((lost management; ethics) An extremely important and expensive variable cost per employee is health care provided by the employer. This cost is ex¬ pected to rise each year as more and more expensive technology is used on patients and as the costs of that technology are passed along through the in¬ surance company to the employer.

One simple way to reduce these variable costs is to cut back on em¬ ployee insurance coverage.

a. Discuss the ethical implications of reducing employee health care cover¬ age to reduce the variable costs incurred by the employer.

b. Assume that you are an employer with 600 employees. You are forced to cut back on some insurance benefits. Your coverage currently includes the following items: mental health coverage, long-term disability, conva¬ lescent facility care, nonemergency but medically necessary procedures, dependent coverage, and life insurance. Select the two you would elimi¬ nate or dramatically 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.

LO1.