Wednesday, June 17, 2009

More Healthcare Cost Stuff

There was an excellent article on health care costs and total compensation in yesterday's WSJ.

It basically argues, correctly, that increasing health care costs tend to crowd out large salary increases. Employers factor in the total cost of compensation and not just salary. So, as health care costs increase, businesses cut back on raises. This doesn't necessarily make businesses less globally competitive as Obama puts it. It just changes the mix of compensation. The WSJ article does make a worthwhile point about how healthcare costs can lock people into their jobs and discourage entrepreneurship because people are concerned that going out on their own will result in a potential business starter staying put with the salary and stability. I've been there (I am there) myself. You could argue that a better healthcare system (not a government run one) could encourage the very thing that encourages job creation and economic growth. Instead of going in a direction that does that, we're actually more deeply entrenching the problem by having the government run things rather than the insurance companies. I would prefer neither, but given my experience, I prefer government even less.

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