Health Care: Competition and Flexibility

By March 3, 2010General, Health Care

With the President expected to release an updated version of the Administration’s health care policy proposal, it’s a good time to excerpt a recent interview with John Engler, president of the National Association of Manufacturers. On Feb. 22, he appeared via phone on the Frank Beckmann program on WJR radio in Detroit. Health care was among the topics, and the transcribed portion of the interview is below.

Engler: The manufacturers early in the health care debate said, look, we’re for reform. Of course we ought to get some of these costs down while fixing some of the problems, such as some pre-existing condition that needs to be covered.

We’ve watched in horror, I guess, as the approach has been to have the federal government take control of the health care system. There’s just a story today, and the President’s using this, Frank, about the idea that maybe we need federal government control of the rates because they’re gong up in California.

You know what I say? Let other people sell inside California. Tear down that barrier and let the competitors in, and then we’ll see what rates are going up.

Beckmann: Well, doesn’t competition drive rates down, drive prices down? Isn’t that Business 101?

Engler: Absolutely. And it does. That’s one of the problems frankly for business, or for manufacturing, is that we’ve got so much competition from other parts of the world, that costs matter, whether those costs are your costs of your energy, the costs of your labor, the costs of your taxes. Today, every penny matter because you’re competing so vigorously, and I say, don’t let health insurance be immune from that competition. We’ve long supported letting competition range across state borders, letting groups like, say, the National Association of Manufacturers have a health-care offering for our members. That would be a great thing, and I’ll bet we can come up with a pretty good deal. But we can’t do that today.

Beckman: There’s also a portion of the President’s proposal -and this is his first health-care proposal – that will fine employers who don’t provide a certain level of health insurance to their employees.

Engler: Well, one of the problems with that… I represent an organization where virtually every company that’s a member here already provides health insurance.

In one sense, it’s not an issue for us, but there’s a philosophical point here that gets to be really important, and that does concern a lot of my manufacturers around the country, and that’s this: Once the federal government gets its fingers in that tent and gets them around your throat – or your wallet – what’s going to happen is that suddenly mandates will show up, and your costs will start to rise.

California will do to America what it’s done to itself. It will load it up …Someone was talking on the radio this morning as I drove in: No wonder it’s expensive, they cover everything from acupuncture to massage to who knows what as a mandate in California. Other states don’t. The federal government by trying to set what they’d call a minimum – your minimum in Detroit might be different than somebody’s minimum in Duluth or Des Moines. We’ve seen companies have remarkable success in controlling costs because they’ve been very flexible and creative in their wellness and their prevention and their plan designs, and the way they share the risk and the gain. Don’t destroy all of that. That’s what’s actually working in this country.

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