(Oct. 6, 2003) — Economically speaking, the first few years of this new decade are shaping up as an era of cost cutting. For some companies it's a matter of survival, while for others it's a case of trimming fat that should have been cut during the booming 1990s.
Leanness in all enterprises is hailed as a virtue.
But there's a downside to that at many companies: a rising number are dropping health insurance for employees.
According to Census Bureau statistics released Sept. 30, the trend is most prevalent at small and medium-size companies — those that employ 25-99 — and it seems to be hitting middle-income households the hardest. The largest economic demographic hit by the drop: households with incomes of $25,000-$49,999.
The number of people in the United States without health insurance increased by 2.4 million last year, to 43.6 million, the report said.
While the increase is partly due to growing unemployment, a large percentage of the people losing private insurance actually have full-time jobs. Some 19.9 million full-time workers did not have health insurance in 2002, an increase of 897,000 in just one year, according to the report. Experts estimate that, because of the sluggish economy, this year's numbers will be worse.
The problem affects workers, their families and society as a whole. And it's a problem that compounds itself, because as companies drop health-insurance coverage, that puts cost pressure on the health-care industry. Hospitals and doctors pass those costs on to people who do have coverage, and that ends up making private insurance more expensive for the shrinking number of employers that can afford it.
The trend needs to change.
The options for a major turnaround don't look good. Nationalized health care is not going to happen in the United States anytime soon. The Clinton administration ran into organized resistance that derailed its plan. Today the prospects are even worse, with the Bush administration firmly in control and the fragile economy putting a damper on the potential for any expensive new government program that's not aimed at terrorism.
Plastics processors can benefit from the trend, however.
* First, processors can use health-insurance benefits as a carrot to attract and retain better employees, especially from the growing service industry.
* Second, processors can offset rising costs by continuing to automate. Better to invest to retain the best employees while improving productivity than to try to nickel and dime costs without really helping your bottom line.
Finally, a word to processors that worry that they can't afford health insurance: Yes, you're competing with low-cost companies in China and Mexico. But you're also competing with processors in Canada and Western Europe, where employee benefits are more generous and more expensive than in the United States. Many of them manage to survive, and in fact thrive. Learn from their example.
As one very successful, U.S.-based processor said a few years back: “We should not try to win the game with cheap tools and cheap wages.”
