Health and Human Services Secretary Kathleen Sebelius Nov. 3 defended the cost of health care reform legislation against the higher cost of the status quo, urging small business owners to take their case to Congress.

Certainly the cost of the health care plan is an issue that must be considered, Sebelius said. “I think you have to start, though, with the cost of doing nothing,” she said.

There is a “huge toll” right now on people, the economy, and businesses under the current system, Sebelius said. “We spend over $2 trillion every year on health care, $2 trillion. That's almost twice as much as any other country on earth, and we get mediocre health results,” she said.

Sebelius and Karen Mills, administrator of the Small Business Administration, made remarks to an audience of small business owners at an event held in the Old Executive Office Building.

Half of the cost of both the House and Senate bills is money being spent day in and day out--they are costs in the system, Sebelius said.

Savings would come from stopping the overpayment for Medicare Advantage programs, which pay 14 percent more than fee-for-service Medicare but with no better health results; getting serious about fraud and abuse; and having for the first time competitive bidding in Medicare for durable medical equipment, Sebelius said.

“A lot of the dollars that you're hearing about as part of the health reform bill are actually dollars that are in the system, which are just going to be spent wiser and better,” Sebelius said.

'Green-Eyeshade Guys.'

The other component of the cost not talked about much is the “green-eyeshade guys,” or the scorers from the Congressional Budget Office, who look at the world through an accountant's lens, Sebelius said.

This is fine, but there is no positive score for redirecting the health care system toward prevention and wellness, Sebelius said. But if the system is paying 75 cents of every health care dollar on chronic disease--but there is a reduction in obesity, heart disease, and smoking in America, there will be lower health care costs, she said.

“We're not given any credit for that, but it's part of the system. So the dollars that you're hearing people talk about--and in the House bill, I think is [$894] billion--that is over a 10-year period of time,” she said.

In a preliminary analysis, CBO scored the net cost of the coverage provisions in the House health care bill (H.R. 3962) at $894 billion over its first 10 years.

This is compared with $2 trillion now being spent, and more than half of that $894 billion is already in the system, Sebelius said. So “apples to apples,” over 10 years, the country will more than save the new money being put into the system by having a health plan for every American, lower costs for business owners, and a healthier nation through prevention, she said.

Goal Line in Sight.

In her opening remarks, Sebelius said there is no question that small businesses are the “backbone of this economy” that are being squeezed under the current health care system.

President Obama has been in office about nine months, and more has happened in health care in the past nine months than in the past 70 years, Sebelius said. “And we are poised to take a major step forward that will be an incredible opportunity for our country,” she said.

Five committees in Congress have drafted legislation and the House bill is poised to go to the floor this week, Sebelius said. The Senate bill is being prepared now, which has never happened before, she said.

If the battle now seems more “ferocious,” it is because the goal line is in sight, Sebelius said. “If this were not achievable, frankly, a lot of the people who are totally satisfied with the status quo would be off doing other things,” she said.

In terms of small business owners, those who have insurance can pay two to three times what larger competitors pay for exactly the same coverage, due to lack of leverage, Sebelius said. In addition, small businesses can be blocked or locked out of the market altogether based on one or two employees' health conditions or pre-existing conditions, she said.

Further, those who offer coverage for their employees are often competing against those who do not, and are facing rising costs on top of that, making a “lose-lose-lose situation” for an important element of this economy, Sebelius said.

Small Businesses Dropping Coverage.

In the past two years, more than half of small business owners who offer coverage have switched to plans with higher out-of-pocket payments, while another third switched to plans that offer fewer services, Sebelius said.

One in eight small business owners dropped coverage altogether, Sebelius said.

Health reform would make important changes to the small business market, including a new health insurance marketplace that would provide far more leverage and offer affordable choices, Sebelius said.

Further, changing insurance rules “once and for all” so that insurance companies no longer pick and choose who gets coverage is a central component to health reform, Sebelius said, as well as tax credits for small business owners to make coverage more affordable.

A majority, or 90 percent of small businesses, would be exempt from a coverage mandate, but larger competitors would be required to carry insurance or pay into the pool, Sebelius said.

“An end is in sight, but we need your voices. You have some of the most powerful voices in America on health care and on how to be a prosperous country. The president has said from the outset [that] we can't fix the economy without fixing health care,” she said.

Sebelius urged small business owners to be a “microphone” for that message. She asked them to contact their members of Congress and tell them this is essential for a prosperous America.

Four organizations organized the event: Consumers Union, U.S. PIRG, Mainstream Alliance, and the Small Business Majority.

Status Quo 'Untenable.'

SBA's Mills reiterated some of the same points she made in an appearance with the president on Oct. 29.

Small business owners want to provide insurance, but the status quo is not working, Mills said. Small businesses pay up to 18 percent more for the same coverage than large companies, because of higher administrative costs and less bargaining power, she said.

Half of businesses between three and nine people do not provide health insurance because there are no affordable options, Mills said. “The status quo is untenable,” she said.

Moreover, half of people who are uninsured in the United States work for a business that employs fewer than 100 people, Mills said. The administration cannot solve the problem of the uninsured unless there is access to affordable options for small businesses, she said.

By Cheryl Bolen

Copyright 2009, The Bureau of National Affairs, Inc.