Doyle pushes health care reinsurance

Governor talks with business leaders from Wausau area

Wausau Daily Herald

Gov. Jim Doyle came to Wausau on Tuesday to talk to people like Debbie Flood, who owns Melron Corp.

The small foundry in Schofield, which makes window and door hardware, struggles with rising energy and materials costs, competition with businesses in Asia and skyrocketing health care costs.

Doyle touted his plan to create an insurance safety net that would spare business owners like Flood from high health insurance costs that can jeopardize small businesses.

Those costs keep families awake at night, worried that large medical bills from a single illness could wipe out everything they've worked for, Doyle said. They also could force them to pay exorbitant insurance premiums for high-risk health insurance.

Health care costs repeatedly are cited as the No. 1 concern among Wausau Region Chamber of Commerce members, said Bob Reinertson, Chamber president.

Doyle's plan would create a reinsurance pool open to businesses and individuals to cover the high costs of care for catastrophic illnesses. It works by compensating businesses, individuals and insurance companies for high-cost or catastrophic claims.

Private health insurance essentially works by pooling the risk of high costs across a large number of people, permitting them or their employers to pay premiums based on average medical costs for that group. Fortunately, most people are fairly healthy and use few resources. According to the administration's estimates, about 50 percent of health care costs are incurred by 5 percent of customers.

For larger businesses with bigger risk pools, catastrophic care claims can and do raise insurance rates. For smaller businesses with fewer people to spread the risk, such care can increase rates and force them to choose between offering health benefits and making a profit or breaking even, Doyle said.

Twenty-one states operate reinsurance pools. In New York, the program has cut by as much as 70 percent the premiums paid by more than 100,000 low- and moderate-income workers and cut costs for small businesses by 15 percent to 30 percent, Doyle said.

Doyle wants to open a similar program to all individuals and businesses in the state to help spread the risk and command better bargaining power at the negotiating table.

Flood said she doesn't know if it would work, but it has potential. She wants to see the state include coverage for costly chronic conditions, as well. Her son, who works for the company, suffers from Crohn's disease, a disorder of the digestive system. Treatments for the disease cost $5,000 every two months on top of medications he takes, she said. Eventually, Doyle said he'd like to see the program include coverage for chronic conditions.

Flood said that when she took over the company after her father's death, she did so with the intention of taking care of the people who took care of him for so many years. That's something that's become increasingly hard to do with growing financial pressures.

Although the company has managed to curb health insurance costs by aligning with a company that can expand its health insurance pool and manage its payroll and human resources, Flood said she fears costs will keep rising.

Other business owners told the governor they want to see action sooner rather than later.

"I'm really looking for a when, not a what," said Tom Felch, president of J & D Tube Benders Inc. of Schofield. The company has been forced to pass on higher health insurance costs to its employees after its insurer raised rates following several catastrophic illnesses.

Doyle said he hopes to put a bill to create the quasi-private authority to research and set up the program before legislators later this month. If passed, he said he hopes the authority could begin offering insurance at the beginning of 2007.