January 29, 2013

The Flyer I Received Was Called “The Tip Of The Iceberg”

By Paul Bieber

It was so interesting I thought I would share it with you.  It came from the insurance provider for my consulting group, Harvard Pilgrim Health Care.  I pay the medical insurance for my employees, and grouse about the bills, just like you do.  And this flyer was meant to make me happy about paying.  That part didn’t work, but I now have a better understanding of why companies should provide affordable medical insurance for its employees.

First, this is a biased flyer…they want people to buy medical insurance, but the facts seem solid.  This is a non-profit group, associated with Harvard University, which is a very good source of information.  Here’s the facts about companies that keep their employees healthy and the related general increases in costs of health care:

  • Cost increases are 5 times lower for sick leave.  This is the cost of covering the sick employee’s duties, the lost productivity and administrative costs of using a replacement worker.
  • Cost increases are 4.5 times lower for long-term disability.  If an employee doesn’t get sick in the first place, or has a milder version of whatever the sickness is, you save.
  • Cost increases are 4 times lower for short-term disability costs.  If you believe the point above, you’ll believe this one too.
  • And 3.5 times lower increases for general health care costs!

These are absolutely measurable costs.  What about reduced overtime by keeping the best people working; reduced turnover by hiring people who want to stay working at a job that gives affordable insurance; lower new-employee training costs; customer dissatisfaction with non-experienced employees, or reduced quality from the ‘new folks’ in the back shop?

All of these are the hidden costs of poor or weak health care.  Now, I am not arguing for one side or the other on the merits of the Affordable Health Care Act, but I am saying that giving employees an affordable plan will keep them healthier, which will keep your business healthier.

From my experiences, I know that hiring the best employees will improve your business.  If you don’t offer affordable medical insurance, you will not get the best folks out there.  It’s that easy.  Remember, the most important assets of your business walk out the door every night at 5:00 pm.  Machinery doesn’t take sick days or have worker’s comp, I know that, but it is people that have creativity and positive attitudes; strong work ethic and an understanding that customers are important.  Sure, we all have employees who don’t have these attributes, but I can guarantee you won’t get the good attributes without providing health care to your workers.  And not just the workers, but their families too.  We used to spend a ton of money maintaining our machinery and plant, but we spent even more maintaining our personnel.  This was one of the keys to our success as a glass fabricator.

So, the tip of the iceberg is the money you do pay for health insurance, but the real savings comes from how much gain you can realize by keeping your workforce healthy!