Time to End Employer-Based Health Insurance
There is a renewed interest in addressing health care reform on both the state and national levels. This focus may be enhanced by Michael Moore’s new film “Sicko” that starts next week. Much of the legislative efforts have been concentrating on the uninsured. I think this is a valid first-step as it is the uninsured that create the cost shift that helps to escalate insurance premiums for the rest of us. On the other hand, it is a band-aid for a health care system that is barely on life-support.
We are about to get our renewal rates for our health insurance policy and we expect a significant increase of something in the neighborhood of 15-20%. This is clearly unsustainable. The rising cost of health insurance premiums is perhaps the single most uncontrollable element of business overhead and is forcing companies to make difficult choices like dropping or reducing coverage. When this happens, the costs of health care is either absorbed by the business, or shifted to families, state programs, or back onto those who are insured and those employers who continue to provide insurance. Increased health insurance premiums means businesses have reduced capacity to invest money in their business for expansion, to raise employee salaries, or to increase other benefits like retirement plans, etc.
As a businessman that provides health care coverage for my employees, I know very well about the rapid escalation of the cost of providing health care for my staff. When I first started in business over 30 years ago, when I founded Northern Power Systems, I was able to cover an employee and dependents for about $1500 a year. Today, coverage that is not even as comprehensive will cost me in excess of $11, 000 a year.
The employer has become the “payer of last resort,” picking up the costs of uncompensated provider care, whether it results from inadequate reimbursement rates or inadequate insurance coverage for people needing health care. As a business owner, no longer do I make hiring decisions based solely upon my company’s need for growth and development. I must consider carefully the impact of the rapidly escalating health insurance premiums as I make each new hire. Sometimes the cost of those “taxes” can equal 50% of an entry-level worker’s salary.
I have intentionally used the word “taxes” because in the health care debate it really all comes down to money. Businesses that do the right thing are paying a health care tax to insurance companies. The dollars I need to spend on providing health care to my employees, who could not get affordable coverage in any other way is a tax, call it a premium but it barks just like a tax! It’s a standing obligation I have, is my contribution to a defined social need. But the “health care insurance tax” that I pay is very different from the other taxes I pay. Unlike other taxes, a) not everyone pays this tax, although everyone benefits from it; b) there is no rational allocation of the tax burden; c) the burden is not distributed through a transparent democratic public debate process; and d) as a “health insurance taxpayer” I have no influence on the administration or governance of the public good that is funded by the tax. I would much rather pay taxes that are determined through a democratic process, with democratic oversight of the disbursement and delivery system, to fund health care, than continue to be subject to unpredictable, opaque and rapidly escalating health insurance “taxes”.
Additionally, employer-funded health insurance has impacted the competitive marketplace, making the decision NOT to provide coverage a strong competitive advantage in bidding for contracts. Employers that do not provide coverage shift their employee’s health care costs to those of us who choose to act responsibly, thereby doubling the adverse competitive impact. Other employers hire part-time or seasonal workers to avoid this premium/tax, still others “dumb down” coverage with very high deductibles and limited coverage that encourages Vermonters to avoid medical care even for chronic conditions.
Ending the employer-based funding of health care will stimulate economic development by reducing the tendency of employers to offer part-time jobs to avoid health care costs, will give employees the freedom to change jobs without fear of loss of health benefits and will eliminate this contentious issue as a labor-management dispute.
The huge administrative load created by our current “Rube Goldberg” “system” of health care in the USA is absorbing millions of dollars to have patients and medical providers fight with insurance companies for coverage. You get an explanation of benefits that needs a lawyer to interpret and the insurance companies are motivated to deny coverage to increase their profits. It would be one thing if our method of providing health care to our citizens produced the best health care in the world, but it does not.
It is time to scrap employer-funded optional health care and provide everyone with access to health care as a “public good” that is publicly-financed so that everyone pays their fair share and everyone receives top-quality health care. This is really the only solution to health care that is feasible and has been demonstrated to be effective throughout the world. There are 27 industrialized nations in the world and 26 of them provide universal health care. We should be ashamed that the USA is the one that does not.