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United States Economy- The True Cost of Healthcare

by Dawn Fotopulos on 2010-08-03

The United States Economy section of this site is designed to provide clarity about root causes for the problems we face. Our belief is, if you don’t properly diagnose the problem, the solution you choose may do more harm than good.

I was shuffling through my Google Alerts and came across an article that broke my heart.

Rich Balka has a rubber fabricating business in New Jersey. God bless him. So much manufacturing has left the state, he’s one of the stalwarts who has survived.

In this article on Small Business Worry Obama Healthplan Will Do Little to Stop Rising Rates Balka describes how rising health insurance premiums are forcing him into a corner.

He has a “Sophie’s Choice” to make; pay the healthcare and go bankrupt or drop healthcare for his employees. That’s a terrifying place to be if you’re a business owner.

His current premiums cost him over $5,000 per year per employee.

That’s a fortune.

Last year, he had to lay off a third of his staff as a desperate effort to stay profitable. Reading the article, you get the sense he’s been in this business for quite some time.

These are not decisions easily made. He has loyal, long time employees. They don’t want to lose their jobs anymore than Rich Balka wants them to.

Balka’s employees are choosing to drop health care insurance if it saves their jobs. That decision may not be one they can make.

Some say the new healthcare legislation called The Affordable Care Act may prove to be anything but affordable for one reason.

Health insurance premiums are still rising. The legislation has not done what it was supposed to do; reduce healthcare insurance premiums.

New Jersey, notorious for the highest healthcare premiums in the nation,  had a stratospheric 20% rise in costs last year.

That’s not an increase. That’s an outrage. It’s also an indication that something is desperately wrong. No business can afford those kinds of increases.

Nothing will destroy jobs faster than over taxing small businesses with cost increases beyond their control.

We continue to address the symptoms  of high health care insurance premiums and not the root causes of the problem, like tort reform.

How can anyone stay in business with those kinds of increases? This comes at the same time the economic demand has slowed considerably so revenues are way down.

Expenses way up, revenues crushed, it’s no wonder Balka struggles to make a profit to stay in business.

The best job growth program is to encourage profitable enterprise. Those jobs are sustainable as long as the business is profitable.

The new legislation requires states to create  insurance exchanges so small businesses can pool their purchases of health insurance.

That was happening in New Jersey before the legislation was passed so in some ways, nothing has changed. The ACA also provides some tax credits for very small businesses is not material to Rich Balka.

The reality is, Balka’s firm is too large to get the tax credits and too small to take advantage of large group buys afforded very large companies. He’s being short squeezed.

The legislation is one more heavy load stone around his neck. We need to support the Rich Balka’s every way we can.

The part of the story that was the most painful to read, was  when Balka sent a letter to the Whitehouse, he received a note thanking him with no action plan, no follow up. It was a form letter.  No doubt the WH gets a million letters, but here’s a guy who’s supporting an employee base.

Couldn’t someone at least refer him to a resource that could really help him? I’d invest some tax dollars to help this man.

The message was clear; “you’re on your own”.

A colleague of mind who has a PhD in economics told me recently, when a dollar of revenue is generated from a manufacturing business, the multiplier affect is 10X in the economy. When a service business generates a dollar in revenue, it generates a 3X multiplier.

If we lose our manufacturing base, we lose our future.

Let’s see what our health care insurance expert, Melissa Delaney Del Valle has to say about this situation.

We’re in your corner, Rich Balka, wherever you are.

At Best Small Biz Help, we are the Solopreneur’s Lifeline.

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