Health Care

Health care: The forgotten culprit
By Jonathan Maze



As published in: Franchise Times - August 2008
Most discussions of the current economic malaise focus on a handful of usual suspects, such as the slumping housing market, the credit crunch, high oil prices and rising food costs. But one factor doesn't get nearly as much blame for the problems as it probably should: health care costs.
The price for health insurance premiums has nearly doubled since 2000. While that has led to understandable concern about affordability and the uninsured, it has also had a negative impact on every sector of the economy except health care. Small businesses, which would include most franchisees, are affected the most.
Employers now spend $8,800 to cover a worker and his or her family. A single employee costs nearly $3,800. Eight years ago those costs were $4,700 and $2,100, respectively, according to the Kaiser Family Foundation, a nonprofit health policy think tank.
Or think of it this way: an employer covering 100 workers, half of whom get family coverage, spends $291,500 more on health insurance today than in 2000.
That kind of cost increase has to come from somewhere. Employers may raise prices or cut costs. Both solutions have their ripple effects, either through inflation, reduced employment or lower wages.
Because most employers have had to face these rising costs, the overall impact on their various solutions has been phenomenal. The increases have acted like an anchor on the economy, contributing to the dual recessions of the past decade and likely keeping it from growing as much as it could have between them.
While the decade-long run-up in health costs appears to be abating, the increases continue to far outpace inflation. And there is no guarantee the slowdown will continue. So any discussion of fixing the economy long-term should include health-care reform.
We don't pretend to know the answer to that question, but we know it isn't "nothing," which has been Congress's typical response.