Commentary: Four ways to counter rising health insurance costs

It can be done. Health benefit costs can be reduced while keeping wages competitive.

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Health insurance premiums are rapidly rising. Employers, facing a shortage of workers, and higher operating costs due to inflation, are scrambling to provide affordable health insurance for their employees. Thankfully, there are solutions to counteract the ever-increasing cost of health benefits.

While “health insurance is one of the main benefits employees look for when considering a firm’s compensation package,” according to the Center for American Progress, employees also seek good wages.

Workers may not understand the trade-offs. “The diversion of employee money to pay for health insurance is a little-discussed factor in stagnant wages among wage-earning employees,” write business professors Regina Herzlinger and Barak Richman. And as economics professor Katherine Baicker writes, “Workers ultimately … bear the cost in lower wages.” Similarly, the UC Berkeley Labor Center notes, “Increases in health care costs are coming out of workers’ pockets one way or another.”

“From 2013 to 2019, the price of health insurance premiums for corporate family plans grew by 22%, dwarfing the growth in overall inflation (8%) and workers’ earnings (14%) as a percentage on income,” reports Herzlinger and Richman. In 2023, the cost of coverage per employee is expected to increase 6.5 percent, more than double the 2022 increase.

“From my point of view as a chief executive of a company, health care is just a different form of compensation,” wrote David Goldhill, CEO of GSN, a media company, in The New York Times. Thus, as the cost of coverage increases, wages and salaries may decline.

New employees may receive lower salaries while current employees are more likely to not get a raise, according to the UC Berkley Labor Center. In small companies with 500 or fewer employees, the employer may absorb some of the costs so employee salaries remain the same, but that action is unsustainable for long-term cost control.

Must employers resign themselves to ever-increasing business costs because of health benefits? No. Consider the following four strategies.

First, employers could provide their workers with a “lump sum of cash for purchasing health insurance, pre-tax, through health reimbursement arrangements (HRAs),” write Herzlinger and Richman. This would enable the employee to shop for an insurance plan that meets their needs. According to the Harvard Business Review, “In 2019, only one-fifth of insured workers in all firms had a choice of more than two plans and 36% overall had no choice.

Second, the state legislature could expand affordable health benefit options. Six states — Tennessee, Iowa, Kansas, Indiana, South Dakota, and Texas — have enacted legislation declaring that health benefit plans offered by the state farm bureau federation (and possibly other non-profits) are not health insurance — and therefore not regulated by the Affordable Care Act. They are affordable, portable, and always available. Tennessee started this movement in 1993.

Third, consider transitioning to health care sharing. These nationwide sharing organizations, such as Samaritan Ministries, are essentially cooperatives for people of faith that provide coverage at a much lower price than corporate or employer-sponsored health plans.

Finally, state legislators could increase competition, choice and competitive pricing by repealing state hospital moratorium laws or certificate of need (CON) laws that restrict competition, keep prices high, and limit patient access to care. Removing restrictive state CON laws would allow local facilities to meet community needs and offer competitive prices to patients.

It can be done. Health benefit costs can be reduced while keeping wages competitive. Employers and legislators should work together to bring coverage costs down while keeping wages at attractive, sustainable levels. Counterbalancing inflation through choice and competition will benefit every person and every company purchasing health insurance.

The views and opinions expressed in this commentary are those of the author and do not represent an official position of Alpha News. 


Twila Brase

Twila Brase, RN, PHN, is president and co-founder of Citizens’ Council for Health Freedom, a national, patient-centered, privacy-focused, non-partisan organization located in St. Paul, Minnesota since 1998.