An extremely important variable cost per employee is health care provided by the employer. In 1990, the average annual cost per employee was $3,161. This ETHICS AND QUALITY figure is expected to continue to rise each year as more and more expensive DISCUSSION technology is used on patients and as the costs of that technology are passed along through the insurance company to the employer. One simple way to re¬ duce these variable costs is to cut back on employee insurance coverage.

a. Discuss the ethical implications of reducing employee health care coverage to cut back on the variable costs incurred by the employer.

b. Assume that you are an employer with 500 employees. You are forced to cut back on some insurance benefits. Your coverage currently includes the fol¬ lowing items: mental health coverage, long-term disability, convalescent fa¬ cility care, nonemergency but medically necessary procedures, dependent coverage, and life insurance. Select the two you would eliminate or dramat¬ ically reduce and provide reasons for your selections.

c. Prepare a plan that might allow you to “trade” some variable employee health care costs for a fixed or mixed cost.

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