Johns Hopkins University
Center for Civil Society Studies
Institute for Policy Studies
October, 2004
The Health Benefits Squeeze:Implications for Nonprofit Organizations and Those They Serve
By Lester M. Salamon and Richard O’Sullivan
Conclusion: The Silent Tax
Escalating health insurance premiums have emerged as a silent tax on the American workforce, offsetting by a substantial margin whatever advantage
workers received as a consequence of recent federal tax cuts and contributing to the reluctance of employers to add new workers to their rolls.
For the most part, attention to the impact of these rising healthcare costs has focused on the business sector. But as the research reported here makes clear, nonprofit organizations have not been immune to these pressures. To the contrary, there is evidence that they have been particularly hard hit, perhaps because they are generally smaller in scale or lack access to the benefit management specialists that seem so important in keeping healthcare costs in check in an increasingly complex healthcare market.
To date, nonprofit managers have succeeded in shielding those they serve from the impact of escalating healthcare costs except for a growing need to introduce or increase service fees. To do so, however, nonprofit managers have had to shift the costs on to their employees – through increased premiums, co-pays, and cost-sharing or through reduced raises or other benefits. In the process, however, they may be undermining one of the few concrete advantages of nonprofit employment – the generally benign human resource policies that nonprofits tend to provide.
How long this process can continue before serious problems of employee turnover and burnout surface is anyone’s guess. What is more, the pressures of continued health insurance cost escalation are likely to accelerate the trend toward increased nonprofit fees and charges, undermining the sector’s ability to fulfill its mission of service to those in greatest need and its broader advocacy role. The “silent tax” represented by continued rapid increases in health insurance costs thus has particularly profound implications for the nation’s nonprofit sector, implications that have been largely overlooked until now. Hopefully, the data reported here will help focus new attention on the health insurance crisis facing nonprofit employers as well.
http://www.jhu.edu/listeningpost/news/pdf/comm03.pdf
Comment: Employees of nonprofit organizations usually accept lower levels of compensation, but do so graciously, acknowledging that the social good advanced has its own rewards. Unfortunately, these organizations are not exempt from the same health care cost pressures faced by for-profit corporations. But most nonprofit entities do not have as much budgetary flexibility. It is particularly disconcerting to see these organizations being forced to use the same methods as businesses in shifting health care costs to their hard-pressed employees.
We are already paying enough to provide comprehensive care for everyone. We
could fund our system much more equitably through a national health insurance program. Then nonprofit organizations would not be faced with the current, unacceptable alternatives of either shifting more health care costs to employees, or increasing fees to the needy being served. We can do better.