Who’s Getting Trampled? Businesses

Businesses

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Over the past five years, health insurance premiums for businesses have increased nearly five times faster than inflation and four times faster than wages (Employer Health Benefits Survey, Kaiser Family Foundation, 2007). Premiums have been rising at, or near, double-digit rates, making it more difficult for businesses to continue to provide health coverage for employees and retirees. Health insurance costs are the fastest-growing business expense for companies. This makes it harder for business to compete on the world market and to add more jobs to the economy.

• Less money available to re-invest in the business, hire more employees or raise wages. High health insurance costs cut into businesses’ budgets, shrinking their capacity to invest in research, product development, and marketing. Health insurance premiums for employers increased nearly 100 percent between 2000 and 2007. By comparison, wages increased only 24 percent and inflation increased 20 percent during the same period.
  —“Why American Businesses Urgently Need Health System Reform,” Better Health Care Together, March 10, 2008


• Benefit costs make it difficult to compete with foreign companies. The high cost of health insurance premiums put American businesses at a disadvantage to foreign companies in countries where universal health insurance programs for their citizens mean lower benefit costs for employers. For instance, employers in the U.S. spend more than seven times as much as Canadian employers on managing employees’ health benefits, according to a study published in the New England Journal of Medicine (Costs of Health Administration in the U.S. and Canada, September 21, 2003). That additional cost is passed on to the consumer, making the product less competitive. One example is General Motors, which estimates that over $1,500 is added to every car and truck it makes because of health care costs.
  —“The Impact of Rising Health Costs on the Economy: Effects on Business Operations,” National Coalition on Healthcare, February 2008


• Health insurance costs keep some businesses from ever getting started. Paying for medical expenses, including health insurance, can make some would-be entrepreneurs think twice about giving up the benefits of working for someone else. Those expenses also require more up-front investment, since they now account for a bigger share of start-up expenses for new businesses.
  —“Health insurance costs dog would-be entrepreneurs,” by Jim Hopkins, USA Today, August 18, 2005

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