Kauffman Foundation VP and event chair Bob Litan discusses the inordinate rate of growth of the health care industry. Jack Cashill and Brenda Sharpe observe.

Economic Overview

As an economist by training, Bob Litan explained some of the numbers driving the health care industry, most notably an 8% increase in cost each year, roughly four times higher than that of the CPI, a trend that shows no sign of slowing. Given this direction, Litan asked whether these organizations would themselves have to cut back benefits to their own employees.

Kala Stroup of American Humanics shared the experience of her own office. When given the choice between maintaining their health benefits or getting a raise, her employees chose the health benefit package. “I think non-profits should be wellness models,” she added.

Peter Yelorda suggested two likely responses by companies. One was to pass the cost increase along to the employees. The second was “mandating in a friendly way” that employees take health risk assessments, which would bring the group cost down, relative to other groups.

As Bill Bruning noted, “The issue of wellness is difficult to fund as benefits are not felt until after the next cycle.” He added, though, that collaboration among large groups to front load wellness programs would help spread the benefits of wellness across the board.

Some of the day’s cheerier news was offered by Gene Dooley of the YMCA of Greater Kansas City, who noted a significant increase in corporate participation in wellness programs.

Kala Stroup of American Humanics reports that her associates prefer an increase in healthcare services than in salaries. Alice Ellison, Peter Yelorda and Gene Dooley look on.

A core problem of the current health system, suggested Bruning, is that the system robs the employee of personal responsibility. “Providers of health plans need to fall back into the court of the individual,” said Bruning.

“Thinking like an accountant”— Julie Welch argued that the way to encourage individual responsibility was through the income tax system, specifically giving incentive to individuals through medical savings accounts.

The question was raised as to what kind of behavioral discriminations employers and health plans were able to make. Bruning cited smoking as the only behavior that could be challenged as of now. When asked about obesity, he offered the day’s best quote, “It’s hard to get your arms around it.” Although a “complex syndrome,” Bruning thought employers would be ill advised to challenge an individual’s status as an obese person but can asses that person’s willingness to participate in a wellness program.

Steve Roling cited the excessive cost to take care of smokers and the obese and argued, “The health care system can be fixed through prevention.” Rex Archer, M.D., Director of the Kansas City, Missouri Health Department, observed that obesity control lagged smoking control by about 40 years and wondered whether the nation has the “political will to deal with obesity.”

Blue Cross Blue Shield executive Peter Yelorda discusses the growing problem of the younger generation “working poor”, without health insurance.

Non-Profit Demands

With costs for basic health care escalating, the question was asked as to whether the non-profits had been forced to shift their emphasis to funding basic service. Brenda Sharpe answered in the affirmative. “The majority of grantees have shifted from visionary programs to core operating costs,” she noted.

For smaller foundations like the Menorah Legacy Foundation, Gayla Brockman commented, this presents a problem. Her foundation, like others, tries “to take a more focused approach.”

Bob Dunn observed that the many demands force his foundation to review carefully the capacity of a given organization and the strength of its board. “We like to help organizations that will be around for the long haul,” he said.

Although Alice Ellison of Blue Cross Blue Shield looks for things “like the rate of return” in assessing which charities to assist, she also has an eye for the “intangibles.” Whether dealing in intangibles or hard numbers, she acknowledged “the constant struggle to justify how you are spending charitable dollars.”

Jeff Ellis also recognized the “profusion of requests” from programs that meet urgent needs, but he recognized the priority of programs that are “catalysts for change.”