March 29, 2011
Remarks as prepared for delivery
Thank you, Carlos, for that introduction. It’s great to be here with you this morning.
We’re gathered here today just over a year since President Obama signed the health care law, the Affordable Care Act. In that time, I’ve gotten to travel around the country and see firsthand the difference it’s making in the lives of all Americans, and especially Hispanics.
For years, Hispanics have been less likely than the average American to get the health care they need. That’s partly because they have less access to health insurance and partly because they’re less likely to have a regular doctor.
And they’ve paid the price in health. You can look at almost any disease. Hispanics are more than 50 percent more likely to suffer from diabetes than whites. They’re more than twice as likely to have asthma. They’re two and a half times as likely to die of HIV/AIDS.
This is just wrong. In this country, your health should not depend on where your family comes from. That’s the opposite of what America stands for.
The good news is that the health care law is the most powerful legislation in decades for reducing health disparities. It will provide about 9 million currently uninsured Hispanics access to coverage. It will make care more available in underserved communities by investing in our primary care workforce and community health centers to. It will provide relief from rising health care costs. And that’s just the start of the new benefits and protections for families.
But today, I want to focus on a part of the law that hasn’t received as much attention, which is how the law will help America’s business community, and especially small business owners.
To put it simply, health insurance today doesn’t work for small business. When I served for eight years as Kansas Insurance Commissioner, I heard over and over again from small business owners who felt like they were at the mercy of their insurance companies and there was nothing they could do about it.
Then I became Governor of Kansas, and I kept hearing the same thing. I’d talk to a farmer and her biggest concern wouldn’t be the price of fertilizer. It would be the price of health coverage.
And as Secretary of Health and Human Services, I’ve heard similar concerns everywhere I go. I remember talking to a Hispanic businessman in Connecticut, and he put it very simply. He said, “I can afford to pay salaries or I can afford to pay health insurance, but I can’t afford both.”
Another small business owner in Florida wrote to me and said: “I am near the breaking point. With guaranteed annual increases at 10-15 times inflation, eventually we will go out of business or be forced to cancel insurance. Either way, it’s a lousy set of options.”
For too many small business owners, dealing with health insurance comes down to making impossible choices. You can keep paying rising health insurance bills. But that’s often at the expense of the investments you need to make to grow your business.
Or you can stop offering coverage. But no business owner I’ve talked to wants to do this.
For one thing, their employees are often like their family. So small business owners want to do everything they can to make sure they get the health care they need.
Small business owners also know that offering health insurance is often a key to recruiting and keeping the best employees. Too many of them have had the conversation where a top employee comes to them and says: “I love working for you. I love this job. But I’m quitting because I need health insurance.”
This puts small business owners in a difficult place. You usually don’t have a huge HR department that can negotiate with insurers. In fact, as a small business owner, you usually are the HR department. And they don’t have the leverage that large companies have to drive down rates.
The result is that the mom and pop shop can pay up to 18 percent more than the big chain down the street for the exact same health insurance.
It’s not fair. And in an economy where small businesses create two thirds of jobs, it’s a huge drain on economic growth. But the reason I bring all this up is because it’s changing under the Affordable Care Act.
The first thing that’s changing is that new tax credits are available this year to help small businesses provide health insurance for their employees. Here’s how it works: if you have fewer than 25 full-time employees and average wages of less than $50,000, then you’re eligible for a tax credit of up to 35% of their health insurance costs.
So an auto repair shop with 10 workers making $25,000 each and typical health insurance costs would get a tax credit of $24,500 this year. And they can invest that $24,500 right back into the business whether it’s buying a new piece of machinery or hiring another new employee.
We are already seeing these tax credits make a difference. For example, in Kansas City, where the largest insurer has been advertising the tax credit, they’ve reported a 58 percent jump in the number of small businesses buying insurance since the law was passed. We’re seeing similar results across the country. And in fact, there is early evidence that after years of decline, the number small businesses offering coverage nationally is now actually going up.
This is a great sign. But we also knew we needed to address the underlying causes behind small businesses’ higher premiums. That’s why we’re working with states set up new health insurance marketplaces called exchanges that will be available to small business owners starting in 2014.
This is an old idea that’s been supported over the years by Democrats and Republicans, and there are two main benefits. First, it allows small businesses to pool their resources so they can negotiate lower rates just like big businesses. Second, it brings more transparency to the marketplace.
