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Mandatory Insurance: Where's The U.S. Plan?


Congratulations on your new magazine! There can never be enough information, advice, or real-life stories to help people manage their business.

I think it is important to realize that not everyone who had to "bounce back" from a stalled business was with a high-tech venture or dot-com. I would dare to suggest that most people who had to turn things around did so with a brick-and-mortar business. As someone who lost his shirt and everything else in the closet (not to mention having to sleep on the New Jersey Turnpike for three months), I managed to bounce back in the wholesale/retail bakery business, and I continue with my passion for baking.

If, in fact, you really believe in something and are truly committed to seeing it through, I believe you return to what you know. The next time around, you listen more, remember, and learn from your mistakes.

TOD A. WILSON

Mr. Tod's Pie Factory

Somerset, N.J.

I have been a subscriber to BusinessWeek for 10 years. On June 30, four friends and I started our own business. SmallBiz arrived in the mail one hour later, and we immediately used Larry Armstrong's article ("Mating Calls") to keep our cell phone and land line calls coming in. Thanks for selecting me to receive the inaugural issue. As always, BusinessWeek's timing is impeccable.

DAVID BRADFORD

via e-mail

As an itinerant business consultant and occasional business operator, I find micromanaging to be the single most limiting trait of many business owner/operators. Timothy G. Habbershon ("A Little too Hands-on") did a great job of describing this persistent, negative trait.

Having sold a few businesses, I think Virginia Munger Kahn ("Ripe for Selling?") provided a clear outline of what a business owner needs to be thinking about, and do, to make a business sale work.

The practical approach of both articles makes SmallBiz stand apart from its competition in the field. I wish you all the best.

STEVE FERNLUND

Generation Three Logistics

Las Vegas

I read and/or skim over 20 trade publications monthly, and I have never enjoyed reading one as much as I did with your new publication SmallBiz.

I work for a midsize manufacturer, privately owned and completely managed by nonfamily managers. We have approximately 150 employees and manufacture 90% of our products (disposable party goods) in our single plant location. Many of the articles in the Summer 2004 publication are relevant to our company. I took 13 Post-It notes and marked that many articles for my co-senior managers to read.

Thank you for bringing a valuable "read" to my day. Best wishes with this publication!

LISSA MARTH

Converting Inc.

Clintonville, Wis.

As a member of the self-employed and small-business community -- which has been hardest hit by the cost of health insurance -- I feel compelled to write. In each of the past three years, my family health insurance premium increased by $500 per month. This does not include dental or vision. Last year, my total cost of health care exceeded $31,000.

My wife and I are both 57 years old, and we have two children of college age. Potential alternate insurance carriers readily assign preexisting conditions that could prevent us from switching to a different insurance company.

The Bush plan of tax incentives and the Kerry plan of broader coverage do not adequately address the real world of affordable health care for small business. I would be more than willing to buy into our state's public employee health-care plan, paying the retail cost with no public subsidy. The plan is already established and can easily accommodate those self-employed and small-business owners who lack the purchasing power to buy affordable health care.

JACK LANDESBERG

Asset Recovery & Valuation

Mequon, Wis.

I sympathize with the small-business owners who are caught between spiraling health-insurance costs and a desire to provide coverage for their workers. But my heart really goes out to the millions of American workers who have lost their health coverage because of this crisis.

In my home state of Nevada, more than one out of five working adults is uninsured, according to information from the Robert Wood Johnson Foundation. These people work hard, but most of them are employed by small businesses that simply can't afford the cost of double-digit premium increases of the past few years. So their families live in fear of an accident or illness that would ruin them financially.

The high cost of health care is also a drag on job creation. We must act now, not later. I have introduced in the U.S. Senate a tax credit that would offset up to half the cost of health insurance premiums paid by small businesses. This measure would expand health insurance coverage and help businesses create more jobs.

SENATOR HARRY REID (D-NEV.)

Searchlight, Nev.

The continuing focus on health insurance hides the real problem. The cost of health care is driven primarily by two things: the cost of diagnosis and treatment and the growth in demand. Competition to spur technical and administrative innovation, combined with the increased personal responsibility of consumers to shop for value, will operate to bring health costs down. Insurance schemes simply shuffle who pays. That may be important, but the true costs of health care will be unaffected.

C. D. PETERSON

Brookfield, Conn.

The 50 state governments are not doing enough to fund the extension of health insurance to the 45 million uninsured Americans. Much of the blame should go to the mostly Republican-leaning, low-tax "red" states that are dodging their obligations to extend health-insurance for children and low-income individuals. The national rate of lack of health-insurance coverage for children averaged 11% in 2001, according to the U.S. Census Bureau, but ranged from a low 4.7% in Iowa to 23.5% in Texas.

In 2001, Democratic-voting "blue" states led by Iowa, Minnesota, Wisconsin, Rhode Island, and Massachusetts insured roughly 95% of the children in their states. Texas has by far the worst coverage. Other red states with high rates of uninsured children are Oklahoma, Georgia, Colorado, and Florida. Some 30% of the 8.5 million uninsured children in the U.S. reside in these five states even though these states have only 19% of the U.S. population.

A federal approach is the only fair way to address this, since some states are taking "a beggar thy neighbor" approach. The only ultimate solution is the creation of a single national health-care system using an actuarial pool of all 285 million Americans providing the same benefits no matter where one lives in the U.S.

JOHN REEDER

Arlington, Va.

The underlying tenet of health insurance is to spread the risk among "similarly situated" individuals and groups. However, the definition of "similarly situated" changes as underwriters are better able to forecast claims. As mathematical and statistical models improve, the number of pools of similarly situated individuals increases, but each pool becomes smaller. Eventually, individuals and small groups will have premiums that equal their predicted claims plus administrative and marketing costs and the carrier's profits, minus the carrier's returns on invested funds. In essence, insurance becomes a customized prepaid plan financed with the insureds' own money. Can't afford the premium? Tough.

Every proposed solution to this paradox has its limitations. A solution, better than any other despite its many flaws, is mandatory universal health insurance. Every First World country, except the U.S., has it. Correction: The U.S. does indeed have a prototype, Medicare, but it is age-restricted.

JOSEPH M. KAMEN

Flossmoor, Ill.

Letters may be edited for style and space.


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