Since the election, Google search queries for “tariff” have suddenly spiked – more than 1,650%. Searches for “who pays tariffs” have risen 350%. The United States already has tariffs in place to curb unfair competition from foreign markets and encourage greater reliance on domestic production. However, the proposed increase in tariffs could raise costs dramatically, affecting American consumers and businesses. The dental and healthcare industries are not exempt. Specialized equipment, tools, and materials are frequently sourced from abroad. And if costs climb, it’s safe to presume that practices will adjust their pricing structures to compensate. New tariffs may therefore have far-reaching impacts on a company’s insurance plans. For HR leaders, maintaining the oral health of your workforce could now mean sustaining the financial health of your organization. Preventative care is even more critical today, when dental emergencies and restorative treatments might emerge as tomorrow’s insurance nightmares.
Understanding Tariffs
Tariffs are not new ideas at all, nor are these protectionist trade policies partisan practices. In 2018, during Donald Trump’s first term as president, he imposed tariffs to curb “unfair competition” from manufacturers overseas. The Biden administration, throughout its tenure, has left those same tariffs in place. Both political parties see benefits associated with tariffs. However, the issue now, as the Brookings Institute explained, is that Trump “has suggested a flat 10% tariff on all imports, and a 60% tariff on imports from China. This would constitute a very large increase, with one analysis predicting that this would cost the typical household $1,700 annually.”
“Among the reasons that countries impose tariffs,” the Brookings Institute said, “are to protect domestic industries (particularly those vital to national security), to incentivize foreign countries to change their practices, and to raise revenue. The Trump and Biden administrations said they imposed tariffs for the first two reasons.”
The Biden administration has kept Trump-era tariffs in place and raised them on steel, aluminum, medical equipment, electric vehicles, lithium-ion batteries, and solar cells. These tariffs represented a fraction of U.S. government revenues. Still, the long-term effects, according to the Tax Foundation, would bring down GDP by 0.2% and result in the elimination of 142,000 jobs.
The Brookings Institute also cautioned that higher tariffs could aggravate the situation: “Economists Mary Amiti of the New York Fed, Stephen Redding of Princeton, and David Weinstein of Columbia found, in a 2020 working paper, that ‘U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers.’ Michael Pettis of the Carnegie Endowment noted that, even when the U.S.-China trade deficit decreases, as it did after the tariffs, the U.S. trade deficit with the rest of the world increases by at least as much.”
Tariffs and Dental Care
Increasing tariffs across the board, and across all countries outside the United States, presents “implausible” and “unsustainable” economic problems. So how does this affect dental care and insurance costs?
Recent research by Elizabeth Curran of the National Association of Dental Laboratories (NADL) indicates that approximately 40% of dental equipment and materials are sourced from overseas manufacturers, across 40 countries, underscoring the dental industry’s reliance on global supply chains. With tariffs imposed on imported goods, this dependence could translate to significant cost increases across essential equipment categories. These concerns are even more pressing when considering potential tariff impacts, which could significantly affect the cost and supply of imported dental materials and equipment, making U.S. practices more reliant on domestic sources. Yet, imported devices are a fraction of the cost of domestic devices, so a tariff would not even the playing field. Even worse, domestic labs have closed down as a result of overseas competition and industry consolidation.
Two Big Dental Complications from Tariffs
Increased costs on goods resulting from tariffs are often passed down to consumers. But there are two larger problems that HR leaders need to consider.
- Supply Chain Disruptions: Tariffs could disrupt supply chains, leading to delays in dental facilities receiving critical equipment or materials, particularly high-tech devices or prosthetic components that aren’t as readily available domestically. Delayed shipments of medical or dental supplies can lead to postponed or canceled appointments. Patients who are unable to receive the treatments they require may need to seek expensive emergency procedures or take extended leaves of absence. Business leaders, in this scenario, could face significant disruptions to their operations.
- Higher Operating Costs Passed to Employers and Insurers: As dental practices experience rising operational costs due to tariffs, insurers may adjust pricing structures. For companies offering dental care as part of their employee wellness plans, this could mean higher premiums, which in turn might affect the quality or extent of coverage offered.
Impact of Tariffs on Dental Insurance Plans
Higher equipment costs have the potential to reshape dental insurance, especially when it comes to premiums and coverage.
- Increased Premiums and Copays: As practices face increased costs, insurance providers may adjust premiums and copay structures to offset expenses. This can affect both companies and employees, who may see higher out-of-pocket costs for certain procedures.
- Potential Coverage Reductions: Insurers might limit coverage options, particularly for non-emergency or restorative treatments, if they become more costly. This could increase out-of-pocket expenses for employees, emphasizing the need for preventative care to avoid costly restorative treatments.
- Shift in Emphasis Towards Preventative Care: In response to cost pressures, some insurance providers might promote preventative care more heavily, recognizing that regular, routine visits can mitigate the need for costlier interventions down the line.
Dentists on Demand has always focused on preventative care, helping companies maintain a robust dental wellness program for their employees while reducing long-term costs. The accessibility and convenience of our solution, which brings care directly to your office through advances in portable equipment, has proven to be a boon for all of our clients – both in terms of cost containment and ensuring healthy, highly productive workforces. However, as the threat of higher tariffs looms, preventative care will be even more essential.
An onsite dental visit from Dentists on Demand, which we call a “pop-up,” includes exams, x-rays, and cleanings. The data we collect during our consultations with employees is immediately available to their local dentists. And if additional treatment is required, we refer them to providers in their area. That said, if the cost of equipment and materials soars as a result of tariffs, those treatments could become more expensive. Preventative treatment then becomes one of the most important ways to protect your bottom line and your employees’ well-being.
Preventative Care as a Solution to Rising Costs
Preventative care offers a practical solution for companies and employees facing rising healthcare costs. Practices specializing in onsite preventative services, like Dentists on Demand, are well-positioned to help mitigate these effects.
- Lowering the Risk of Expensive Emergency Treatments: Emergency dental procedures, such as root canals, crowns, or extractions, often come with high costs that tariffs may exacerbate if the necessary materials become more expensive. Preventative care can reduce the incidence of these emergencies by identifying and addressing issues early on.
- Promoting Regular Check-ups and Cleanings: Regular cleanings and check-ups are crucial in preventing oral health problems that could necessitate more costly interventions later. By bringing preventative care directly to the workplace, Dentists on Demand eliminates logistical barriers for employees, increasing their likelihood of maintaining these essential appointments.
- Increasing Employee Productivity and Satisfaction: Oral health is intricately linked to overall health, impacting everything from cardiovascular health to diabetes management. When employees are pain-free and healthy, they’re less likely to miss work due to health-related issues. Preventative onsite care promotes productivity and contributes to a healthier, happier workforce.
Preventative Dental Care is the Smart Investment for Today’s Companies
Given the potential impact of tariffs on costs across the dental industry, investing in preventative care has never been more critical. By focusing on preventative services and fostering a culture of oral health awareness, companies can protect both their employees’ health and their own bottom line. Dentists on Demand remains dedicated to providing convenient, high-quality preventative care onsite, making it easier than ever for employees to take control of their oral health and prevent costly complications down the line.
It’s difficult to tell if or when these tariff increases could occur. So why not get ahead of the curve and schedule a pop-up today? Or, learn more about our approach to portable preventative care.