Many trace the origins of our modern system (for lack of a better term) to the 1920s, when costs of health care began to spike. Of course, part of the reason for the higher costs was that doctors and hospitals had developed new and better treatments for sick and injured people. These treatments, while better, were more expensive.

Soon, the cost of going to see the doctor was beginning to get a little steep for many, especially those on the lower end of the spectrum financially. The Great Depression served to highlight this, as more and more people found themselves closer to the bottom of the totem pole.

Baylor Hospital is reputed to be the first to offer a solution resembling medical insurance, when it started a program which eventually morphed into the Blues. The program was (and remains to this day) not for profit, and benefited from generous government tax breaks.

Of course, the American capitalist didn’t take long to catch onto the idea that there was money to be made here. And while medical insurance companies don’t have the high profit margins some seem to think, they don’t go under often, either. The development of commercially available insurance, combined with a labor shortage in the ‘40s led many companies to offer insurance as a fringe benefit, in order to recruit more or better employees.

In large part, the fringe benefits were the result of wage freezes during the war because they provided a loophole through which companies could offer a better package without technically raising wages. Of course, sixty years later, most of us expect that when we take on a grown-up job we will be provided with medical insurance.

What’s happened since then isn’t much different than the developments that led to the creation of medical insurance in the first place. Better treatments, which cost more money are becoming available at a dizzying pace. The question that is raised, of course, is who pays for it?

The truth is we all pay for it, and that won’t change no matter what system of health care we adopt. But, that’s not necessarily a bad thing. Paying for medical advances still beats not having them.

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For starters, we don’t have enough doctors. The bottom line is that American medical schools just aren’t training enough of them? Is that the schools’ fault, or the governments? Who knows. Let’s just hope everyone can stop pointing fingers enough to look at the issue. It’s predicted that we will be short over 100,000 doctors within twenty years from now.

So why is that? For starters, the overwhelming majority of the doctors currently serving are from the baby boom generation. During the 1970s, the government approved funding for more doctors to be trained. Of course, when the immediate shortfall ended, so did the finding. More accurately, it hasn’t increased in proportion to population increases. With more Americans set to be insured, there will be even more demand for doctors.

So, what’s the problem with that? Well, as baby boomers, lots of the doctors are retiring. So is the rest of the baby boomer population. The children of the ‘60s did what they vowed never to do…they got old. And with that comes a greater need for medical attention. So, we have more people, particularly more older people needing more attention from fewer doctors. Yikes!

But whose fault is it, really? Well, the baby boom began when the American GIs, members of this country’s Greatest Generation and recipients of FDR’s New Deal, came home from fighting World War 2 in  Europe and Asia, full of red blooded American vim and vigor. And as any red blooded American boy would do, they set right to chasing American girls. And that, kids, is what produced the baby boom generation. So, if you think about it, this whole thing was caused by a bunch of horny GIs. It’s the Greatest Generation’s fault. But that’s OK. Seems they were the ones who brought us the concept of medical insurance anyway.

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Since the laws don’t start taking effect until 2014, we still have a while to wait to see how they will really affect us. Whether we own a small business or just work for one, there are some features of the new legislation that we can be sure will affect us, but much of it is still a mystery, and there are still three and a half years for lawmakers to make revisions to the bills before they take effect.

As it stands now, here are some of the likely effects (benefits and liabilities) for small businesses:

• All Americans will be required by law to have insurance. Of course, this means you. It also means your employees. So, if you don’t insure them, they will need to find private insurance. Some employees might simply look for other employment rather than paying premiums, so be sure to take that into consideration when you make decisions regarding employees’ medical insurance.

• Small companies will be able to band together to purchase insurance at lower rates normally reserved for larger groups. Each state is required to make provisions for smaller companies to do this. These Small Business Health Options Programs (known as SHOP exchanges) will be available to companies with 50 or fewer employees, and in some cases to companies with up to 100 employees.

• Part of the costs of providing medical insurance will be defrayed by the government. At present, it looks like 35% of the costs will be covered for the first two years. While it still might be cheaper to pay the $750 per employee fine, the government picking up more than a third of the insurance tab will lower the cost of insuring your employees significantly.

• If you have fewer than 50 employees, you most likely won’t be directly affected or required to provide insurance. As previously noted, though, even if you’re not required to provide it, your employees are going to be required to have it, and in many cases, it will be easier to get a different job with medical insurance than to buy it for themselves.

Small business owners should be watching this closely, both the good and bad parts of it. There is still time to contact your congressman if you have any concerns or suggestions. Health care in this country is going to change, but you can have a voice in molding what that looks like.

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That’s not to say our health care system has no gaps. Nobody who’s aware of the situation would deny that there is a gap amongst the working poor. There are a good many who make too much money for government programs, but have trouble coming up with the scratch for medical insurance premiums. Whether or not the new government programs will truly fix that problem remains to be seen.

One thing all of us need to be ready for is the fact that our insurance premiums are going to go up. While most of us probably see it as a good thing (more or less) that those who have pre-existing medical conditions will have an easier time finding insurance plans to cover them, we all need to take an open eyed look at the fact that when insurance companies are no longer able to pick and choose whom they will accept, their costs are going to go up.

