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Health Care: Why Employer Responsibility is Needed

There a strain of liberal advocacy for national health care that hopes for the system to get worse, in the assumption that only then can serious reform happen. Ezra Klein makes this argument in a post attacking the Chicago Retail Workers bill as a danger since it might actually improve the lives of Wal-Mart workers. Instead, according to Ezra, progressives should "view a slightly better menu of options for Wal-Mart employees as delaying the ultimate, more important victory." So the worse the lives of low-wage workers, the better for certain liberal social engineers trying to enact national health insurance. Then, we can eliminate employer responsibility for health care with a completely government-financed system? Which makes no sense. Ezra makes a broader argument about "progressives" like himself serving the public interest better than unions -- which I'll return to later in the post -- but let's start with why employer responsibility for health care is not going to happen, at least any time soon. The Numbers: Look at the following graph of who currently pays for health care in America: Health-PercentofSpending.jpg So currently, federal and state governments cover just 39% of funding for $1.75 trillion in US health care spending annually. So for the government to take over the rest of health care financing would requre roughly a $1 trillion annual increase in general revenue taxes. (This doesn't include the costs of extending health care to those presently foregoing health care because of lack of insurance, but it's reasonable to argue that savings from a national system could pay for the uninsured.) Look again at the graph above-- without that employer contribution to health care, does anyone seriously think there is any way to help out the families paying hundreds of billions out-of-pocket or going without health care presently? Back in 1994, the rightwing filibustered even the moderate Clinton reforms; they will lay on railroad tracks to prevent these kinds of revenue increases. Yet folks like Ezra want retail workers in Chicago to go with less health care today so that liberals get a better opportunity to convince William Kristol that blocking single payer health care is a bad idea. Employer Responsibility in Other Countries: Ezra also makes the argument, as he has before, that the current problems Ford and General Motors face is due to requriing employers to be responsible for health care costs. Yet he ignores the basic fact that Detroit's main Japanese competitors operate in a country, Japan, which is based on employers paying for health care. In fact, the Japanese health care system looks a lot like the "fair share" requirements that unions and their allies have been promoting across the country. So if Japanese companies are increasingly dominating the global car market under a system of employer-responsibility for the health care of their employees, let's abandon the argument that employer responsibility for health care is the problem. The overall costly, dysfunctional US health care system may be a problem for all employers, but making the employers pay their fair share of costs in a reformed system is no obstacle to global competition. But let's go back to the present cost numbers to refine what national health care needs to accomplish, with a different graph (also courtesy of the California Health Care Foundation): HealthSpendingbyContributor.jpg

The Burden on Working Families: Now to amend the number above, some of the present health care costs by individuals and businesses are taxes already paid for Medicaid and Medicare, so the really relevant spending on health care for those not covered by those programs are the $442.1 billion spent by individuals and $342.8 billion spent by businesses on insurance and out-of-pocket health care expenses. So here's a question for progressives. Don't we want to keep that $342.8 billion employer health care commitment in place and concentrate new taxes on easing the $442.1 billion burden of health care expenses paid by individual families? Of course we need reforms of the system to eliminate wasteful paperwork, avoid duplication and control costs, but as Japan and a number of European countries show, that can be done in a system where employers retain a financial responsibility for paying their fair share of health care costs. Part of Ezra's argument is trying to blame unions for the lack of national health care in the country. It's actually amazing that he argues that unions are only interested in "tangible gains for their workers now," while ignoring the historic role of unions in fighting to enact Medicaid and Medicare and SCHIP for children and a range of other government programs. And guess what, no Wal-Mart workers in the US are in unions, so bills to increase health benefits for Wal-Mart workers DOESN'T create tangible gains for unionized retail workers right now. It does have long-term gains for union workers since a level playing field, where all employers, union and non-union, have similar health care costs, may help unions, but that just points out why unions actually inherently and institutionally push for a "just society for everyone." Contrary to Ezra's supposed opposition between the "progressive movement" (a nebulous institution) and the union movement, a more just society is better for union workers, which explains why unions have been core part of social advancement, from the New Deal and Great Society to the civil rights movement. Why "Fair Share" Advocates Have the Right Idea: Here's a thought. Maybe the unions and churches and community allies like ACORN, all representing millions of working families, aren't dumb. Maybe they recognize:

  • That the multi-hundred billion dollar per year health care contribution by employers can't easily be replaced by tax revenues;
  • That the better option is to require a level playing field where ALL employers are required to make a commitment to health care for their employees, so none has an unfair competitive advantage; and
  • That new tax revenues would be better spent on easing the $442.1 billion burden of direct health care spending by families, rather than using that revenue to subsidize large employers like Wal-Mart. I'm in favor of moving towards an integrated national health care system, since it's the best way to make sure no one falls through the cracks and to achieve a more rational, less costly health care system. But if employers bail on their present spending on health care, that just means that the government will have to raise MORE revenue to achieve such an integrated system and make it less likely. Some believe that the worse the health care system gets, the better, since that will open up the possibility of national health care reform. But it's actually the opposite-- the more we shore up the employer side of health care responsbility, the more likely we can afford to bring the rest of the population into a reformed system.