W.Va. health insurance and median income chart at bottom of story
This is part of an occasional series examining federal health care reform bills and their effect on West Virginians.
ST. ALBANS, W.Va. -- Richard Sinclair is president of Jefferds Corporation, a 225-employee operation sprawled over 4 acres in St. Albans. His company sells forklifts, conveyors, cranes and hoists.
If Congress passes a health reform law, companies like his, with more than 50 employees, may have to provide health insurance or pay a penalty.
But Jefferds has provided health insurance to its employees for at least 35 years. "It's been important to us to do that," Sinclair said.
He does worry about the rising cost of health insurance.
Employer-sponsored family health insurance premiums have gone up four times faster than median earnings since 2000, according to a Families USA study headlined "Premiums outpace paychecks in West Virginia."
The cost of employer-sponsored family insurance is predicted to double again by 2020, a Commonwealth Fund study predicts. Nationwide, firms are paring employee benefits and increasing deductibles and co-pays.
"I think everyone would agree that what we've got isn't working very well," Sinclair said.
He probably has a better idea than most. In addition to his business responsibilities, he's served on the Charleston Area Medical Center Board of Directors for about 20 years, including several terms as the board's chairman.
He's trying to get a grip on the complex bills before Congress. The situation is changing so fast and is so complex, he said, "we haven't a chance to examine it carefully for its impact on businesses of this size."
It will be especially complex for businesses that self-insure, he said, which is the majority of large businesses in West Virginia.
"We need reform, but I'm not sure yet if this reform is the answer we need," he said. "It depends on what stays in the law and what is thrown out."
A House-Senate committee, which includes Sen. Jay Rockefeller, D-W.Va., will meet soon to iron out differences between the two plans.
Sinclair would like to give them this piece of advice: hike the penalties if you want it to work.
He recently compared the amount his company pays for insurance with the highest penalties a firm would pay under the bills before Congress.
"I found it would be vastly less expensive for me to drop my insurance, pay the penalty, and let my employees choose from what's on the market," he said. "I'm not saying for a moment that I would do that, but I think other companies may."
Under the House bill, companies with a payroll of $500,000 or more would have to pay 8 percent of payroll if they did not offer insurance. Under the Senate bill, companies with more than 50 employees would pay $750 a year for each employee who gets government-subsidized insurance.
Since 2000, the average West Virginia employer's share for coverage of a single worker has jumped 88 percent, from $2,183 to $4,087, according to a 2009 Families USA report.
"It's a good thing this won't kick in for a few years, so they can look at things like this," Sinclair said.
'People will take their chances'
Three or four years from now, every American would be required to have health insurance or pay a penalty, under the reform bills.
About 260,000 West Virginians are uninsured, according to census data. The bills before Congress would insure 177,000 of them, according to Families USA.
That would be good for health-care costs at the Jefferds Corporation, Sinclair said. Those who cannot now pay their hospital bills would be able to pay them, and emergency rooms would not be flooded with uninsured patients.
From his 20 years on the CAMC board, Sinclair knows that hospitals and doctors, nationwide, shift part of the cost of unpaid bills onto their paying customers' bills.
Between 2006 and 2008, total unpaid medical bills surged 75 percent in West Virginia, to $231 million.
"It's in everyone's interest to get that under control," Sinclair said.
The bills before Congress offer help with insurance. Those who make up to $43,000 and families that earn up to $88,000 could get subsidies on their premiums. Small businesses can get tax credits. An expanded Medicaid would cover about 100,000 low-income West Virginians. The subsidies would be paid for either by a tax on "Cadillac" plans or a tax on the rich.
But once again, Sinclair said, the penalty is too low. It's $92 the first year, growing to a maximum of $750 a year, under the House bill.
"Especially in a down economy where people have to make hard choices, a lot of people will take their chances and not sign up," he said.
That would leave insurers between a rock and a hard place, he said, because, "As I understand it, insurers could no longer reject people who have pre-existing conditions such as cancer and heart disease."
They would have to sign people up with little or no waiting period.
"Whether or not you think that's good policy, it will clearly be expensive," Sinclair said.
Theoretically, that new expense is supposed to be balanced by new premium-paying customers.
"But it won't work if people can just pay the penalty when they're well, then climb in the boat when they get sick," Sinclair said, "and that's not fair to the people already in the boat."
His company is in the boat.
"What scares me is that my employees who have health care coverage today -- which we provide with some assistance from them -- may find that they're worse off if this thing gets passed."
Sinclair sounds almost wistful when he says he hopes he likes the overhaul better than he thinks he will.
"We need reform," he said.
He likes the fact that the plan contains billions for efforts to stamp out fraud and abuse within Medicare and Medicaid, but "I'll believe it when I see it."
If Congress passes a national bill, nobody will be required to have insurance for at least three years.
"A lot could happen in that time," Sinclair said. "It looks like they'll have to come back to tweak it a lot."
But at this point, he said, "If I weren't holding the phone, I'd put both of my thumbs in my ears and wiggle my fingers and give it a big razz.
"I don't know what the ramifications will be," he said, "but I hope I'll live long enough to figure it out."
Reach Kate Long at katel...@wvgazette.com or 304-348-1798.