Universal health care would benefit my small business
(This post originally appeared on The Hill)
Ask someone living in Canada, the U.K., Australia or any other country that has a universal, single-payer or national health-care system and they’ll certainly tell you it’s far from perfect.
My wife is British and her parents both live in London. As they’ve gotten older, they’ve sadly gotten sicker. They could take advantage of Britain’s National Health System (NHS) but, other than the usual doctor visits, they rely on private insurance for the big ticket stuff, which is an option there.
They believe the care is better and faster that way. They’re right and because they live in Britain (as opposed to Canada) they have that option.
The NHS, in particular, has many problems, and you know what they are: long wait periods, stretched resources, underpaid doctors, etc.
But even with these problems and a growing level of dissatisfaction, 53 percent of British people (61 percent of those over 65 years old) are still satisfied with the system according to an annual survey sponsored by The King’s Fund, an independent health-care charity.
But my question is what’s better for me, the small employer: a U.K.-style universal health-care system or the health-care system we currently have here in the U.S.? The answer for me — a right-leaning, free-market guy — is a difficult on: universal health care.
This is the case for two reasons: It would likely cost me less, and it would make my business more competitive. Let me explain why.
First the predictable caveat: It’s tough to make an apples-to-apples comparison of employer costs in the U.K. vs. the U.S. Some coverages are different, and there are exchange rate considerations (the dollar is currently very strong).
Nevertheless, here’s my simplified analysis:
In the U.K. both employees and employers contribute to the cost of health insurance, and it’s based on what an employee earns. According to the British government, a typical employee making £52,000 ($67,000) a year would pay in about £4,700 ($6,200) of health insurance annually and the employer would contribute about £7,200 ($9,500).
This cost covers pretty much everything. However, some prescription drugs, dental, eye care and other services may still be charged separately, though at rates below the U.S.
Also, and unlike here, the U.K. government picks up the tab for children, dependents and people out of work. Here, we must purchase family plans. In the U.K., there are no deductibles or significant out-of-pocket expenses. That’s not the case in the U.S., and those costs can amount to thousands of dollars.
So how does that compare to the costs of my health-care plan here?
The Kaiser Foundation’s 2018 Employer Health Benefits Survey reported that a single coverage plan, on average, costs about $6,700 per year. But most people get some form of family coverage and that costs, on average, almost $20,000 annually with employers picking up about $14,000 and employees paying the difference.
That generally doesn’t include the cost of those dreaded out-of-pocket expenses and deductibles as well as prescription drugs, dental, etc.
But wait. The costs don’t end there, particularly for the typical small business.
At my company — and most other small businesses — we spend a significant amount of time figuring out how to minimize our health-care costs.
We strategize with our outside benefits people. We consider alternatives like self-insurance and joining associations. We set up health and flexible savings accounts. We spend time and money administering these plans.
Then, we worry every year what the next year’s increase will be in what is one of the most significant line items on our income statement: “Health-care costs ‘only’ rose 5 percent this year. Yay!”
All of this leads me to conclude that health care here is more expensive for a small employer as compared to our British friends. Which brings me to reason number two for why a universal health-care system would benefit me: competitiveness.
Employers with less than 50 full-time equivalent (full and part-time) employees aren’t required by law to provide health insurance. But we’re at a serious disadvantage if we don’t.
Health insurance is an essential part of an employee’s benefits and a top priority for people looking for jobs (not to mention a major hindrance for people looking to leave their job and be an entrepreneur).
In these days of low unemployment, every small-business owner I know is struggling to find and hold on to good people. Health care is a big part of that.
Unfortunately, my company just can’t compete with larger employers who can afford to offer better health-care benefits, so I lose out on prospective employees.
A universal health-care system would level the playing field. Sure, bigger companies may have the option — as they do in the U.K. — to offer private insurance to particular individuals as an extra benefit. Maybe I’d do the same.
Sure, I’d still be paying in insurance like I’m doing now. But the cost would likely be less, or at least comparable, for a similar level of services across the board. But most importantly, it would help to take the health insurance issue off the table in negotiations with a prospective employee and enable me to better compete with that big company down the street because we’d all be offering the same plan.
No, I’m not a fan of big government. But I am a fan of solutions that work. They’ve got their share of problems, but a majority people in many advanced countries — like the U.K. — are happy with their system. As a small-business owner, I’d be happier with their system too.