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If you missed the first part of this posting regarding small business and healthcare, click here to review.

In my last posting, I discussed the fairly grim reality that rising healthcare costs in America are having on small business and solo entrepreneurs, who increasingly are being squeezed to provide insurance under the existing system.  The World Health Organization reports that as of 2006, the United States spent a staggering 15.3 percent of GDP on healthcare, yet lagged behind many other industrial nations in infant mortality, anticipated lifespan, and other metrics, suggesting that the “bang for the buck” was not as impressive as might be hoped.

It is probably an understatement to observe that in addition to the other challenges facing the economy as we head into 2010, getting a handle on how to most efficiently and effectively administer and deliver healthcare in this country is a pressing priority.

Who Should Pay for Employee Premiums?

Should employees of a company expect that their employer will cover their healthcare costs completely, and even extend this coverage to their immediate family? Is this sense of entitlement a holdover from the ascendancy phase of America’s economic superpower status which is no longer valid in the “flattened world” of the 21^st Century?

Truth be told, there is no easy or glib answer, and the best I can do is some general observations. When something is perceived as “free” it is often given little value, and to have the individual completely divorced from the costs of seeking out treatment can lead to abuses. The rise of “defensive medicine” as a response to our horribly litigious society, as well as demands placed on doctors by patients that expect every possible test to be performed on them to diagnose whatever symptoms ail them also contribute to fast-rising medical costs. And while HMO’s have been a boon to the often highly compensated executives that manage and run them, they have introduced layers of bureaucratic interference into the doctor-patient relationship which are detrimental to both physician and patient.

Currently we are in the midst of economic doldrums which have threatened the very stability of the global financial system and have depressed wages, leaving many workers struggling from paycheck to paycheck even if they are not rabid or irresponsible consumers. If salaries remain flat or decline, coupled with rising inflationary costs for many necessities as well as the reality that actual purchasing power has dropped for a large percentage of Americans, and healthcare benefits are reduced or done away with altogether by employers, it is likely that we will see more people postponing or avoiding medical care. This places further stain on the system if and when these individuals find themselves in a true medical emergency due to failure to seek out treatment at the onset of symptoms.

Healthcare Premiums Place Steep Burdens on Many Workers

If employers are unwilling or unable to cover employee premiums, or at the very least pay the lion’s share of the burden, and employees are forced to seek out insurance without the group buying power that is afforded by even a small business pooling its employees, I suspect that there will be declines in real productivity, no matter what the statistics say. Workers that are motivated by fear (such as loss of income or the threat they can be replaced by someone willing to work for less) are not the kind of employees that benefit an organization in the long run. Sadly, some executives fail to understand this, or could care less, since their own immediate futures and compensation are more often than not tied to short-term performance, or worse, the appearance that a company is healthy.

Ultimately, smart companies acting out of their own self interest will reward productivity and innovation in their employees by paying a decent wage (and ideally reward performance via other incentives such as bonuses, flex time, awards and recognition, etc.), and if that means paying less on the salary side in order to provide decent health coverage, this may be a wise trade-off. Conversely, companies that want to squeeze employees in a depressed economy by expecting more out of their workers while stripping away benefits and compensation will either face retribution when the economy recovers (i.e. disgruntled workers will leave in droves) or will simply hasten their own demise.

What Happens if National Healthcare Becomes a Reality in the U.S.?

While I do not have a crystal ball, it seems apparent that mandating people to carry health insurance coverage, while well-intentioned, is likely to result in some very negative unintended consequences. Many small businesses would be hard-pressed to continue operating in an employer-mandated environment without significant subsidies from government, which in turn would require higher tax burdens on those working, particularly as the Boomer generation ages and the Social Security and Medicare entitlements are stressed further. Subsidizing those currently without health insurance, regardless of whether this is a lifestyle choice or not, becomes grossly unfair in instances where the recipients have the discretionary income available to pay for coverage, but choose instead to spend the money on other goods and services.

It is no secret that for the majority of Americans, any talk of a recovery right now is largely illusory, as the U6 unemployment number, which measures those underemployed, working part-time involuntarily, “discouraged workers” and independent contractors that simply don’t show up in the oft-cited U3 unemployment number, is pushing towards 18 percent. And while this may fall short of the Great Depression in relative terms, the economy is very different from that period and a large number of the millions of jobs lost in recent years will simply not return to the U.S. barring major global shifts. For all the talk of creating new “green” jobs or training “knowledge” workers, there is little evidence that this is happening, or that the jobs which will be created will pay wages that afford the job holders the ability to maintain what has come to be defined as an American “middle class” lifestyle.

