The burden of health care costs on businesses is substantial and rising rapidly. Between January and May 2004 alone, the costs of providing health care for workers increased by 11%. Between 2000 and 2005, premiums for employer-based insurance rose at least 9% each year, a rate of increase 2 to 3 times faster than inflation and workers’ wages. Companies are suffering because of these cost burdens. General Motors, which has historically offered one of the most generous benefits package of any corporation, spent approximately $5.6 billion on employee health benefits in 2005, at a time when they suffered their worst quarterly loss in a decade. Health care costs add about $1500 to the price of each car GM sells.

The significant rise in health insurance premiums within the past five years has led to dramatic increases in the amount Massachusetts employers must spend on employee health care costs annually.

_{Data obtained from theMassachusetts Employer Health Insurance Survey by Massachusetts DHCFP http://www.mass.gov/Eeohhs2/docs/dhcfp/r/survey/er_2005_comp_results.pdf}

Employer-sponsored coverage has traditionally been the main source for health insurance in the US, but this relationship is weakening. In 2005, 77% of employees received benefits from their employer, down from 81% in 2001. Most of the employees that lost coverage during that time remained uninsured. Uninsured individuals are at risk for poorer health and premature death. Universal single-payer coverage offers several advantages to businesses. It will reduce costs for businesses that are currently providing insurance and also eliminate retiree benefit costs. Businesses will no longer have to negotiate with insurance companies or labor unions about health coverage. National coverage will free up more money for consumer spending and also create a healthier, more productive work force. Health care costs will be controlled and predictable, and businesses would no longer lose employees to those companies offering better benefits.

FURTHER RESOURCES:

• “Single-Payer: Good for Business,” Morton Mintz, The Nation, October 28, 2004.
• “Changes in Employees’ Health Insurance Coverage, 2000-2005,” Kaiser Family Foundation, October 2006.
• “Ailing GM looks to scale back generous health benefits,” Julie Appleby and Sharon Silke Carty, USA Today, June 23, 2005.
• “Workers’ Health Insurance: Trends, Issues, and Options to Expand Coverage,” Paul Fronstin, Commonwealth Fund, March 28, 2006.