily increase.

The business community felt the most pressure because health care still qualifies as "a must-provide benefit" if a company wants to attract the most qualified and capable employee, who expects as much.

Fortunately, the Medicare funding bill recently passed by Congress boosts the Medicaid reimbursement rate and will probably allow New Mexico HMOs to operate in the black for about two more years.

The original goal was to get the state's Medicaid reimbursement rate up to 100 percent of the Medicare rate. But that may not be enough for a state with the demographics, needs and economic climate of New Mexico; 125 percent may be more adequate.

Without appropriate funding from federal, state and local governments, the system has nowhere else to go for money except to individuals and the business community. With continued revenue shortages you can expect business to be squeezed again and again, unless some other complimentary alternative financing solution is developed.

The traditional business health care agenda used to focus on controlling costs, limiting mandated benefits, and providing more affordable plans for small business. These components are still very important factors in determining premium prices. But there's a huge area that business has largely overlooked and it's affecting the bottom line like none other. It's the public and private financing aspect of health care that needs some reform.

Business people need to start paying more attention to all aspects of the health care system and not just the insurance premium. The rising price of prescription drugs, technology professional labor and the health care delivery and financing systems all play an important role in determining the cost of providing insurance to employees.

It's the big picture that counts, and business needs to become more involved in helping develop a strategy to meet our current health care challenges.

There isn't much more pressure businesses can stand before they'll seek relief the only way they know how: either pass on all the cost increases to the employee or stop providing coverage altogether. This will create more uninsured people and it will take even more money out of an already revenue-starved system, which means those who can still pay will be asked to pay even more.

It's encouraging to hear the health care industry calling for more statewide economic development. Health care companies realize that economic growth will help solve the health care financing crisis facing our state. The more companies that come to New Mexico offering health insurance, the better off we'll all be.

To their credit, health care organizations are supporting business groups that work to make New Mexico a better place to live and do business, and they're helping develop pro-growth messages and strategies.

It will take a public/private effort to improve the health care situation in New Mexico. One project currently underway is generating new ideas about how to reduce the number of uninsured in New Mexico while giving some premium relief to employers. The project is called the New Mexico State Coverage Initiative, and the members of the steering committee include the Association of Commerce and Industry of New Mexico, the Greater Albuquerque Chamber of Commerce, New Mexico Hospitals and Health Systems Association, University of New Mexico, the state Human Services Department, the Health Policy Commission, the New Mexico Medical Society and private sector health care companies.

The initiative is a partnership effort with the Legislative Health Subcommittee, chaired by Sen. Linda Lopez, D-Albuquerque, who also serves on the initiative steering committee.

Expanding economic development efforts and encouraging the public and private sector to work together to reform the health care financing system is the best medicine we've seen yet for increasing health care coverage opportunities while protecting individual employers from having to pay more than their fair share of the tab.