My wife is English and one of the biggest surprises she had when moving to this country was healthcare. “I don’t understand why my employer is involved in my healthcare,” she said back then–and still says today. After years of listening to that argument, I’m starting to understand what she means.
I can’t believe I’m saying this. I consider myself a smaller-government, fiscally right-of-center guy. I own a small business. I want lower taxes and less regulations. And yet, after watching and studying and writing about healthcare reform for going on 10 years I think I’m finally to the point of caving in and admitting that maybe, just maybe, a single-payer system would be what’s best for businesses, including businesses like mine.
A single-payer system is one in which the government or some quasi-government entity manages the financing and the care is still supplied by the private sector. Of course, if this is anything like what we’ve already seen with the Veterans Administration, then forget about it. There’s no argument that government-run healthcare programs, like the VA and the one in the United Kingdom, are far from perfect. Read the British media and you’ll find regular reports of shoddy service, underpaid doctors, long waiting periods for surgery, out-of-date equipment, huge budget issues and a number of other challenges. Moving to a system like the ones in the U.K., Canada, Sweden or France will likely just replace many of the problems we have in our system with new problems.
But I know from first-hand experience that the system in the U.K. does work. My in-laws have relied on the country’s National Health plan for their basic medical needs. But here’s the twist: they are fortunate enough to be able to afford additional insurance (called BUPA, an acronym for British United Provident Association) so that they could avoid waits and go to better hospitals for their healthcare. In the U.K., those that can afford it can get better care. But everyone is still able to get healthcare, regardless of their income. Is that the best solution? Probably not. But it does seem to work. There is no perfect healthcare solution. Not everyone will be happy.
Which is why I think a single-payer system could be better for businesses here.
Every year I speak and work with thousands of business owners and managers and each and every one of them are terrified come summertime when healthcare rates for the next year are announced. Every year–and I mean every year–my clients have suffered with double-digit increases in their healthcare costs. Sure, they are pushing more of these costs down to their employees. But most are still covering a large part of the health insurance offered to their people. Those that aren’t make up for it by contributing to corporate Health Savings or Healthcare Reimbursement accounts. In addition to the cost of premiums, even companies with as little as five or 10 people wind up paying for the time a manager has to spend internally dealing with the administrative headaches of their health plans.
We spend too much time trying to figure out ways to reduce our healthcare insurance–which, to many represents a significant line item on our income statements. This time distracts us from ways to grow our businesses. But we have to do this because we have to offer a healthcare benefit. Our employees expect it. Our competitors are offering theirs. The labor pool is tight. My wife asks “why?” So do I.
According to the Kaiser Foundation, the typical U.S. company paid about $5,000 per employee for health insurance in 2016, net of employee contributions. So a business owner with 25 full-time employees paid about $125,000 last year. This cost is deductible, but the remainder comes right out of his pocket for this employee benefit. Business owners in the U.K., Canada and other countries with single-payer systems don’t have this cost, or the cost of administration.
No question people who live in these countries pay a lot more in taxes. In the U.K, for example, tax rates range from between 20 to 45 percent and then there’s an additional 12 percent to pay for national health. In the U.S., we have slightly lower individual federal rates but then again we pay local and state taxes. Even though we already pay a Medicare tax, adding another 10 to 12 percent on top of that for a national healthcare system would be burdensome on individuals. But wouldn’t it be a relief for businesses like mine?
“If we choose to have a single-payer system, big government will make a mess of it like they always do,” people say. More than the mess we already have? More than the mess of Obamacare or what Congress is currently proposing? All I see in the eyes of my clients is fear and uncertainty and more dollar signs when the topic of healthcare is brought up.
Everybody has their opinions, but no one really knows the answers to these questions. One thing, however, is for sure: healthcare is a mess, Congress isn’t solving the problem and few business owners I know believe it ever will. We’re at the point where many of my clients –and many who are fiscally right-of-center like me–would seriously consider an individual tax increase and all the risks of a single-payer system just to take this headache away from our businesses so we can focus on…well…our businesses.