Health care cost is and has been a bone of contention in the US due to its general effect on their GDP. The health expenditure has been on the rise since 1988, by 2002 the United States government spent an approximate of $ 5267 per capita health care. The figure has been growing gradually and by 2013, the entire health expenditure had risen to $3.6 Trillion which is equivalent to 18.4 of the country’s Gross Domestic Production (Thomas Bodenheimer, 2005).
The high costs have not spared the United States employer since 60% of American employees are on employer-sponsored health scheme. Such kind of burden has precipitated a conflict between the employer and the employees in the United States of America as the employer try to reduce the cost. It’s against these backdrops that we discuss how the high cost of healthcare in the United States has contributed to the employer, employee conflict. The following are the effects.
• Reduction of the fringe benefits, the employers are very keen not to bear an extra cost on behalf of their employee. Any increase in the cost of production is transferred to the employer in form of a reduction in some allowance to help on covering arising cost such as increased health cost(United States Department of Health and Human Services, 2019)
• Increased working hours, some of the employers have resulted in increasing the working hours for their employee as a way of subsidizing the high cost instead of implementing a pay cut. This has a demoralizing effect on the employees as they work more for less pay.
• A decline in profitability, especially for business with minimum nominal wages in relation to the rising cost of employment. Mild inflation triggers a reduction in profit, increases the prices, lowers production and higher contribution by the employee. This is most common with small business (United States Department of Health and Human Services, 2019)
• Poor employee welfare, as the insurance cost keeps on rising, the employer is finding it hard to protect their employees through normal subsidies. They have resulted in implanting of further cuts to cover on the rising cost (Reed Abelson, 2010)
• Reduction in the workforce, when the cost of insurance rises, the employer may opt for part-time workers without benefits in order to manage on his overall cost. This greatly affects full-time employees since part-time employees prove to be less costly.
• The quality of the employees has been compromised, the employer may opt for cheaper labor force with minimum benefits. This affects the quality of their output. The employees, on the other hand, may fail to deliver to the expectation especially where they use the pa capita approach to determine the premium (National Bureau of Economic Research, 2019 )
• It has also led to an increase in the uninsured population, as the employers focus on cost reduction and opt for an employee without some benefits, the case of the uninsured population will grow exponentially to alarming levels if not controlled.
• Retarded economic growth, increased the cost of health means more expenditure and a reduced disposable income, this translates into a stagnated or reduced economic growth since the employees will have little saving available for investment.
• Distorted perception, while employers find the high insurance cost to have a high negative implication on their profitability, employees view the high contribution as exploitation hence prefer to work on part-time employers who don’t deduct such benefits.
• Increased health cost has led to a reduction in incentives; employers with insurance covers have an increased 3% working hours as compared to employers without benefits.
• Divided attention, due to the high cost of the insurance, some employer has allowed their employees to seek for an alternative cheap service provider where they can secure vouchers for treatment. (Reed Abelson, 2010)
• The high insurance cost has also contributed to compromised service delivery by the insurance service providers. The service rendered is based on the amount contributed by the beneficiary. Some employees will be forced to access low-quality service since they can’t afford the good services offered by through the expensive package.
Since a healthy population plays a major role in the growth and development of a nation, healthcare should be packaged and availed to every citizen at an affordable cost. To achieve this all the citizens, business entities and government should come up with policies that make its availability swift.
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