And no business, insurance or otherwise, simply takes a soaking when their operating costs go up. They pass the costs onto the customers. While on the one hand, they will have a whole new pool of customers who will be required by law to purchase medical insurance, providing more income, on the other hand, many of the new customers will be people they would have rejected before for cost related reasons. Which means that, in the end, we’ll all pay a bit more.

The government is already taking steps to ensure that price hikes are regulated, but there is only so much regulation that can be done. Business is business, and companies need to show a profit at the end of the day or they go under.

So, prices are going to go up, for just about everyone( except those who had been paying high premiums due to health problems). But, chances are, it won’t be as extreme as some would have us believe. Like any other bill that we can’t avoid, we’ll pay it, the economy will adjust to it, and we’ll move on. Let’s just hope that as government controls set in that the medical profession continues to be an attractive one. Because as it is, we have great medical treatment here. Good enough that people come from other countries to receive medical care here. And regardless of political stance, we all want to continue to have good health care.

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1. For starters, it’s a really bad idea to be without health insurance. Without comprehensive, or at least catastrophic, coverage, a single illness or injury can wipe out a lifetime of savings, leaving you penniless. No one needs to be told that medical costs are sky high, nor that the cost of insurance has skyrocketed in recent years. These are facts that we live with and see the effects of every day.
2. For many Americans, medical insurance is difficult, if not impossible, to get. While new legislation promises to ensure that all Americans will be able to purchase medical insurance, regardless of pre existing conditions, it remains to be seen what that will look like in the real world. Obtaining medical insurance, by all appearances, will soon be mandated by law. Government programs will be set into motion to help those who can’t afford it, but it has yet to be seen exactly how much the government feels that we can afford.
3. Understand that the costs of public medical insurance will eventually be passed on to us. This isn’t necessarily all bad, especially for those who were unable to purchase coverage previously. But, the bottom line is, it is likely to have an effect on the long term cost of health care, and we should all be ready for that.

Most of the new laws don’t take effect until 2014, of course. But, regardless of which side of the political aisle you lean towards, don’t allow yourself to be caught without medical insurance in the meanwhile if you can at all help it. If you lose your job, make the sacrifices necessary to continue your insurance through COBRA. For most of us, there are a lot of other areas we can trim the fat instead of our medical insurance.

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Here is your starting point: The KFC Double Down comes in with 540 calories, 32 grams of fat, and 1380 milligrams of sodium.

Burger King

You think that Tendercrisp Chicken Salad is a healthier solution to this Double Down wonder? You had better think again. The B.K. Tendercrisp Chicken Salad comes in at 670 calories, 45 grams of fat, and 1740 milligrams of sodium. So much for a chicken salad being a healthy option.

Chicken is supposed to be healthy though. Maybe you just want an Original Chicken Sandwich. You’ll be enjoying a mere 630 calories, 39 grams of fat, and 1390 milligrams of sodium. So far, that Double Down is looking better and better.

McDonalds

The golden arches have to contain some chicken that is better for you. They have those great Chicken Selects. Yet, a 5-piece Chicken Select meal with one packet of buffalo sauce is game for a medical insurance melt down. This 5-piece meal rakes in 720 calories, 46 grams of fat, and 2489 milligrams of sodium.

So maybe the Angus Burgers are a better choice. After all, Angus is the cream of the crop when it comes to beef. Therefore, you snag an Angus Mushroom & Swiss burger. Enjoy all 770 calories, 40 grams of fat, and 1170 milligrams of sodium. Therefore, you might not get as much sodium, but you are sporting some good fat and calories.

Wendy’s

The little red headed girl has to have something healthy. You know, because they have baked taters and chili after all. How bad can something like the Chicken BLT Salad with Honey Dijon Dressing be? How does 720 calories, 51 grams of fat, and 1540 milligrams of sodium sound to you? Good thing you didn’t get the ranch dressing.

Maybe you decide that a BLT salad is a bad idea. Therefore, you snag a Southwest Taco Salad with ranch dressing and tortilla chips. Taco salads can’t be that all bad. Think again. That Southwest Taco salad is packing 640 calories, 36 grams of fat, and 1590 milligrams of sodium.

This point here is that the KFC Double Down has received some unnecessary press. Anyone can look at the major fast food chains and find their so-called healthy salads come in being worse for you. Do your medical insurance a favor and just steer clear from all these foods. Nothing will top some good fruits and veggies from the local farmers market. You get healthy food while supporting your local growers. This is full of win.

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What is a wellness plan? In the most basic sense, a wellness plan is a benefit or incentive offered by an employer to its employees to live in such a way as to minimize medical insurance claims. It has the added benefit, of course, in that following a wellness plan will also increase the employee’s life expectancy.

Government Interference

In some cases, however, the incentives that companies are offering to their employees may run afoul of government regulations. In fact, over the past few years there have been a steady stream of new rules governing these kinds of benefits.

Take, for example, a company that offers to help employees quit smoking and provides them a cash incentive for doing so. The government wants to make sure that workers are being treated “fairly” in wellness programs, so they are mandating that companies create ways for non-smokers to earn the same rewards.

