Wanted: New Employee Benefits

Posted on April 17, 2009

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It’s going to happen; just a question of when.

The “it” is the move away from the employer based model of providing health insurance in the United States. It’s quite clear that President Obama is determined to bring change to the health care model (see, for example, a recent blog post by Peter Orszag, the head of the Office of Management and Budget entitled “Changing the Game in Health Care”).  Last week the Wall Street Journal published a rather passionate editorial on the topic (“The End of Private Health Insurance”).

What the future holds for health care and for health insurance in this country is, of course, not clear at the moment, though there’s no lack of suggestions, ideas and plans . One idea I recently came across is to base a new system on the one utilized in Switzerland, as described in this blog post by Regina Herzlinger.

So, for the sake of discussion, let’s assume for a moment that, at some point, health insurance is decoupled from employment. How should employers modify their total rewards packages in light of the fact that the largest component of total compensation is no longer there?

Here are two initial thoughts on the question. Would love to hear others from readers:

  • Increase salaries – In some ways, the most obvious idea. Take the cash spent on medical insurance and make it part of employees’ base pay.
  • Increase retirement benefits – Maybe employers can strike some sort of deal with the government in which employers are off the hook for providing health benefits but, in return, are expected to increase spending on retirement benefits.

Of course, another possibility is that since somone needs to pay for health care, employers won’t have extra dollars and the question is moot. In other words, it’s certainly quite possible that while the responsibility for providing health insurance will be taken away from employers, business will pay – whether directly, through some kind of “health tax” paid by businesses or, indirectly, through higher income taxes.

Posted in: Health Benefits