“Big business (i.e. the ones with lobbying power) probably derive a competitive advantage in the labor market over small business in the offering of benefits like medical insurance to employees (since big business can often offer better plans at lower cost than small business).”
Was the Chamber of Commerc lobbying for the system that shall remain nameless? I seem to recall they did not. They do have some lobbying power. They represent small business, no?
Before the law’s employer mandate, employers offered health insurance because:
If there was a mandate that all companies must stop offering health insurance, I believe what would happen would be very predictable. As a generalization, the small companies would be relieved, as it is a huge burden and competitive disadvantage for them while attempting to compete with larger businesses. The large companies would publicly moan and complain…and when it was done, give out large bonuses to the executives and the stock prices would shoot up. Employees would not recoup the loss of benefits in raises, what little increased salary they would get would be miniscule compared to increased health insurance costs and taxes. Every year they would keep falling further behind.
End game would be a big boon for profits and executives, and a massive loss for middle class workers. They would be stuck paying all the additional taxes for a huge nationwide system, lose their benefits, have to pay for their own insurance while any added income would be highly taxed.
Employers in the US offer health insurance. Employers in other countries never have done so at scale, not even before universal health care was offered in those countries. That’s not because the US is some unique country where people wanted health insurance from their employers. It’s because during World War II there were wage controls in the US, to get around the wage controls employers began offering health insurance as a benefit, and the system became entrenched. It’s all about path dependence. If there had been no wage controls in WWII, there would be no employer-sponsored health insurance now.
Well, that would be entirely at the discretion of each individual employer. I’m going to go out on a limb and predict that there will never be a law which prevents employers from taking the premiums they’ve been paying to the insurance companies and moving that amount over to salary. And the competitive labor marker will reflect that. So better employers, and employers who want better employees, would offer salaries which include the premiums they’d no longer be paying to the carriers. Cheapo, crappy employers wouldn’t. Completely up to them.
^ I agree, CF - but if they wanted to get rid of this system, which has been pointed out is costly and hurts their competitiveness with international companies, all they needed to do was lobby for that which shall remain nameless. But they didn’t. I can only conclude those things are not as important/costly to their bottom line as people seem to think.
I don’t recall small businesses/Chamber of Commerce lobbying for that other plan, either.
I think they all like it just the way it is or else employer health insurance would be a thing of the past already.
“Well, that would be entirely at the discretion of each individual employer. I’m going to go out on a limb and predict that there will never be a law which prevents employers from taking the premiums they’ve been paying to the insurance companies and moving that amount over to salary. And the competitive labor marker will reflect that. So better employers, and employers who want better employees, would offer salaries which include the premiums they’d no longer be paying to the carriers. Cheapo, crappy employers wouldn’t. Completely up to them”
Look at the labor market right now. Employers completely have the upper hand. Profits are rarely shared with employees, raises do not keep up with inflation. When corporate profits boom, executives get huge bonuses, companies horde their money, give out miniscule raises, dividends increase. If a company were to give out the premium value to their employees…they would boast about how wonderful they are, while the employee pays a high tax rate on them, and I doubt the employers would raise the amount to keep up with health care insurance inflation every year.
In fact, my employee group just negotiated a deal with the company that we will “be made whole” in the event of Cadillac tax. It’s somewhat unspecified, but it sounds like if it hits the company, we will be offered cheaper insurance and a pay raise. Which we will end up with 55% of, after paying taxes and dues, or even less. The union negotiated hard for this. There are not many people anymore that have unions negotiating for them, and negotiating hard, people are at the mercy of their employers.
You may call them all cheapo, crappy employers, but that is the job market that we are in, for the most part. And we have people flooding into the country to get those jobs with those employers.
I can’t disagree with you, busdriver. The entire economy is rigged against the middle and lower classes. All workers, even non union workers, did better back when unions were strong.
It is a travesty, LasMa, and I don’t see a solution. There is no way to force companies to share profits with their employees, and as long as they have a surplus of applicants, there is no incentive to increase wages and benefits. One of the few good deals that workers have is their health insurance. If companies were able to shed that (without looking like complete jerks, because they had no other option), I really think they would do so gladly.
Though I am generally pro union, sometimes unions are pretty blind. Their only goals often are personal power and improvements for their membership. Often they cannot look beyond that to realize that if they bring the company down, cost them too much money for being nonproductive, the source of the jobs might disappear or move elsewhere. It’s too bad that we can’t count on businesses to share their profit with or without the unions, as shareholder return and executive compensation are the top priority.
For the individual health insurance market to stabilize, you need more people in it. If the insurance companies have a more stable pool, it becomes more predictable. With the coming tax, you might see more companies dropping health insurance or offering only high deductible plans with very high premiums.
I believe someone at GM once said for American manufactured cars about $1800 of the cost is due to health insurance and other employee benefits.
Long term, we need a new health insurance system. It also needs to be rationale and realistic on reimbursement rates. Medicare/Medicaid for all is not sustainable in current form. They have high paper work burdens and low reimbursement rates. It isn’t uncommon for providers to loose money especially with Medicaid. Medicare now penalizes hospitals for high readmission rates. However, it does not consider the population of the hospital. They also tie reimbursement rate of physicians based on patient sanctification surveys. It is not uncommon for a physician to get a bad review because he/she refused to give patient certain medications. You also need to get a handle of end of life care.
Re: “The entire economy is rigged against the middle and lower classes. All workers,…, did better better when the unions were strong.”
We unfortunately are unable to go back to the time when there was no “globalization” but with a “smaller pie”. The pie becomes bigger today, but the bigger pie is not eaten by the middle and lower classes in America.
