Should Businesses be Required to Pay for Health Care Insurance – No

Requiring businesses to do anything other than comply with local and federal laws is ludicrous. Businesses already pay workers comp. insurance, business liability, at least minimumwage, half your FICA taxes, federal unemployment taxes, as well as the general expenses involved with keeping the lights on.

The typical incentive for a business owner to offer health benefits are that it helps attract and retain employees and premiums that are paid for with pre-tax deductions may reduce the share of FICA and FUTA taxes. However this does not completely offset the cost of providing these benefits and you still become a more expensive employee in the end.

According to the US Small Business Administration the United States had 6 million small employers in 2006, representing 99.7% of the nations employers (1). It is these small employers who would bear the brunt of the cost associated with providing mandated health coverage for every employee. But what is the cost and whats involved anyway?

On a small group health quote the insurance company wants to know how many employees there are, what gender they are, how old they are and where they’re located.

Let’s look at a quick example of a quote for a mom and pop pastry shop with 6 employees here in Orlando, FL:

-6 employees
-4 male, 2 female
-The oldest is 33 years old and the youngest is 24 years old
-All located in Central Florida

The good plan (no co payment, $1250 deductable, Rx, $10 doctor visits): $1683.91/month for the group

The cheap plan (50% co payment up to $10k, $1500 deductable): $871.15/month for the group

I myself can’t imagine a congressman telling mom and pop “Hey I just helped pass a bill that requires you to pay your employees health insurance and raised your overhead $10,453/year. Can I count on your vote next election?”

Even for the cheapy plan they’d have to sell alot of cupcakes to pay for it. There seems to be a misconception (generally among those who have never tried their hand at operating a business) that since someone IS in business they’re always making a profit hand over fist and have loads of disposable income. Realistically it is likely that many businesses are treading water at best.

Furthermore the economic impact of mandating this expense would be substantial. On the upside this would be fantastic news for the insurance industry – “Now Mr. Business Owner you HAVE to buy our stuff”. Sure you would have your free health insurance however, there is always a yin for every yang. On the downside expect to see mass layoffs the next day because your employer can’t afford you anymore or they can go another route thats gaining popularity and hire you on as a 1099 independent contractor who pays all their own insurance and taxes.