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Businesses face an all too familiar annual decision: Living in a competitive environment with labor costs rising, how much health insurance do I provide my employees? How much do I pay, how much do they pay? What is a reasonable plan, what level of deductible, what level of co-pay?
I know that health insurance is important for my employees who depend upon my business for their livelihood, but I am struggling with profitability. If I didn’t have to pay 10 to 20 percent of my payroll for health insurance, I would be making more money.
Nearly every small business faces these questions each year These vital decisions are in the hands of people not trained in either health care or insurance and, yet, we have a hodgepodge of plans, financing and coverage that baffles even the experts.
Vermont has taken a bold and innovative approach to health care reform by putting in carefully measured steps to build a single-payer universal health care system. Instead of some companies paying for health insurance – while their competitors are sometimes not paying – and instead of some being covered by differing plans and entities, Vermont envisions a health care system with everybody in and a public financing system that is fair and eliminates the “free-riders” that help to boost health insurance premiums.
The annual escalating cost of health insurance premiums creates uncertainty and helps to stifle economic growth in our state. No longer do I simply think of opportunity and growth as I consider expanding my business; I must also think of the burden of the $3 to $7 an hour in addition to wages that I pay for health insurance for my employees. It changes the equation and it makes me think twice about hiring.
Imagine a system where I was out of that equation. My business would continue to support the health care system by collecting taxes for the state, but the critical life and death decisions were out of my hands. Even more importantly, the playing field would be even. If all Vermonters have health care, one company cannot lower their overhead and be more competitive in bidding for work simply because they short-change their employees on health care.
Data backs up these claims. A January 2013 report from the University of Massachusetts found that Vermont could cover all residents and cut health care costs by moving to a single-payer system. That report concluded that Vermont will need to raise about $1.6 billion in taxes – this will replace the premiums paid for by businesses and individuals – while cutting system costs by $281 million over the first three years.
It is a fact that health care costs will continue to rise. Doctors keep figuring out ways to keep us alive longer and we have an aging baby boomer population. But it is also true that if we continue on with the status quo, our health care system will grow more uncoordinated, fragmented and bloated with administrators. Health care costs will rise at an even more astronomical level, putting more pressure on businesses that support their employees with health care insurance.
Governor Shumlin and our legislators should be very proud of their well thought out plan. Vermont will once again lead the nation and come to grips with one of the most serious issues facing business today. Their plan is truly an economic development plan masquerading as health care reform.
Don Mayer is the CEO of Small Dog Electronics and a member of Vermont Businesses for Social Responsibility’s board of directors.