One of the biggest problems we have in North America and the U.S. specifically is the cost of healthcare. There are lots of reasons for this, but we have seen a triple whammy hit the labor markets in the past year. We have talked about the other two parts of the whammy. Job hugging by employees due to economic uncertainty and layoffs by employers due to both economic uncertainty and the reduction of lower-level white collar jobs due to the increasing capability of technology are also roiling the job market. The third leg of this current toad stool of a labor market is the rising, rising, rising cost of healthcare.
I write this on the heels of the longest government shutdown or “shut up” in history—in the era of politics as performative or bad reality TV. You oppose the other side for the sake of opposition and don’t let those pesky citizens get in the way. I think I speak for 90% of the American public when I say that cynicism was the biggest winner of the shutdown. It drowned us in the irony of the arguments from both sides. If you can’t get healthcare relief, then you cannot get anything else. Or, since your party’s healthcare package is nicknamed after a former President, no one is willing to discuss fixing it.
Just one problem: It’s really broken and no one seems to be able to agree that dysfunction is the issue, not how we pay for it.
Employers are relatively powerless about benefits costs. Yes, larger companies can self-insure, but almost all have their retained layer covered at the top end by an insurance layer. However, the retained layer is being chewed up faster than ever by rising costs due to inflation, defensive medicine, and the practice of suing everyone, everywhere all the time in healthcare. For most employers, the reality is they do not self-insure. They need insurance. The insurance companies got the pilot seat in Obamacare and since then, every plane and plan crashes on takeoff. Many people and politicians blame the doctors and the hospitals. However, why are so many hospital systems either bankrupt or approaching it? Bad management is one answer, but the rate of insolvency has skyrocketed in the past decade, and COVID exacerbated it, but did not create the situation. If the doctors were raking in all the money, why are so many opting out and/or retiring? Meanwhile, insurance companies are having record levels of profit while they cut reimbursements to both doctors and hospitals and routinely deny claims. They had nowhere near this power prior to the Affordable Care Act, and their role in managing care turned into a role of managing profits.
The cost of employing a human has risen, so if you believe in economics, rising costs of employment means you will employ less people or delay more to avoid the increased cost model. This is an unfortunate side effect of unbridled healthcare premiums, it retards employment, reduces productivity, and even reduces tax revenue to the very government that sewed Frankenstein’s monster together.
I am not sure I have much of an answer either beyond abandoning ship and hiring overseas if you can, which many companies are already doing. That is a poor solution for most jobs and companies. The best advice I have is to use your lobbyists, your social media, and your megaphone to shame Washington into fixing the problem. It really does not matter how we got here and pointing fingers at one party or the other, which is all they do, does not solve the problem. But we have a problem, and we had better pressure our leaders in government to fix it and fix it soon.
Elliot S. Clark
CEO