Here’s to your health!

I posted a comment over at NewWest about why business owners should pay for the health insurance costs of their employees. But I don’t think the owner, Jonathan Weber, quite understood my point. Bottom line is that it is best for the business.

Many employees of small businesses can’t afford to get sick. An extended illness or recurring injuring can be financially crippling. Once your sick leave runs out, most of us don’t have any way to pay the mounting hospital bills. Without health insurance the only option seems to be bankruptcy. Given the choice, most of us would take another way out, any other way out. But, that’s the sad truth of the cost of medical treatment – there is no other way out. The bills are just too big. Other than our homes, most of us don’t own sufficient assets to pay hundreds of thousands of dollars of medical bills.

So, while it is the right thing for the small business owner to protect their employees from bankruptcy, it is also in the best interests of the company to do so. Rather than being faced with financial ruin there is a good chance the employee can come back to work. All the time and effort that went into recruiting and training that person isn’t lost. All the accumulated wisdom isn’t lost. And with a bit of luck the business doesn’t suffer too much of a hiccup as they get back up to speed.

Of course, there’s also sound health reasons for providing health insurance. No one wants sick people coming to work, bringing their illness or disease into the work place. Just like lots of places offer free flu shots (in the hope that a flu epidemic won’t break out in the workplace), there is a real cost savings when fewer of your employees get sick. Hence, smart employers remove all possible barriers to folks staying home and getting the care they need. That’s why we have sick leave, that’s why we encourage preventative health care, and that’s why we make it cheap for people to get looked at before the illness or injury gets too bad. Much can be treated easily and cheaply if a prognosis is made early. Folks get better quicker, too. Which means they can come back to work sooner.

Moreover, employees with health insurance we have one less thing to worry about and that allows us to focus more on our work. A similar logic is used in Europe and many US corporations that provide child care for their employees. Simply knowing that you are taken care of means a much greater level of productivity and much less lost time.

It all sounds a bit patronizing and nanny-ish, but it does create ‘stickiness’. Employees are less mobile, less likely to flit from job to job, if the conditions at the workplace are good. And, if the work is good and the pay is good, then most of us are content to stay put and continue to grow the business as a mutual project. It gives us something to believe in, something to contribute to, something to be a part of. A sense of we’re all in this together.

Fact is that employing someone is a competitive project. Most businesses want to pay as much as they can afford. And most businesses have to pay as much as they can afford. Otherwise, they are likely not to get a fully qualified person or someone who fully meets the expectations of the job. To get the best you have to offer the best. And that includes offering health insurance. Because of the way the health system is set up today, it is much easier and cheaper for the business to buy into health insurance than it is for an individual to do so (particularly if they are middle-aged or have pre-existing conditions).

Jonathan was right, in a way, when he asked, “A healthy population with access to good medical care is a universal good that benefits everyone, not just employers, so why should employers alone be responsible?” Ideally, we would have universal health care and employers wouldn’t be responsible. But, that’s not the case in this country. And it might never be.

Until that day, it would seem that we have two options. Either the employer pays or the employee does. I would argue that the employee already does. Not only are they the person who is in hospital, but with the extensive co-pay or deductibles we are already looking at quite high bills. (A recent dose of pneumonia cost me over $10,000 and I have pretty good insurance).

I can accept the logic of co-pay to a certain extent in that it makes the consumer a bit more responsible with their selection of healthcare. But, in most cases it is not an ideal market – as patients we have no idea what we are purchasing, nor do we have the information or skills to know how to choose the right product for the right price. Literally, we are at the mercy of the health provider.

Its all an interesting argument, but I am struck with the question of why business owners want to ditch health insurance for their workers. Is it simply a cost-savings mechanism? That is, shift the cost for someone else to pay and forget about the full cost of labor. Socialize the externalities, right?

I admire small business owners. It takes a lot of guts, a whole chunk of money, and a huge stack of time and effort to make a go of it. They’re putting it all on the line and hoping that now is the right time for their great product or service. And in these tough times it must be even harder.

But, for a small business to survive and thrive they are going to need great employees. In sickness and in health!

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