Yes, health insurance is on everyone’s Top-Ten list. Unfortunately, there is NOT a lot of this information regarding the cost of regulation, therefore very few business leaders understand the real cost to the consumer.
Regulators and Bureaucrats
This past week I sat in a meeting with 4 attorneys, 1 CFO, 2 CEOs, 1 Senior Insurance Executive and a Plan Trustee.
During this 3-hour meeting, we spent 1 hour and 20 minutes talking about regulations, educating about being a plan sponsor and exploring how we can best protect the Board of Directors from the liabilities of making health plan decisions. How much do you think that meeting cost?
Why did we take the time to do this? Because the federal government – DOL, EBSA and IRS – is now more concerned about the “process of decision making” than the “outcome for the employees.” Being a plan sponsor for health care or a retirement plan can mean personal exposure for individuals whether they are a formal or an informal fiduciary. This is a great example of the hidden cost of regulation!
Business owners and managers can’t even begin to understand the impact of laws they don’t know about. The costs of health services regulation outweigh benefits by two-to-one and cost to the average household was over $1,500 per year!
As regulators allowed special interests to help design policy, everything from medical education to drugs became dominated by virtual monopolies that wouldn’t have otherwise existed if not for government’s notion that intervening in people’s lives is part of their job. Health care administration costs have increased over 2000% in the last 20 years.
There is some hope
ERISA allows companies that are self-insured for health coverage to be excluded from many regulations. ERISA laws produce a $46 billion net benefit from blocking the costs that state regulations (state benefit mandates, premium taxes, etc.) would otherwise impose on these insurance plans if they were covered through a traditional carrier. Currently, it is estimated that self-funded employer health plans cover over 120 million Americans.
And for the final blow to our regulator mindset, The Institute of Medicine, Care without Coverage, has estimated that 18,000 uninsured Americans die every year due to lack of coverage. In other words, over 4,000 more Americans die every year from health services regulation than die due to a lack of health insurance. This is information from a historical perspective prior to PPACA legislation.
#1 The U.S. Census Bureau reports a total 109,297,000 family and nonfamily households in 2002. U.S. Bureau of the Census, "Table HH-1 Households, by Type: 1940 to Present," http://www.census.gov/population/socdemo/hh-fam/tabHH-1.pdf, June 12, 2003, p. 1.
#2 The Impact of Regulatory Costs on Small Firms, by W. Mark Crain, Lafayette College, Easton, PASBA Office of Advocacy Sept 2005
#3 Health Care Regulation, A $169 Billion Hidden Tax, Christopher J. Conover 2004
# 4 - How the Government Ruined US Healthcare — and What Can Be Done Originally published at The AntiMedia. Mises Institute
About the Author: Bill Hutter, Sequent Founder and CEO
Bill is Sequent's leader, strategist and visionary. His thought leadership in business management and years of service industry experience helps to guide the company’s direction and growth.