National site selectors and corporate real estate professionals continually praise Utah for the excellent public/private partnerships we create. Such partnerships are a key component of our success in business recruitment. Many of our partners have established annual economic summits to help local businesses network and provide economic information specific to the local areas served. We think the summits are a great way to stay connected and up to date, and encourage you to attend a summit presented in your area of the state when the opportunity arises.

The next two Economic Summits on the docket are the Wasatch Economic Summit "What's In Out Back" on Sept 14, and the Northern Utah Economic Summit, "What's Going Down Up North" on Sept 30. I hope to see you at one or both of these great summits!

We would also like to recognize the passing of Chris Tunis. Chris was a long-time member of EDCUtah, but more importantly he was a well known and respected member of the community. His work in sports radio, print media and as a genuine, compassionate person will be remembered for years to come. Our thoughts and prayers go out to his family.

Today's Economic Review also includes links to many of the ED-related news stories from the past week. As always, if you have comments, suggestions or topics you'd like to see in the Economic Review, please contact us by clicking the "Comments" link on the bottom of this page. Enjoy!

Jeff Edwards
President and CEO

The Affordable Care Act (ACA), passed by Congress in March, mandates that each state establish an insurance exchange for individual and small employer plans by January 1, 2014. State's that don't will be required to join a regional or federally-run exchange.

The Beehive State is well ahead of the curve and on Sept. 1 will officially open the Utah Health Exchange to small businesses with 2-50 employees.

Legislative Foresight
"Because of the foresight of our legislators, Utah already has a functioning small employer exchange and is in the process of making it available to large employers as well. This is certainly advantageous for Utah consumers," says Spencer Sutherland, spokesperson for insurance carrier SelectHealth. "In 2014, when other states are still testing the exchange waters, our state's portal will be much further down the road in terms of functionality and user experience."

Natalie Gochnour, chief economist & EVP/public policy and communication for the Salt Lake Chamber, agrees, saying "Utah's business and government leaders understand that health reform is an economic issue. A state that reforms its health system will be advantaged in a landscape where the federal government is mandating reforms in a one-size-fits-all model."

Aside from Utah, Massachusetts is the only other state to have a health insurance exchange in operation.

The Utah Health Exchange did a limited launch last fall in a beta test to evaluate the technology and the dynamics of the market. Approximately 400 individuals have obtained their insurance through the Exchange as part of that beta test, according to Gochnour. This Fall the Exchange will begin a pilot program for large businesses—those with 51 or more employees. Originally, the Exchange was not planning to admit large employer groups for beta testing until Fall 2011; however, due to its early success and at the urging of several large group employers, the Governor's Office of Economic Development's Office of Consumer Health Services initiated the early pilot project to accommodate larger Utah employers. In April Governor Gary R. Herbert announced that RC Willey Home Furnishings, MediConnect Global, Blendtec, and Prosper, Inc. will join Zions Bank, APX Alarm, HealthEquity, Inc. and Spanish Fork City government in the pilot program for large businesses.

Rising Costs
The opening of Utah's Exchange for small businesses is coming none too soon. Healthcare costs are rising rapidly in the Beehive state, as well as across the nation. In fact, individual and family premiums have more than doubled in the decade from 1999 to 2009, according to the annual Kaiser/HRET survey of Employer-Sponsored Health Benefits.

Gochnour says the rapidly increasing costs are due in a large way to incentives being out of line in the healthcare industry. Healthcare practitioners feel pressured to satisfy their patients, whether the treatments are totally necessary or not, she explains. Further, the practitioners are paid by how much they do–the more services they provide the more money they make. According to Dartmouth College's Institute for Health Policy and Clinical Practice, the U.S. spends $500 billion dollars annually on unnecessary medical care. In fact, studies have shown that patients have at least a 43 percent chance of undergoing an unnecessary medical test at their next physician visit.

What's more, malpractice liability risks often force practitioners to over treat their patients. Some estimates indicate that defensive medicine costs the health care system more than $100 billion per year. Another reason: Since patients don't fully know upfront what the costs of their care will be, they are limited in their ability to make wise choices about the type and extent of the healthcare services they receive.

Obviously, healthcare reform measures should address such issues. The Salt Lake Chamber says it supports health reforms that "apply market principles to contain costs, strengthen the economy and improve lives. Current health reform efforts by the U.S. Congress miss the mark by focusing primarily on expanding access rather than controlling costs."

"It's not just about our health; it's also about our economy," says Gochnour.

Fines for Non-participation
She notes that the Affordable Care Act mandates fines of $2,000 per employee per year for large businesses that do not provide employer-sponsored insurance coverage; however, such fines may be cheaper than providing the insurance, so there may be a disincentive for large businesses to comply.

On the other hand, Sutherland says small businesses are incentivized for adding or maintaining health coverage for their employees. The federal Small Business Health Care Tax Credit will reimburse qualifying businesses, with fewer than 25 full-time employees, up to 35 percent of their insurance premiums. To help businesses understand how the credit works and what they are eligible for, SelectHealth has created a free, online tax credit estimator on its website (www.selecthealth.org/taxcredit).

The average American spends $5,200 a year on healthcare, while the average annual family premium in the U.S. is just over $13,000. The good news for Utah businesses and economic developers is that in Utah the costs are lower: The average is $3,900 per individual and just under $12,000 in average annual family premiums, according to the Salt Lake Chamber.

Why the disparity?

"Demographics and lifestyle certainly play a part in Utah's lower cost of healthcare," says Sutherland. "Utah has a younger population and is healthier than other states in the country. Another reason for lower costs in Utah is the competition between carriers. Individuals and employers in the state have a wide variety of carrier options—including non-profit, for-profit, local, and national carriers—and as result, pay less for administrative costs."

Mike Tatko, media and public relations representative for Regence BlueCross BlueShield of Utah, says the Beehive State also enjoys a favorable underwriting environment, while the healthier lifestyle results lower healthcare utilization, and therefore help lower healthcare costs.

Single Shopping Point
The Utah Health Exchange was designed on the premise that to function efficiently, consumers need a single shopping point where they can evaluate their options and execute an informed purchasing decision. Thus, brokers, agents, employers, and individuals must have access to reliable information to allow consumers to make side-by-side comparisons of their various insurance plan options.

The Exchange allows employers the opportunity to simplify benefits management by offering employees a "defined contribution", or specified amount of pretax dollars set aside for the purchase of an employee-selected health plan from a menu of various plans and prices. The Exchange also allows employees, rather than employers, to compare and select the health plan that works best for their individual needs and circumstances.

As more employers choose to offer health benefits on a defined contribution basis via the Exchange, increasing numbers of workers will be able to take their coverage with them from job to job. Increased portability means greater continuity of care and a reduction in the number of uninsured.

By statute, all plans offered through the Exchange must meet federal standards for employer-sponsored coverage; thus, participating employers and their workers can be confident the insurance they choose will be quality coverage from responsible carriers.

Utah Healthcare Snapshot from Statehealthfacts.org:

• Utah ranks seventh in the country in terms of lowest single premium for employer-sponsored coverage.
• Health spending per capita is $3,972, verses $5,283 nationally.
• The average employee contribution for a family premium is 25 percent, verses 27 percent nationally.
• The uninsured population is 13 percent, verses 15.4 percent nationally.
• 62.5 percent of Utahns have employer-sponsored insurance, compared to 52.3 percent nationally.
• 7.3 percent of Utahns have individual insurance coverage, compared to 4.7 percent nationally.