Last December, the National Federation of Independent Business unveiled its "Small Business Principles For Health Care Reform," which it described as "a foundation to address the No. 1 issue plaguing small-business owners." The Entrepreneurial Agenda was skeptical, but we are also fair, so we've invited the NFIB to explain itself. In February, sent Bob Graboyes, the organization's senior health care advisor, a handful of questions. He responded by email late last month.

Today, the Entrepreneurial Agenda presents the first part of that exchange, with some musings at the end. Bob makes a staggering assertion here: that most of the uninsured in the U.S. work for or own small businesses. I've never heard that before and have no way to verify it, but it drives home just how crucial these issues are to small business. To read the introduction to this Q&A series, click here. To read Bob's comment to my original post, click here.

INC.COM: You've commented that the health care debate has long centered on the question: "Which is more important -- coverage, cost, or quality?" What do you mean exactly, and where did NFIB historically come down on that question?

GRABOYES: Health care reform entails several admirable goals: Holding down costs, getting people covered by private or public insurance, and improving the quality of treatments (including the range and availability of those treatments). In a world of limited resources, no country can achieve the maximum along every dimension. Choice is inescapable in health care, as in all economic markets. Interest groups disagree on which goals to sacrifice in the course of reform. Historically, NFIB's membership has been most concerned with cost, both for affordability and as a means of expanding coverage.

INC.COM: How has the NFIB's stance in that debate evolved in the last year, and what brought about the change?

GRABOYES: In 2007, NFIB broadly defined its Small Business Principles for Health Care Reform. In 2008 and 2009, we'll further define these principles. High and rising costs remain the paramount concern of small business. The soaring costs are driven by rapid advances in technology, incentive structures that reward medical procedures rather than outcomes and prevention, insufficient competition among insurers and providers, lack of transparency on costs and outcomes, and vagaries of malpractice law. We're an aging population, plus we're richer and demand more. These problems are all worsening, but are fixable.

However, it's increasingly difficult to disentangle cost and coverage. Why? According to a Kaiser/HRET Employer Health Benefits Survey, health insurance premiums for small businesses have increased 129 percent over the last eight years, leading to more people without coverage. In addition, cost and coverage both impact the quality of care and the rate of medical innovation. In NFIB's view, cost/coverage/quality is not a multiple-choice question.

A majority of America's uninsured work for or own small businesses and the numbers are worsening. Relatively few existing small businesses -- including NFIB members -- drop coverage. The problem is that new small businesses, opening their doors for the first time, are less likely than in the past to provide health insurance for employees. These new firms make the excruciating choice of jobs over health insurance. In addition, fear of losing insurance coverage deters countless Americans from pursuing their dreams of owning their own businesses. That's bad for them, bad for our economy, bad for America.

INC.COM: You warn Americans not to expect "unlimited access to the highest quality care at bottom-dollar prices whenever they want." Where would NFIB propose to draw the line with its universal coverage? What kind, and how much, care could every American expect?

GRABOYES: NFIB has endorsed universal access to quality affordable health care, which means insurance coverage must be within the reach of all Americans, including those who are sick or poor. But that does not mean limitless expenditures for all. Every health care system on earth limits access -- the word "universal" does not allow any system to escape the need to deny some people care that they want and that would help them. The difficult questions are: Who is denied care? Which care? Why? When? Where? Health care reform doesn't eliminate the questions, but only alters the answers.

Neither NFIB nor any other organization has the cognitive power or moral authority to dictate exactly how much and what sort of care 300 million Americans ought to have. We need a system that allows individuals to make their own choices or to delegate them as they see fit. It's important to remember that guaranteed benefits are meaningless without guaranteed availability. A few years ago, the Canadian Supreme Court slammed Quebec's single-payer system, with the Chief Justice declaring, "Access to a waiting list is not access to health care."

INC.COM: How much would NFIB's vision of universal access cost? Who would pay for it, and how?

GRABOYES: It's not clear that universal access has to cost more than we currently spend. Our health care system is not at maximum efficiency by anyone's standards. Peter Orszag, director of the Congressional Budget Office, was quoted recently as saying that evidence "suggests you can take costs out of the system without harming health and maybe even slightly improving it." This notion that we can reduce spending without harming health comes from economists across the political spectrum.

We need to create incentives for consumers, providers, and insurers to increase wellness and prevention efforts. We need transparency from providers and insurers -- clear, understandable, easily obtainable information on costs and outcomes of different medical interventions. Consumer Reports and similar publications and databases have made it possible for ordinary people to make sensible decisions about highly complex products in which they have no expertise. The health care industry needs do the same, and they're not likely to do so out of altruism. They need to be rewarded for doing the right thing, and currently they're not.

INC.COM: Apart from malpractice reform, what measures could we take to lower the cost of health insurance, or the underlying health care?

GRABOYES: We can't really get a handle on the numbers without solving a big mystery lurking within the cost structure of American medicine. Within the United States, per capita health care costs vary tremendously across geographic regions, across insurers, and across providers; Utah, for example, spends 40 percent less per person on health care than Massachusetts. We know some of the difference results from differences in cost of living and differences in age and health of the populations. But most of the variation is unexplained. Some parts of the country spend way less on health care for some reason and -- this is the real news -- the patients seem to do just as well there as in the high-spending areas.

So a big policy question is whether and how we might bring down spending in the high-cost areas without reducing the quality of care. If we can find the key that unlocks this mystery, we then have the potential to free up resources and cover some or all of the uninsured. Lots of economists are working on these questions, the Congressional Budget Office included.

I'll conclude by noting that one of NFIB's reform principles is "realistic." We'd like to proceed rapidly, but not so rapidly that some Americans' care suffers as reform takes hold.


Ok, so already I suspect my skepticism will remain unalloyed. Read Bob's responses carefully, and you'll see that he basically didn't answer three of my four questions. A thousand words later, and we still don't know 1) why the NFIB changed its position last year (after all, according to the Kaiser study he cites, insurance costs have been going up for the last eight years*); 2) what sort of universal coverage the NFIB contemplates (if NFIB wishes to make an important distinction between universal "access" and universal "coverage," then I'm willing to bet that most of the players fighting for universal health care with greet the NFIB's stance with suspicion, and rightfully so); and 3) specific ways to reduce the underlying cost of health care, apart from the NFIB's standby, malpractice reform. What's really new here?

In the next installment, the conversation turns to the NFIB's initiatives to level the playing field between employer-sponsored coverage and individual coverage. Be there or be square.

*A relatively minor quibble: as I read the most recent Kaiser Employee Health Benefits survey, it appears that health costs for firms with fewer than 200 employees have risen 93 percent in the last nine years -- a substantial increase, but not the one Bob reports.