Help or Harm?

There is a danger, in some cases, of offering rewards for specific wellness activities. One company in Wisconsin decided to provide a cash benefit to people who could quit smoking and stay smoke free for a certain amount of time. They found that people would start smoking and then quit so as to get the benefit.

On the other hand, some wellness programs offer rewards for merely attending. These are the programs offered by companies accused of being “unfair.” So, employees can participate in a seminar or read some literature, and then continue to smoke, drink, eat fatty foods, or not exercise.

Lower Premiums

In many cases, a medical insurance company will give a discount on their group coverage to a company that implements wellness programs. For that reason alone, it can be beneficial to a company.

The key is whether or not those benefits are passed along to employees, and to whom. If the only ones who get a discount are the ones who quit smoking, for example, there will be cries of “unfair.” Offering the discount to everyone may not deter the kinds of bad habits. Either way, it’s likely someone is going to complain.

Help from the American Recovery and Reinvestment Act

Specifically, under the Act, people that had lost their jobs and were eligible to sign up for COBRA would receive help in paying the premiums for their COBRA medical insurance coverage. The money from the federal government would cover 65 percent of the cost of the worker’s monthly COBRA premiums. This was effective for people who became laid off between September 2008 and December of 2009.

A Program Extended

This program has been extended by Congress a number of times since the original bill passed. Most recently, it was extended on April 15. On that day, the President signed legislation that would not only extend the unemployment benefits that many workers have been receiving, but also provide additional help for COBRA premiums.

Specifically, this legislation extended the COBRA premium subsidy for people that are involuntarily terminated from their jobs all the way up through May 31 of this year.

There is talk, however, that Congress may continue to extend these benefits. It’s suspected that the benefit may continue all the way through the end of the year.

Understanding How COBRA Works

It’s important to understand how COBRA works. If a company has more than 20 employees and offers medical insurance, they are required by federal law to allow you to continue to participate in their group insurance program for a minimum of 18 months after you leave the company.

If that happens, you have to pay for the premium costs yourself. That is likely going to be as much as $400 for an individual, or more than $1,000 for a family. In fact, the average cost for a family was $1,111 in 2009. The federal subsidy reduces the cost of that premium to $389. This still makes it a challenge to pay for COBRA, but it is much easier than it was before the federal assistance was passed.

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These rate controls were included in some of the original health care legislation, but were removed for mainly procedural reasons. The passage of the legislation is aimed to keep medical insurance providers from raising premiums in an unreasonable way.

One issue at stake, of course, is the issue of state regulation. Today, most insurance regulations are a state matter. The states have the authority to review medical insurance practices, and many of them do. Some states review premium increases before they go into effect. 22 states review increases in individual medical insurance premiums, while 27 states review increases in small group medical insurance premiums.

The Senate proposal would not interfere with states who already review insurance premium increases. Instead, it would review increases in states where the state authorities don’t have the authority to do so.

Advocates of the changes argue that insurance companies may be tempted to randomly raise their premium rates just because they can. They charge that insurance companies will take advantage of the current market conditions, before the sweeping medical insurance reforms go into place in 2014.

One of the changes that will take place in 2014 is that medical insurance providers will be required to offer insurance to all applicants, and that they won’t be able to charge a higher premium rate because of a person’s medical condition or medical history. This has some in the insurance industry worried, because they won’t be able to adjust premium prices in such a way as to mitigate risk and remain a profitable business.

Photo via Rob Crawley

No one can say for certain, of course. Really, it’s anyone’s guess what will happen over the course of three decades. If you’d have described the Social Security system or even the Civilian Conservation Corps to someone in the 1910s, they’d have thought you were loony, yet both of those things were a reality under Roosevelt.

Ultimately, things will go one of two ways: Toward a single-payer, socialized medical insurance scheme or toward a scheme based in the free market.

Socialized Medicine?

The UK has had socialized medicine for more than half a century. In spite of dire predictions of some politicians, simply having socialized medicine doesn’t destroy a country. It does affect service levels, as the UK has struggled for some time to provide medical services in a fast and efficient manner.

One thing to remember, as well, is that private medical insurance isn’t likely to disappear altogether. Somewhere between 10 and 15 percent of residents of the UK pay for private medical insurance. In many cases, this is simply a way for them to bypass the queues of the National Health Service.

If we continue the direction we are headed, it’s likely that this will be the end result. A system like the new one that mandates individuals buy insurance yet also places strict regulations on insurance providers will not last long, and a single-payer solution will have to be implemented.

Market-based Medicine?

The medical insurance industry is in desperate need of reform, which is why so many people have been open to the kinds of sweeping changes passed this year. However, there are those that argue for more market-based reforms. For example, changing the structure of how FDA trials and approvals work, and reforming malpractice legislation would go a long way to reducing the costs of medical insurance.

These kinds of changes aren’t likely to occur, unless the recent bill is repealed or declared unconstitutional by the Supreme Court. It would also require changes in presidential as well as congressional leadership. While that isn’t likely to happen today, it may happen over the course of the decades.

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