At the conference I attended this week, the cost of health care was one of the prevailing issues being discussed among HR professionals. In fact, at a seminar discussing health care and consumer-directed health plans, statistics were provided showing that by 2007, large employers (500+ employees) would be paying 2 times their 1999 health care premium rates for employees, while small employers (less than 500 employees) would be paying 3 to 3 1/2 times their 1999 rates. It is not surprising then that the Wall Street Journal today carried this article: “Health-Care Costs Blamed for Hiring Gap.” The article states:
The search is on for an answer to the most pressing question in the U.S. economy today: Why are businesses so reluctant to hire new workers? The popular answer is that business is hiring in India and China instead of the U.S. But there isn’t enough offshore outsourcing going on to explain the mystery. . .
The article makes a case that health care costs may be some of the answer:
The logic goes like this: For an employer, adding a worker makes sense when demand seems strong enough for the company to turn a profit from a worker’s labor. But adding a new worker means more than paying. There are also payroll taxes. And there are the costs of health care and pensions. With health-care costs surging, employers prefer to squeeze more work from workers on their payrolls — or rely more on temporary workers, who are much less likely to get health or pension benefits — than hire new workers. That gives rewards of extra labor without the cost of extra benefits.
Also, on the health care front, the Wall Street Journal is reporting: “GM’s Liabilities For Retiree Health Are Over $60 Billion.” (Subscription required.) The article states that “GM, the nation’s largest purchaser of health care, will soon report that its future health-care liabilities for retirees have surpassed $60 billion — even after recent Medicare legislation that has reduced retiree health-care obligations for many companies.”
And regarding California’s recently passed health care bill, SB 2, the California Health Care Foundation has posted some great information on the ERISA implications of SB 2 which you can access here as well as some excellent resources regarding the bill here.