Mary D. writes in response to our podcast about the "Cadillac Tax":
I worked at a small business for two years where, as head of operations, I actively participated in the decisions about the health benefits we offered our employees (including coverage for me and the owners). The owners felt strongly about providing health benefits for their employees, but it wasn't easy. Each year, we faced 25-30 percent increases in our baseline health care costs.
As an employer, your choices are:
1. The owner pays it all, taking a hit on the profitability of the company and using money you would otherwise happily give in raises to your employees. And, I do mean happily. Most rational business owners want to reward good employees.
2. The employee pays the extra, thereby reducing their own take home pay. Employees will receive a pay raise, but it is not likely to cover the total increase in premiums so they are effectively paid less - and their health care is no better.
3. Reduce benefits by opting for higher co-pays and higher deductibles or changing insurance companies which may change the doctors you can see.
4. Some combination of the above, where benefits are reduced, the employees pay more and the employer pays more. In this case, everyone is a little worse off and paying more for health insurance that at best is the same, or more like, worse than the prior plan.
Sometimes, the rising costs are an employee or a member of an employee's family has a serious or chronic medical issue. How would you like to be that person who is causing these premiums to go up for everyone?
For years I have been wondering why people - business owners and employees - don't seem to care that health costs keep rising which negatively impacts employee income and hinders the employer's ability to compensate its employees. And, it isn't as though the health benefits are better - they aren't. I think most people would prefer a salary increase, and I think most employers would prefer to provide greater financial incentive than spend it on health care. After all, saying "Great job, here's an x-ray" doesn't quite have the same impact as giving someone $500, for instance. But these are the trade offs employers and employees have to make.
This is the reality small businesses face every year. And that is what workers need to understand.