Expert says health care costs will go up

COVINGTON -- A health care expert painted a bleak picture of what the new health care reform law will mean for businesses at a seminar hosted by the Covington-Newton County Chamber of Commerce at Georgia Perimeter College on Tuesday.

Ryan Mahoney, director of public policy for the Georgia Chamber of Commerce, said the cost of health care will grow under the new law and Americans may find themselves with little choice when it comes to provider options. While the Georgia Chamber believes health care reform is needed, "This is not the plan to do it," Mahoney said.

Mahoney leads strategic development and execution of Chamber initiatives in transportation, health care, education and other policy areas and appears as a guest commentator on the Fox 5 Atlanta show "Georgia Gang." He's spent extensive time researching the bill passed by Congress earlier this year.

Mahoney said the cost of health care has doubled in the past decade. One reason is the advancements in medical technology, such as Lasik eye surgery, which consumers have demanded be covered under their policies, he said.

Another is the growing number of mandates required to be covered under all health insurance plans -- in Georgia, mandates total 45, each of which increases costs by 1 to 3 percent.

The growth in the number of government-run health care programs such as Medicaid, Medicare and PeachCare also plays a part. Such programs pay only a fraction of actual costs for care and providers pass the remaining cost on to patients who have private insurance and their employers, who provide the insurance.

According to Mahoney, there are about 46 million uninsured people in America, and 1.7 million in Georgia. But, he said, that number doesn't tell the whole story. With about 10 million of those people in the country illegally, another 10 million who could afford and qualify for insurance but choose not to -- usually young people who think they have little need for coverage -- and others who qualify for government-run programs but opt out, it boils down to about 10 million low-income, uninsured people that could be handled through the creation of a high-risk insurance pool, Mahoney said.

Another option for reducing costs would be to reduce the number of mandates, Mahoney said. Allowing people to opt out of certain mandates would reduce premiums. He used the example of monks at the Conyers monastery, who he said don't need to pay for a plan that covers mammograms or breast cancer treatment or birth control.

Instead, Mahoney said the new law continues the trend of moving from private to government coverage and increasing costs.

The health insurance exchange program to allow consumers to compare plans and costs will be set up either by the states or federal government -- Insurance Commissioner John Oxendine has said he won't get involved, so for Georgia, the feds will be in charge. The federal government will highly regulate which insurance carriers are qualified to participate, Mahoney said.

The result will be that many employers won't be able to keep their plans as they currently are set up. Many plans will be ineligible for the exchange due to increased costs from inflation, adding benefits or the new requirements to eliminate lifetime or annual maximum payouts and to cover dependent children up to age 26, Mahoney said. Remaining private insurers will be fewer and fewer, he said.

Caterpillar Inc., the world's largest manufacturer of construction and mining equipment, has estimated its costs to meet the requirement to insure dependents until age 26 at $20 million annually, Mahoney said.

Employers won't have much incentive to keep their insurance plans, he said, noting that on average an employer in Georgia pays $8,000 annually to insure one employee. Employers who don't provide insurance will be subject to a $2,000 fine per employee, but that's cheaper than providing insurance. The employer could pay the fine, possibly give the employee a raise in lieu of insurance and still save money, he said.

Businesses with fewer than 50 employees will be eligible for subsidies to help cover the cost of insuring employees, but the subsidies are contingent upon offering a federally approved plan, which Mahoney claimed will wind up being more costly than their current plans even with the subsidies.

Mahoney said estimates are that 35 million of the 170 million Americans with employer-sponsored coverage will lose it, and 1 million of 5 million Georgians. Large companies such as AT&T and John Deere are estimating their costs will increase by between $100 million and $1 billion, Mahoney said.

Mahoney predicts doctors and hospitals already having difficulty making ends meet will exit the market. The result of increased costs without the ability to increase rates along with fewer health care providers will likely result in some type of rationing of care, he said.

He noted that the average wait time to see a specialist in the Atlanta market is currently 11 days. In Massachusetts, where a health care reform law enacted in 2006 mandates that nearly every resident obtain a state-government-regulated minimum level of health care insurance coverage, the wait time averages 55 days, he said.

Jim Weadick, administrator of Newton Medical Center, said hospitals will give up half a trillion dollars in reimbursements from insurance providers over 10 years to meet requirements of the law. As a result, it will be harder to maintain staff and equipment, he said. Newton Medical Center lost $3 million in 2009 alone for provision of care, he said.

"I do not believe many Americans know how expensive this will be. It's going to bring them to their knees in terms of personal income," Weadick said, adding later that, "If everybody thinks they're going to get free health care, it's a myth."

Weadick questioned the likelihood of reversing some of the policies contained in the law. Mahoney said that will depend upon the outcome of the 2010 and 2012 election cycles.

Randa Sanchez of Sanchez Flooring Solutions LLC said she's better informed after Tuesday's seminar, but is still confused and intends to seek out more information. She said she's concerned about repercussions for her business of four employees, particularly in regard to insurance requirements for subcontractors.

"That's the dream, to live in the United States and have your own business, but they're making it so much harder for us," she said.

Elliott Bayne, who's in the process of starting his own business, said he and other small business owners he's talked to are worried about the changes.

"Angst -- I think that's the one-word description. Nobody knows and everybody is sitting around doing nothing until we know something," he said. "But socialized medicine has never worked in the history of the world, and it still doesn't."

To learn more about the Georgia Chamber's health care policy position and find links explaining the impacts of the health care reform law, visit www.gachamber.com/healthcarereform.