Quite frankly, depending on the details of a National Healthcare plan, we can expect that given the high costs associated with insuring American workers, larger corporations may elect to continue to outsource jobs overseas wherever practical while smaller localized businesses will likely find their tax rates (either as corporations or passed through to the owner on personal taxes) increasing to pay for this societal largesse. Perhaps the greatest good that government could do in this situation would be to force insurance carriers to be more competitive by opening the playing field, and allowing small businesses in a given geographic area to pool workers to get the best possible rates for employees, regardless of who is paying the premium. Similarly, allowing independent contractors to buy insurance through a larger pool with pre-negotiated rates, rather than as individuals with minimal bargaining power, could result in savings that would allow individuals to either add to depleted savings or invest into the recovering economy.

Make no mistake – we didn’t get into this mess overnight and any solutions brought forth are not going to be quick and painless either. But inaction, which has been the de facto choice for years by politicians, is simply postponing a societal reckoning which could be even more devastating than the pain felt by most Americans for the past couple of years.

Jonathan S. Ross is the founder of Los Angeles based Black Rock Consulting, a boutique management and communications consultancy offering strategic planning and development, project management, marketing strategy and copywriting, and creative writing and content development services to start-up, early stage and more mature ventures. He is also the originator of Tao of the Zentropist, a business and personal development blog fusing universal truths found within Eastern and Western wisdom traditions.

Learning from Failure

Let’s get this out of the way – nobody likes to fail. And outside the realm of the plot conceit of The Producers, it’s highly unlikely that under normal circumstances, unless it is part of some greater stratagem, anyone deliberately sets out to do so. Yet every single day, all around us, people fail. And if we’re brutally honest with ourselves, we can likely count ourselves in that number on one level or another.

Entrepreneurs Learn the Most from Our Mistakes

Now before you discard this as some pessimistic drivel, understand that failure is an incredible teaching opportunity, for more often than not, we learn more when we come up short and fail to achieve a goal than when we successfully realize it. The truth of the matter is, humans, as well as most animals, learn by making mistakes, and then correcting the behavior until they get it right.

Of course, we have to acknowledge that in the vast spectrum of mistakes to be made, some have more serious repercussions than others, and indeed, some are so unforgiving as to provide no opportunity to rectify or resolve. But these “world-enders” are by no means as prevalent as far less ominous errors in judgment, analysis or action which do not yield a desired outcome, but may teach us important lessons so that the outcome we are striving to achieve is ultimately affected.

Smart Small Businesses Take Responsibility for Their Mistakes

However, in order to learn from failure, we must be willing to set aside, at least temporarily, the ego which seeks to attach a judgment to the failure, and which is often extremely counter-productive to extracting the necessary lesson. For example, failing to achieve a goal may lead to a natural let-down or disappointment, but dwelling on this or mentally flogging yourself for this failure will ultimately continue to undermine your confidence and ability to bounce back from the setback. It is far more productive to acknowledge the negative emotions, allow the grief process to chart its course proportionate to the magnitude of the failure, and then resolve to make the necessary adjustments to avoid a repeat of the failure.

This last point cannot be overstated. We may do everything in our power to try to bring about a desired outcome and still fail in achieving this, and yet this is ultimately forgivable if we’ve truly given our all and applied ourselves with all diligence and effort. Repeatedly failing at a task or goal, because of a shortcoming in effort or because we are making the same mistakes due to indifference or ineptitude, is far less so. We owe it to ourselves, as well as those around us, to do our best and rise to the occasion, especially when the talent or ability to achieve the goal is in abundance and only our own inaction or lack of focus and clarity is preventing us from the result that we claim to desire.

Successful Businesses Choose to be Victors, not Victims

Those who are honest will admit to failure, and successful entrepreneurs and business people often have a long list of failed initiatives and endeavors; however, what separates them from those who are judged to have failed completely is that they learned from previous mistakes and avoided repeating the same mistakes twice. Part and parcel to this process is avoiding the negative status of relishing our victimhood or wallowing in self-pity and self-recrimination; while it is true that some things are outside of our control and sometimes we must play the hand that we are dealt, we can control our attitude and resolve to find a way to overcome the obstacle(s) that stand in our way.

And for those who insist that they’ve never failed, I would counter that you have in all likelihood never taken a risk or stepped outside of your comfort zone, for if you had, you certainly wouldn’t be batting 1000. Anything worth doing entails risk, and if we are not pushing boundaries we are not growing, which is a surefire recipe for failure of a more obstinate sort – the failure to achieve our potential.

Fundamentally, that is the failure that we should be most cognizant of avoiding at all costs.