Mr. Gay Burke, writing for the Denver Post asks the question, “Why should employers pay for health care?”
To Mr. Burke:
Employers tend to be a smart group. Otherwise they would not be running successful businesses. But on health care, they have been stupid, blind and stubborn.
I can say that, in part, because I have spent nearly thirty years in the employee benefits profession.
The stubborn follows from the blind and stupid.
So let’s look at stupid first
Mr. Burke is onto something when he questions the role of employers in providing health insurance to employees. This is an admittedly illogical system. For starters, the doctor patient relationship is one that relies on continuity. Fostering that continuity is one of the major ingredients in proposals for health care delivery reform.
How can that strategy be successful in a system where entry into the system is through a relationship that is fundamentally discontinuous – the employment relationship? But how ill it be improved in a market of individual policies.
But upside down logic doesn’t stop there. I frequently encounter two kinds of questions from our participants who work physically demanding jobs: “I’m sick or injured. I can’t work. I therefore have no money. I can’t afford my health insurance so how can I get better and go back to work?” or “I’m better now, but in order to come back to work, I need a statement from my doctor. But I haven’t worked in months,; where am I supposed to find the money to go to the doctor so I can return to work?”
Does this system make sense?
Then there is the business perspective. The current system distorts competitiveness. Less than half of private sector employees get their health care coverage from their own employers. That means that some employers gain a competitive advantage by not offering health care coverage. Others are subsidizing those same employers by offering coverage to dependents who work for companies offering no or inferior health care coverage.
This very unlevel competitive playing field affects employer access to talent or the ability to get the best talent. Some employees are not able to do the kind of work they would rather be doing because they need health insurance. Other employees are locked into jobs because they need the health insurance. This restricts employee mobility and employer agility. And it is not keeping pace with the demands of the 21st century workforce.
Then there is blind
Mr. Burke is suffering from a popular misconception that if the consumers bore more of the cost of health care, that some how “market forces” would lower the cost of health care.
Mr. Burke observes that employers would rather not offer health insurance. This is certainly reflected in efforts to shift costs to employees over the past decades.
But there is no evidence to suggest that this has curbed health care cost inflation. Yes, it has cut employer costs. But that is more than a bit short sighted.
It has become a rhetorical mantra that the United States pays more for health care than any other country. But consumers in this country also pay more out of pocket than most other industrialized nations. And we have more people declare bankruptcy as a result of health care costs
Paying more for less
Shifting more of the costs to consumers has not worked. Shifting the full cost as Mr. Burke suggests positively will not work. How do people without money pay the full cost of insurance? There is only approach that makes sense – payments based on income.
Back up Mr. Businessman and ponder this. Our European counterpoints pay less. Their governments pay less, their citizens pay less out of pocket and their employers pay less. Let’s leave aside for the moment that they get better outcomes: they live longer, have lower infant mortality, lower maternal death rates, and lower rates of avoidable deaths.
Just from a services perspective, Europeans visit the physicians more often; go to the hospital more often; spend more time in the hospital; and they take more drugs.
Higher costs, fewer services. Even a non-businessman can figure this out. I am not aware that doctors and hospitals are flush with embarrassing riches. And poorer outcomes to boot? So where is the extra money going?
Let me help you out here. You are paying for the inefficiencies in this system that you refuse to let go of.
This is where stubborn enters
How many times have you heard or used the phrase – think outside the box.
But when it comes to health care, you refuse. You are locked into a business that is not a core function. It is fundamentally illogical and against basic business impulses. But the only way you see out of it is to turn it over to a model of individual insurance that is the illogical conclusion of a business strategy that has not worked.
Face the reality. There is only one way out of this box that works for you and for your workforce. (Except for employee benefit professionals like me.) It is a single payer system. You know from your own experience that no single employer has enough market power to move the health care industry, yet you stubbornly refusal to admit that government might be able to do a better job with health care than you have done.
There is still another model. It is the model of the German health care system where employers and employees run sickness funds. It is the same model that exists in the Taft-Hartley funds in this country. Pay into the funds while the employee is working to provide coverage for periods of time when the employee is not working.
Both ideas require employers to abandon stupid and blind ideas about “consumer responsibility” and to take some real leadership that will stabilize business costs, make businesses more productive, the workforce more mobile and enterprises more agile.
The answer to the question is a smart, open-minded and forward moving approach.
It is a business solution that requires business leadership.