NCPA - National Center for Policy Analysis

Competing For Workers Through Health Insurance

April 15, 1999

Nationwide, increasing numbers of people are going without health insurance. But some employers are now finding that offering health benefits is a good business practice. Not only does the option lure job applicants in areas of low unemployment, it can reduce the number of days employees call in sick -- thus holding down overtime costs for those who must take up the slack.

  • Only 54 percent of small businesses offered health insurance last year, compared to 59 percent as recently as 1996, according to a study by the Henry J. Kaiser Foundation.
  • But in Kansas City, Mo., where unemployment is 2.9 percent, a Chamber of Commerce initiative is encouraging small businesses to provide their workers with health insurance.
  • In three years, more than 3,000 businesses there have begun offering a Blue Cross plan -- and the insurer expects the number to increase 15 percent this year.
  • Those without health insurance in Kansas City total between 9 percent and 12 percent of the population -- compared to a nationwide average of 18 percent, or 28 percent in New York.

The reduction in the number of employee sick days stems from insured workers' access to immediate physician care. Rather than having to wait in long lines for emergency room treatments or care at a free clinic due to lack of insurance, the newly-insured spend a shorter time recuperating and are soon back at work.

The director of a Kansas City child-care center estimates that offering health insurance cut overtime costs among her 14-member staff from a monthly average of $420 last year to $120 this year.

Source: Lucette Lagnado, "Small Employers Offer Health Benefits to Lure Workers in Kansas City," Wall Street Journal, April 15, 1999.


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