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State Insurance programs

Insurance programs are mandated by our state government. Many of the benefits covered by these programs (i.e. social insurances, business insurances or health care) have been defined by our politicians, not the insurance companies.

Unemployment Insurance

With Unemployment Insurance, the claimant (formerly the employee) is not responsible for paying any premiums. Unemployment Insurance is paid for by the employer, not the employee. The former employee is the beneficiary and there is no reason for him to be concerned about the financial impact on the employer.


Worker’s Compensation and Unemployment are insurance programs that are funded by the employer. Employers’ premiums are significantly influenced by employee usage of the insurance. With Worker’s Compensation, employers are assigned an experience modification factor. This factor can result in the loss of a 20% discount and a surcharge of 30%, resulting in a 50% increase in premiums) and is a significant factor in the cost of labor. Employer discounts can be lost immediately and surcharges take three years before they start to diminish.


Under our current Unemployment system, the claimant receives a weekly benefit for a fixed time period. When the set period of time expires, then benefits terminate. It is a cold turkey approach that does little to motivate the worker to find a job during the period covered by unemployment insurance. Would it not make more sense to designate a set period during which the worker would receive full benefits, and then systematically decrease the weekly benefits until they are stopped altogether? This would financially motivate the unemployed person to make maximum effort to locate a job.


Employers are required by law to provide (at the employer’s expense) Worker’s Compensation and Unemployment insurance to all employees. Employers are not permitted to pass any portion of the cost on to the employees. Hence the premiums become a factor in the cost of labor.


In some states, employees who file a Worker’s  Compensation claim are required to self-insure their loss of income for the first five days of a claim. This substantially reduces the number of fraudulent claims and thus reduces the cost of Worker’s  Compensation. For every line of insurance there is a logical remedy.


The cost of these insurance programs is a key factor impeding the creation of new jobs and the growth of small business. Since the early 90’s, residential building contractors moved away from hiring workers as employees; instead, they now hire individuals to work as subcontractors to avoid the financial burden of providing insurances.


Health Care

When we focus on problems with our health care system, we become very apprehensive. However, the issue can be correlated to the auto repair example. The health care scenario is much more convoluted, but the principles are the same. Instead of it being an auto repair shop that takes advantage of our insurance programs, it is medical institutions and the large medical practices that take advantage. We, as patients, appreciate what we perceive as extra attention to our well-being, and rarely question doctors’ or hospitals’ practices. We do not think to question prescribed tests or procedures. After all, we trust that our caregivers have our best interest as their main focus. However, we need to remember that medical care is an industry.


Health care has become so convoluted that no politician believes the mess can be unraveled. Hence, Democrats have forced Obama-care upon us, and Republicans (who don’t have a solution) recognize that Obama-care simply takes a convoluted mess and makes it a bigger convoluted mess. The American people want to believe that Congress understands what it is doing. However, Congress does not.


The demand for insurances to provide services such as routine physicals at no cost to the patient may fuel job creation and the growth of both the medical industry and the insurance industry. However, the costs of insurances are a primary factor in the out-sourcing of manufacturing jobs. It is a key component in the decision “not to hire”. As the medical and insurance industries continue to grow, so does the ratio of uninsured verses insured.