In the continuing redistribution of wealth, which President Obama approved of in the campaign, Congress has redistributed the responsibility for health benefit costs from some individuals to some corporations. The following excerpts are from a Wall Street Journal article by M.P. McQueen, February 19, 2009.
Congress has just given a big assist to millions of jobless Americans facing a tough decision: Do they reach into their wallet to continue health insurance coverage with their old employer or not? As part of the economic-stimulus package signed into law this week, the federal government will provide a nine-month subsidy covering 65% of the Cobra premium for people who qualify. Employers may not be happy with the expansion of the Cobra program, as some fear it will raise administrative and other costs. "The new law will impose very large costs on employers," says John Goodman, president of the National Center for Policy Analysis, an independent think tank in Dallas. "It will make it more expensive for employers to provide health insurance. And, for those who do, it will make it more expensive to hire new workers."
The first question that comes to my mind is, why would any employer choose to provide medical insurance plans if the government continues to move along this path? If an employee is involuntarily terminated, there was a reason for doing so which results in the lowering of overhead unless a replacement is hired at an equal or higher rate. What if the employee was released for reasons that were adverse to the company? Should the employer be saddled with the 65% costs? I would think employers, especially the small businesses, may begin to consider eliminating the health benefits package and offer a cash subsidy for employees to purchase their own coverage.
The anti-business atmosphere will steadily add to the cost side of the ledger. If this doesn't drive business from the market, it will definitely add to the price of goods and services to the consumers. I don't know if the legislators really consider the unintended consequences for the actions they take. They either don't know or don't care. This is another case of hurting many to help a few. Every regulation or law they enact that adds costs to a company's bottom line, increases the price consumers pay at the register. This is only avoided when the government take the dramatic step of price controls. When price controls begin, the profit margin for companies shrink as their costs are increased. There comes a tipping point where it is no longer worth keeping open the doors of the establishment.
This is only the beginning. If you are unconcerned because it doesn't affect you, be aware that your turn will come. When the health care system is completely controlled by the federal government, the companies will be required to pay into the system if they are not providing coverage on their own. Again, these cost increases will be passed onto the consumers. We are all affected by these kind of actions. Even the folks on welfare will have less to spend when the prices are raised. Don't get too excited about the $13 per week in less withholding tax. When prices go up that money will be eaten up quickly.