Health-insurance blues

Mounting costs have many employers singing the health-insurance blues.

Michael Cannon, director of health-care policy at the Cato Institute, observes that an employee health plan is merely a way to pay for a portion of the labor provided by workers. The problem is that employers have agreed to compensate workers in part by giving them health care, the cost of which keeps increasing.

These increasing costs are causing serious problems for many businesses that have been too generous in the past with their health-insurance programs. For example, the CEO of Starbucks Coffee recently revealed that his company spends more on health insurance than it does on coffee beans its primary product! General Motors, meanwhile, spends an average of $1,500 on employees health care for each car it produces.

What approach to health insurance will allow employers to change their tunes?

An increasing number of business owners now offer Health Savings Accounts (HSAs), which allow employers to deposit cash into a tax-free savings account rather than paying premiums to insurance companies for low deductibles and co-pays for office visits and prescription drugs. This approach is more fiscally sound than the traditional employer-based health-care program.

Challenges offered by rising health-care costs are not restricted to the private sector. Policymakers in most states, including Kentucky, are struggling to find politically acceptable ways to address the needs of state employees. These workers generally have enjoyed Cadillac health-care plans paid for by taxpayers.

HSAs could help alleviate the rising costs of health care for government workers by allowing recipients to have more control of their own care while saving taxpayers millions of dollars.

Sources:

Why employer-based health insurance is unraveling by Devon Herrick, The Heartland Institute, Nov.1, 2005

Learn more about HSAs at http://healthsavingsaccountminnesota.com