Paying the Price of Healthcare

Recently, the South Carolina Chamber of Commerce surveyed its members and board of directors to learn what major issues are impacting their businesses both short and long term. Not surprising, the top concern is the rising cost of healthcare, which is the second highest expenditure for businesses after wages.

According to research by Families USA, a national non-profit, non-partisan group that advocates affordable healthcare for everyone, annual premiums for family coverage in South Carolina rose from $6,600 to $11,624 from 2000 through 2007. The portion paid by the employer grew from $4,851 to $8,439. Premiums increased 76.1 percent during those eight years compared with median earnings, which only grew 13.4 percent.

An estimated 720,000 South Carolinians are uninsured. Currently, 98 percent of medium and large employers provide healthcare for their employees. Only 40 percent of small businesses are able to provide even some resemblance of healthcare coverage.

The economic downturn and high unemployment rate is making matters worse as healthcare becomes less affordable. Escalating healthcare costs disproportionately burden low income South Carolinians and small businesses. Today, an individual at 100 percent Federal Poverty Level (FPL) would have to pay 43 percent of annual income to obtain healthcare coverage.

Most small business owners believe healthcare cost is the primary issue confronting their businesses. According to a survey released by the Robert Wood Johnson Foundation, more than one in three small business owners stated that rising costs are likely to cause them to cut some portion of health insurance benefits for their employees. This, even though they believe health benefits are a powerful tool in retaining good employees. Seventy-eight percent of small business owners surveyed stated they would support a reform package that combines government-sponsored purchasing pools to allow small businesses to purchase insurance at negotiated bulk rates, along with tax credits to make offering insurance more affordable for small businesses.

If you are not a small business owner and if you have health insurance, why should this matter to you? Businesses that provide health insurance to employees, and South Carolinians who are self insured, pay higher premiums to help the healthcare industry recoup its cost in providing services to the uninsured and underinsured. During Washington Night in South Carolina, Senator Jim DeMint told the audience if an insured person had to go to the hospital that person would pay 129 percent of the cost to make up the difference for Medicaid and Medicare.

For more than two years, the South Carolina Chamber, the business community, healthcare professionals, insurance industry and other allied groups have worked together to develop a comprehensive plan to help the uninsured and small businesses struggling to provide healthcare coverage in South Carolina.

Last year, the House and Senate were able to pass cigarette tax increases, but they were unable to override Governor Mark Sanford’s veto of the legislation. This year the South Carolina House of Representatives passed a 50-cent per pack cigarette tax that would provide revenues to leverage Medicaid dollars and help provide relief for small businesses that purchase health coverage for employees. Specifically, 70 percent of cigarette tax revenues would be used to fund small business tax credits and premium assistance for low income workers. Twenty percent of the tax revenues would be used to help fund the high risk pool, and 10 percent would be used to help fund smoking cessation and agriculture marketing. Nearly 100 lawmakers voted for Speaker Bobby Harrell’s (Charleston) plan, a veto-proof margin, to raise South Carolina’s lowest in the nation cigarette tax.

The legislation is now in the Senate. It is important for business leaders to contact their senators and ask them to quickly deliberate H.3584 and pass the legislation this year. We’ve seen the power of the business community’s grassroots efforts. Your phone calls, e-mails and letters can make a difference in getting legislation passed to help provide some relief to the healthcare crisis facing our state.