Mark Harbeke

There are many, including New West media publisher and CEO Jonathan Weber, who argue that we need to separate business (especially small business) from health care coverage of individuals.  Marc Tracy of Slate's BizBox site echoed Weber's argument in a post yesterday.

Tracy points to three big reasons Weber states as to why this needs to happen:

1. It distracts small businesses from their principal mission,
2. It gives large companies a big advantage over small companies (big companies can leverage economies of scale to reduce their per-employee costs), and
3. It introduces friction in the job market by creating an external incentive not to change jobs.

These are very compelling reasons and I agree with them...to a point.  Where I start to play devil's advocate is when I see workplace research – namely our analysis of our 2009 Top Small Workplace Finalists – which shows that including health care coverage as an employee benefit, when combined with employee engagement and trust building activities as part of overall innovative human capital strategies, can maintain or boost business metrics that matter to small business leaders.

Check out this chart which shows how the 2009 TSW Finalists compare to the 2008 Finalists when it comes to offering medical insurance, the company's share of employee premiums covered, and some of the resultant business outcomes:

I need to put a big asterisk (*) here that this alone, of course, does not lead to the outcomes shown, including better employee retention, lower turnover, and comparable revenue growth (we suspect the 2009 average is down slightly due to the economy, although the figures for both years are strong).

Still, it is where these companies spend the most money in benefits to recruit and retain the talent they need to drive business success.  Removing employer-provided health care coverage would likely lead to decreased competitiveness – especially in recruiting Millennial employees, which studies have shown have come to expect this in the benefits packages of employers they want to work for.

Thus, we come to the rock-and-a-hard-place part of this debate.  Small firms are damned if they include a health insurance component and pay some or all of the premiums for employees and/or dependents, as they can be flattened by larger competitors here as Weber notes.  And they're damned if they don't because top performers will seek to join other (possibly larger) employers that do instead.

All that said, it will be very interesting to see what comes out of Washington this year (if indeed it happens in 2009 as President Obama wants) with regard to a health care overhaul.  I hope that the needs of small organizations – those that, let's not forget, make up over 99% of all employers and provide 60-80% of new jobs annually – don't get lost in the shuffle.

Should small firms be mandated to provide medical insurance coverage, or should it be optional as it is now?  Or, should it be taken out of the purview of business altogether?

Photo credit: Quincy Herald-Whig