Employment Based Healthcare Has To End

The United States continues to adhere to its arcane system of providing employer based healthcare. That is to say medical insurance is through a person’s employer opposed to the government or other source. It is too expensive for an individual to go out and purchase healthcare insurance on their own, so we continue to rely upon our employers to purchase the insurance for us and hope that we will only be required to pay a small portion of the total cost.

Many employees do not have the luxury of having an employer who provides health insurance for them. Many headlines have recently focused on the fact that the largest employer in the world, Wal-Mart, provides a minority of its employees with healthcare insurance. While on the other side of the spectrum, GM is arguably sinking into bankruptcy in part due to the total cost of its health insurance coverage for its current and former employees.

Regardless of whether someone believes that an employer should have the option of providing its employees healthcare insurance like Wal-Mart or whether one believes that GM’s financial hardships are due in large part to its health insurance cost is immaterial. What the nation needs to recognize is that employer based healthcare insurance is illogical and detrimental to all involved.

Employers struggle with how to pay for the high cost of health insurance. GM spends approximately one billion dollars per year to pay for its current employees health insurance costs. It could be paying up to four billion dollars to cover all of its retirees and current employees for healthcare costs alone. The fact that so much money is being removed from an employers bottom line and going to only healthcare costs does not make sense in a global economy when many of GM’s competitors are international companies and do not have such overhead costs. Thus, US companies are at a disadvantage in business because they have to spend so much money on healthcare opposed to spending the money on R&D or other required areas of their business.

Employers are also at a disadvantage due to employment based healthcare insurance because whenever employees come to the table to discuss their future employment, they ultimately start discussing who is going to pay for healthcare insurance for the coming year. Spring CWA members are currently striking in part due to the healthcare coverage cost. The grocery stores in California were striking a few years ago because of Wal-Mart moving in and reducing wages and healthcare coverage benefits. GM barely diverted a strike when it finally obtained a compromise with the UAW over medical healthcare coverage. Finally, the New York City MTA is concerned that its employees could start striking this week due to the healthcare coverage issue. Whenever one of these companies has a strike because a compromise over healthcare coverage occurs, these companies are losing a significant amount of money as a result of the strike and have lost a significant amount of money in legal fees leading up to the strike that it would not have had to pay had it not been an issue. Moreover, if the NYC MTA strikes, the amount of money lost due to the economic heartland for the nation, possibly the world, shuts down as a result of healthcare insurance. Billions of billions of dollars around the world could be lost because many Wall Street employees and others will not be able to get to and from work during the strike. This in itself should encourage the nation to start looking at other healthcare insurance systems.

There is no economic benefit to this nation to continue paying the high costs for healthcare insurance, and we are doing business a disservice by requiring that they flip the bill for healthcare insurance when their competitors are not concerned with such issues.

Update: It was reported today (12/13/05) that if the MTA goes on strike, which is illegal but has happened before, it would cost the City approximately $200 million per day due to private companies' employees not being able to get to work and people not being able to travel through the City easily. The last time the MTA went on strike it lasted eight days. In other words, an MTA strike over healthcare insurance could cost New York City companies $1.6 billion. It is a substantial cost to the private businesses for not supporting universal healthcare.