We’ve already created a great new website called healthcare.gov where you can go and type in your zip code and see all your health insurance options in one place for the first time ever. When you have to list your price right next to your competitor’s, it’s a powerful force for bringing those prices down.
And in 2014, Exchanges will make give small business owners a one-stop shop where they can easily compare plans and pick the right one for you. So as a small business owner, you’re not only going to have better options, but the process of buying health insurance is going to be a lot more straightforward.
I also want to take a moment to point out the difference this law will make for the small business owners of the future. Entrepreneurs are risk takers. They’re not afraid to make sacrifices and work hard to pursue their dreams.
But taking a financial risk is not the same as risking your health or the health of your family. And in the health insurance market we have, that’s often what you’re doing if you quit your job.
As long as insurers were free to discriminate against the 129 million Americans with pre-existing conditions, too many Americans were going set aside their dreams of starting a business just to keep their health insurance.
But under the law, insurers are now prohibited from denying coverage to children because of their health status. And in 2014, all Americans will be free from discrimination against pre-existing conditions.
So if you’re the mom of a child with a disability and you have a great idea for a new business, worrying about health insurance is not going to stand in your way.
These reforms will unleash America’s entrepreneurs and bring some much needed fairness to the health insurance market for small businesses. But even if we eliminate all the disadvantages that small businesses face, premiums will continue to rise too fast unless we also do something about the growing cost of care.
The truth is that part of the reason small businesses pay so much is that they get worse deals and pay more in overhead and administrative costs. The reforms I just talked about will help address this.
But part of it is just the underlying growth in health care spending. And that’s a problem for all of us from medium and large businesses to families to state and local governments to the federal government.
Today, we spend far more than other countries on health care without being any healthier. That puts pressure on family and state budgets. It contributes to the federal deficit. And it puts us at a serious disadvantage in a global economy, which is why Warren Buffet has called health care costs the “tape worm” eating America’s competitiveness.
Yet we know that it’s possible to improve health while reducing costs. We know this because businesses across the country are doing it with well-designed employee wellness programs. We know this because hospitals across the country are doing it by adopting innovative new models of care.
I saw this firsthand last week when I traveled to Columbus where hospitals, non-profits, and the local business community have formed a partnership to improve the quality of care. So far, they’ve saved millions of dollars while cutting patient hospital stays by 900 days.
You would think that health systems around the country would be rushing to copy these models, but progress has been slow because the incentives in our health care system reinforce old ways of doing business.
So under the health care law, we’ve launched the most ambitious effort in American history to change those incentives. Last week, we unveiled a first-ever National Quality Strategy that will guide our efforts to improve care and bring down costs across the country. And as part of the law, we’re implementing a wide range of long overdue delivery and payment reforms that will make it easier for doctors and nurses to deliver the kind of care they know is most effective.
History shows that Medicare and Medicaid can be a force for innovation in health care. For example, it wasn’t until Medicare stopped paying for so-called “never events” – the kind of mistakes that should never happen like operating on the wrong body part – that private insurers did the same.
Now, under the Affordable Care Act, we’re providing more support than ever before to help hospitals, doctors, and nurses in your communities deliver better care while cutting waste and inefficiency.
The health care law is not perfect. No piece of legislation ever is, and President Obama has made it clear that he’s willing to support any idea that makes it stronger, no matter who it comes from. For example, he’s already expressed strong support for correcting a bookkeeping provision that would have improved tax compliance for vendors, but put too big an administrative burden on small businesses. The President and I strongly support eliminating this provision. And if anyone else has ideas, we’re listening.
But what we can’t afford to do is repeal the law and return to the disastrous path we were on two years ago. As the President has said many times, if we want to win the future, we need to make America the best place in the world to do business. And to do that, we need a health insurance system that is an asset to American businesses, not a liability.
For years, America’s businesses watched their premiums skyrocket while their coverage crumbled with no end in sight. Would-be entrepreneurs surrendered their dreams because they couldn’t risk giving up their sick child’s health insurance. US companies struggled to match the prices of foreign competitors that paid half as much for health care.
These trends will not disappear overnight. But thanks to the Affordable Care Act, we are making health insurance work better for America’s businesses, so that they can focus on what they do best: delivering great products and services, creating jobs, and keeping our economy growing so that the next generation of Americans can enjoy even greater opportunities.