by B Smith

Created on: July 15, 2009

Should businesses be required to pay for health care insurance?

One of the most important lessons I learned was in college. My friend was arguing that nothing was free. I gave him a long list of what I believed to be free and he successfully refuted every one of them. Then I thought I finally had him and I looked at him and announced that breathing was free. After about five minutes of fierce arguing I came to the realization that not even breathing is free.

Now we have people that want to use the government to force private companies to pay for their health care costs. But what is really happening here? If anyone thinks that companies are paying their health care costs then they must be naive. Why Smith? Think about this if a company did not have to pay benefits to its employees then they would be free to pay higher salaries. Every employee represents a cost to the company. The managers come to the conclusion that they need a new employee and decide they can allocate $100,000 for that position. Now from the $100k, they will pay the employee about $65,000 and they will use the remaining allocation to pay for things like social security, 401k matches, health care, vacation days, sick days, dental care, vision care and the like. If they were to not pay those benefits they would be free to pay much higher wages.

Think of it like this you enter a new car dealership to buy a car. Let's say you have decided on a Toyota Camry. What will it cost you? The more options you get on your car the more it will cost. Seems logical right? The better anything you get will usually cost you more. What costs more? A hamburger or a steak? A Chevy Cavalier or a Chevrolet Corvette? The more you get the higher the cost, again, generally speaking. So, the more benefits you get, the higher the cost. Benefits cost money and that cost will be met somewhere. Whether it is lower salaries or higher costs to the consumer, they (costs) will be paid for somewhere.

Keep in mind that employers are not required to pay any benefits whatsoever. Benefits are a recruiting tool to attract the best talent to the company so the company can be competitive. If you would like to see the benefits that Google offers (and they are incredible!) then go to this site: http://money.cnn.com/magazines/fortune/bestcompanies /2008/.

Then there is the question of who is going to set the requirements. What kind of health insurance will it be? Will it be basic health? Will it be major medical or bare bones?

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