(This column originally appeared in The Guardian)
Covering healthcare costs through taxation is cheaper and lets businesses concentrate … on doing business
As a US small-business owner I admit that there’s one area where I envy my British counterparts: health insurance. I really wish we had a national healthcare system like the UK. It would make my life a lot easier.
It’s common knowledge that the UK’s National Health Service has premier-league-level challenges. I learned that a few months ago when my father-in-law was forced to spend seven weeks in a north London hospital bed for a minor leg break. Why seven weeks? Because he had the unfortunate timing of being there during two strikes. The NHS is antiquated, underbudgeted and understaffed. Patients there suffer with long wait times, subpar conditions and lots and lots of bureaucracy.
But the system here in the US ain’t so wonderful either. Consider my experience when my own mother had to spend a few days in a Philadelphia hospital this summer (I know … what a year, right?). Things weren’t that much better. There weren’t any strikes. But the care was below average, with long wait times, staff shortages and plenty of bureaucracy too. Oh, and a few terrifying moments when we thought some of her care wasn’t covered by insurance … and the slap of realism when we discovered that at-home assistance isn’t covered at all.
Unfortunately, healthcare costs in this country are going nowhere but up. According to multiple studies by some of our largest healthcare consulting firms, the health insurance premiums paid by businesses in the US are projected to increase as much as 8.5% in the coming year.
The reasons for the jump in healthcare costs are manyfold (spoiler alert: inflation across the board), but the result’s the same: US businesses are going to have to suck up and pay more in healthcare and we have few other options. What’s worse is that many smaller firms can’t afford to do this, being already squeezed by higher expenses. But what else can be done in these times of tight labor? For those that can’t absorb, their employees – assuming they don’t quit – will ultimately have to share more of the burden.
Some US business owners say that healthcare in the UK is more expensive. But that’s not true. Just look at the numbers.
The rates in the UK vary by income level, but many employees must contribute as much as 14% of their pay for health insurance and employers need to contribute about the same amount. For these workers the cost of health insurance for someone making £60,000 a year would be about £8,400 ($10,500) each for the employer and the employee, or a total of £16,800 ($21,000).
That sounds like a lot. But in the US the typical cost for similar coverage, according to the Kaiser Family Foundation, is $22,463, with workers paying $6,106 and employers contributing the balance of $16,357. The bottom line is that UK employers are actually paying slightly less in health insurance while their employees are paying a lot more. But in the UK there are no deductibles and pretty much all healthcare is covered. Drugs are included. So when you add up all those additional items, the individual costs are more comparable.
When it comes to healthcare, UK businesses have other advantages. They don’t have to worry about the privacy of their workers, the fiduciary responsibility over their healthcare plans and the annual negotiations with the big insurance companies that make up the beloved US quasi-monopoly. They don’t have to deal with the mind-numbing complexity of calculating the impact of premiums under various plans with different deductibles and coverages and “in-network” and “out-of-network” doctors. They’re not lectured to provide more “wellness” programs. They don’t have to deal with volatile premium increases, the intricacies of different state and local rules, and all the “flex” and “savings” and “reimbursement” tax schemes designed to mitigate employee costs or those confusing “self” and “captive” insurance programs which (may) reduce their risk.
More importantly, in the UK the playing field – sorry, pitch – is level. A high street shopkeeper is basically providing the same health benefits to their employees and at the same cost as the CEO of a Fortune 100 corporation. I think it’s safe to say that there are zero Main Street US shopkeepers that can say the same.
Life for UK business owners isn’t easy. They have more rules and regulations, higher inflation and interest and tax rates and Brexit and Piers Morgan.
But they should be grateful for their healthcare. The system is simple: just pay the tax and that’s it. And then you can spend your time worrying about finding new customers, motivating your employees, managing your inventories, creating new products and services. You know … the actual business stuff. I envy that. I really do.