Health insurance from the employer’s point of view

There has been a sad trend since the turn of this century. Health insurance costs have been rising so fast that even large sections of the middle class now find it a struggle, if not impossible, to pay the premiums demanded by the insurers for private plans. The fact is that, although in the last one or two years, there have been some increases in average take-home pay, these increases have not kept pace with inflation. People today are more poor than they were ten years ago. For a time, people compensated by using their credit cards and borrowing against the positive housing equity on their homes. With the bursting of the housing bubble and the credit crunch, people must now confront the size of the debt they carry. Articles like this are not supposed to feel sorry for employers. They are the ones who take our work, pay us as little possible and buy big houses to live in. Sometimes, we only put up with this exploitation because of the health plans some offer as part of the compensation package. But they have also been feeling the strain.

The national statistics show that, in the period 2000-2007, there was an average 80% increase in the premiums payable by employers for the health plan offered to their employees. As a cost, this has increased five times faster than the cost of wages and salaries. Because consumers have come to expect that prices will not rise, it has not been possible to pass these increased costs on in the wholesale and retail prices. The result has been a reduction in the profits earned by the employers. Hence, wages have not risen fast enough to keep pace with inflation.

This has real significance for the future health of the nation. Slightly more than 30% of the workforce is less than 30 years old and the majority of them are not insured. This because more employers have given up the unequal struggle to keep up a health plan for new employees, and more younger people who still have their health do not see it as a priority to use more and more of their take-home pay to fund private health insurance. They feel they are paying against the risk of sickness that might never come. This has an unfortunate knock-on effect. Health insurance distributes the risk so that the fit and health subsidize those who fall sick. If too many of the healthy refuse cover, the cost must be born by the older population more likely to make claims. This forces the premiums to rise. It would be better if everyone had a policy because this spreads the costs and keeps everyone’s payments low. You can make a start by using sites like this to find the cheapest possible policy, but nothing will change unless government policy changes.