The Health Insurance Debate: Enlist Your Employees' Help

Heated rhetoric surrounding health insurance reform is frequently infused with inaccurate data and half-truths spun to serve various perspectives on issues. Lately, I’ve heard this erroneous comment: “There really aren’t many uninsured people in the country.” More than 45 million Americans are uninsured; and more than 60 percent of the uninsured work for small businesses, according to statistics from the U.S. Chamber of Commerce, known for its conservative business views.

The 2008 Employee Health Benefits survey, conducted by the Henry J Kaiser Foundation, indicates the cost of employer-sponsored health premiums increased by 119 percent during the last decade. As revenues dropped precipitously for most businesses during the past two years, medical insurance costs continued to increase. And even for those who are covered, insurance companies deny approximately one out of every five claims. In-depth research by the California Nurses Association revealed one insurance company rejects 40 percent of covered claims. We’ll probably never know how many people die, or live in an ongoing state of reduced productivity, because they have no access to medical services for treatable ailments, or because their insurance companies won't allow the course of care their doctors recommend. 

We do know: Healthy employees improve productivity and profits for businesses. As a proprietor of a small business, you want to do all that you can to maximize profits, especially during this challenging economic period. You know you can attract more qualified employees when you offer health care benefits. And you know medical insurance will help them stay well so you can achieve better productivity levels.

However, Kaiser Foundation research reveals the challenge that every small business is up against:

• The average employer-sponsored insurance premium costs $13,000 for a family of four.
• Employees pay an average of 30 percent of insurance premium costs.
• Only 62.7 percent of small businesses (companies who employ between 3 and 199 people) offer health insurance to employees.

Our common sense tells us we all need insurance so we can access appropriate medical care. However, nonstop information overload and too much political brouhaha may be causing you to tune it all out. There’s one thing all the many approaches to medical insurance reform have in common: Nothing is likely to happen for about five years! So we’ll be living with our current insurance systems for a while.

Are you facing the reality that many small businesses face? Although you deduct 100 percent of the premium cost as a business expense, you cannot afford to continue offering health insurance to your employees because your cash flow is not great enough to cover the ongoing premium payments.

As a business, you need to pay all your bills on time, you need ample cash flow, and your enterprise needs to make a profit so you can access business credit you need, when you need it. Unless you’re one of a small percentage of companies thriving during these tough economic challenges, you’re looking for ways to cut expenses. In any type of business, health insurance costs could be eating up your cash and preventing other expenditures, which could deliver profits.

Before you eliminate insurance as an employee benefit, consider these steps toward a compromise solution:

• Meet with your employees to explain exactly what is happening with company finances.
• Show them how much medical insurance costs your company.
• Show them how much monthly cash gets consumed making premium payments.
• Compare insurance costs to other significant monthly expenses so they can put the numbers in perspective. They need to understand how insurance payments directly affect cash flow.
• Tell them how much money you need to cut from your monthly corporate budget to free up cash so you can continue to offer health insurance.
• Ask your employees to help you figure out ways to cut ongoing costs.
• Give credit, when you implement helpful ideas from your employees.

In addition, if you don’t offer health insurance now because you can't sustain the cash flow drain, you might consider trying that seven-step approach with your employees. Let them help you discover where your company can find the cash to pay for premiums so you can offer insurance as a benefit. 

Often, people who are doing hands-on jobs see ways to eliminate expenses that managers never consider. A team effort can make your employees feel more invested in the success of your business, which will probably result in greater productivity and higher profits. This can be a win for all concerned.