NewsLanc’s is one of a family of independent companies which provides a medical plan for approximately 125 employees. The premium will jump 42% at the end of this year due in part to unfavorable claims experience over 2009.
Consideration has been given to passing the approximately $3 in hourly benefits along in the form of cash and allowing employees to purchase their own policies, or do whatever they want with the money. That’s when we walked into a World War II mine field.
Even if individual coverage were cheaper, or lesser benefits at less cost or none were preferred by the individual, using after tax dollars to purchase private insurance would result in a 22% penalty. That is because company provided health benefits are paid for out of dollars BEFORE the employee has to pay federal and state taxes, while independently acquired policies would be paid for by the employee AFTER the employee pays taxes.
The American health care system has a per capita cost almost twice that of other advanced industrial nations and we experience mediocre results. The root cause of the dysfunction was companies offering health care to compete for employees during World War II when wages were frozen. Unlike other advanced nations, employee funded insurance became the general practice in the USA. This led to a breakdown of the normal cost constraints resulting from people taking direct responsibility for their purchases.
We hope that the new health program will eliminate the incentive for employee paid health care, but we doubt that will be the case. Until then, we do not have much hope that cost reductions will take place in the bloated industry. Instead, we will continue careening down the road to economic ruin paved by the military/industrial and health care industries and, for the time being, funded by loans from China.
