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Monday, May 11, 2009

Businesses Affected By Healthcare Costs

Healthcare costs continue to increase. Over the past decade, insurance premiums charged to employers increased 119 percent, four times faster than wage increases. During 2002 to 2007, health insurance premiums for employers increased almost five times faster than inflation.

For every $100 spent in the U.S. on healthcare, five countries (Canada, Japan, Germany, U.K., and France) spend only 63 cents, according to a recent study by the Business Roundtable. Most Americans, 170 million, receive health insurance through their employer. Based on a survey of  428 companies, 46 percent of employers plan to shift healthcare costs to their employees in 2010.

"While today's economic challenges span the globe, companies in other countries may be better able to weather the storm in part because the value that their healthcare systems deliver," said Business Roundtable Chairman Harold McGraw.

Another recent survey by the Robert Wood Johnson Foundation revealed that 36 percent (one in three) of small business owners said rising healthcare costs will likely cause them to cut some of the benefits for their employees. Almost half (42 percent) said "making health care more affordable" should be priority for federal government. 

The number of small businesses that provide health insurance is decreasing every year. In 2007 it decreased by 59 percent in 2007, in 2000 it decreased by 68 percent, according to the Kaiser Family Foundation.

“Many small business owners have already reduced their health benefits and asked employees to pay a larger share of the premium, and still they struggle with the ever-increasing costs,” said Risa Lavizzo-Mourey, M.D., president and CEO of the Robert Wood Johnson Foundation. “They want health care reform that reduces the burden on their business and where all Americans have affordable health insurance.”

Small businesses are more affected by rising healthcare costs. Small businesses pay 18 percent more for health insurance than large companies, according to a January 2009 study by the Commonwealth Fund. In 2006, 35 percent of businesses with fewer than 10 workers offered health insurance, but 98 percent of companies with 1,000 or more employees did.

What do CEOs really think of employer-based health coverage?

"There are employers that don't want the responsibility, and we are in that category," said Carl T. Camden, CEO of Kelly Services (KELYA). "My health-care costs total more than my profits. 

"CEOs overwhelmingly want out of this business," said Benjamin Sasse, an Assistant Secretary of Health & Human Services under President George W. Bush . "They just do not want to be seen as more willing to dump [benefits] than their competitors are."

"CEOs are focused on the bottom line," said Len Nichols, director of health policy at the New America Foundation. "They know high health-care costs put U.S. companies at a competitive disadvantage."


James Hagedorn, CEO of Scotts Miracle-Gro (SMG), said, "If someone said to me, 'you can pay the same amount [for health care] and we will redeploy to a national system,' I'm fine. Why would I argue with that?"

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