The Snitch

Much talk is going on right now on whether the US government should bail out their local automobile industry (ie. Chrysler, General Motors and Ford). Part of the reason why these manufacturers are unable to compete with the likes of Honda and Toyota is because of the high pension wages and employee healthcare insurance which the Big Three companies have to foot. This is unlike in countries in Japan, where employee insurance is covered by the government.

According to a Washington Post article:

The Big Three pay much higher wages than production workers are paid in the nonunion auto firms and in the general economy. And the health-care costs of current workers and retired union members are an enormous additional burden.

Of course the whole blame cannot be placed on the cost of employee salaries and healthcare alone. The failure to produce anything other than SUVs and poor senior management is also reason for why Detroit is failing.

But it brings up a  pertinent question. In a globalised economy where bottom-line costs help determine how competitive a company is, who should bear healthcare costs? The government, employers or employees themselves?

I was sitting beside the very charismatic CEO of Opus IT Services, Charles Fan, earlier at the Enterprise 50 awards lunch today when this subject came up. From his perspective running a local SME, healthcare costs is definitely an issue which he deals with, and one which needs to be kept under control.

But even within MNCs, there is a trend is of moving away from an all-comprehensive healthcare package. More companies are starting to ask employees to co-pay part of the insurance or/and medication.

It is inevitable that healthcare cost is Asia will keep on rising due to longer lifespans and a shift to chronic lifestyle diseases. So what are some strategies companies are doing to keep costs low? Who should bear the onus of covering employee healthcare?

What are your thoughts?