The bargaining power of the labors eroded, expanded and then eroded in the past century, according to this article (from Washington Post?)
Regarding: “The private safety net is shredding, though the public safety net (unemployment insurance, Social Security, anti-poverty programs, anti-discrimination laws) remains.”
There are no lack of pro-business people who even want to take the remaining public safety net (“entitlement programs”) away from the middle and lower classes. They may even try to take the Medicare away from us if they can manage to achieve that.
"Over the past century, we’ve had three broad labor regimes. The first, in the early 1900s, featured “unfettered labor markets,” as economic historian Price Fishback of the University of Arizona puts it. Competition set wages and working conditions. There was no federal unemployment insurance or union protection. Workers were fired if they offended bosses or the economy slumped; they quit if they thought they could do better. Turnover was high. Less than a third of manufacturing workers in 1913 had been at their current jobs for more than five years.
After World War II, labor relations became more regulated and administered — the second regime. The Wagner Act of 1935 gave workers the right to organize; decisions of the National War Labor Board also favored unions. By 1945, unions represented about a third of private workers, up from 10 percent in 1929. Health insurance, pensions and job protections proliferated. Factory workers laid off during recessions could expect to be recalled when the economy recovered. Job security improved. By 1973, half of manufacturing workers had been at the same job for more than five years.
To avoid unionization and retain skilled workers, large non-union companies emulated these practices. Career jobs were often the norm. If you went to work for IBM at 25, you could expect to retire from IBM at 65. Fringe benefits expanded. Corporate America, unionized or not, created a private welfare state to protect millions from job and income loss.
But in some ways, the guarantees were too rigid and costly. They started to unravel with the harsh 1981-82 recession (peak monthly unemployment: 10.8 percent). As time passed, companies faced increasing competition from imports and new technologies. Pressure mounted from Wall Street for higher profits. In some industries, labor became uncompetitive. Career jobs slowly vanished as a norm; managers fired workers to cut costs. Unions provided diminishing protection. In 2012, they represented only 6.6 percent of private workers. Old organized sectors (steel, autos) have shrunk. New sectors, from high tech to fast food, have proved hard to organize. Companies have ferociously resisted.
Now comes the third labor regime: a confusing mix of old and new. The private safety net is shredding, though the public safety net (unemployment insurance, Social Security, anti-poverty programs, anti-discrimination laws) remains. Economist Fishback suggests we may be drifting back toward “unfettered labor markets” with greater personal instability, insecurity — and responsibility. Workers are often referred to as “free agents.” An article in the Harvard Business Review argues that lifetime employment at one company is dead and proposes the following compact: Companies invest in workers’ skills to make them more employable when they inevitably leave; workers reciprocate by devoting those skills to improving corporate profitability.
“The new compact isn’t about being nice,” the article says. “It’s based on an understanding that a company is its talent, that low performers will be cut, and that the way to attract talent is to offer appealing opportunities.”
Workers can’t be too picky, because their power has eroded. Another indicator: After years of stability, labor’s share — in wages and fringes — of non-farm business income slipped from 63 percent in 2000 to 57 percent in 2013, reports the White House Council of Economic Advisers. But an even greater decline in 22 other advanced countries, albeit over a longer period, suggests worldwide pressures on workers. Take your pick: globalization; new labor-saving technologies; sluggish economies. Workers do best when strong growth and tight markets raise real wages. On the week of Labor Day 2013, this prospect is nowhere in sight."
Interesting and comprehensive explanation, mcat2. It’s tough to figure out now, where we go from here.
I think that this question can and should be considered from two viewpoints. First is what is best for me. Second what is best for society as a whole. At this point, most have answer the question based on the former.
When I was working and had good coverage, I would have answered that employee based insurance is the best. Reasonable cost, tax free, and pooled insurance with no pre-existing clauses. My main complaint was NOT cost but the need to switch doctors when the plan changed. Heaven on earth. Until you lose your job.
Now being unemployed, I am seeing this question in a different light. Before Obamacare, my main concern was can I get insurance at ANY cost. With Obamacare, the concern is how to afford it.
In the past few years, our country seems to have become polarize over the healthcare issue. Personally, I now wonder if we would be better with a system where insurance is separate from employment. That way, we are all in the same boat and there would be more incentives and pressure to come up with a system that works best most people. There will never be a perfect system. Under the present system, we seem more focused on keeping what we have instead of focusing on a solution that is best for the country rather then what is best for me.
I wish I had answers. I think most of us would agree that the system is broken. Yes we have excellent healthcare in this country but the model for paying for it is broken.
Employer based health insurance likely results in better insurance coverage than when people try to save their money by choosing the cheapest policies. In the past employers needed to insure all employees equally- no offering different standard policies based on employee categories. So, when the boss wanted good coverage the employees got it too.
As a physician patient I hate having to do things because of the insurance company. Sometimes I wonder who is practicing medicine- the doctor or the plan paying the bills as they see fit. So many issues- such as Medicare coverage for things that really shouldn’t be done at advanced ages, stages in condition. Most people don’t realize the burden on society for doing things just because we can instead of for best patient benefit (being kept alive isn’t always the best, btw).
There will never be a perfect system. No utopia. Basic economic principles of supply and demand. Never enough supply to meet all possible demand.
btw- thank goodness for Obama Care! For now I have group coverage but couldn’t buy individual coverage at any price under the old system. It is amazing what the differences are in costs with and without insurance- look at your bills. The prices for lab tests and drugs- wow. Things the physician typically can’t offer gratis to patients. An example- I can see why a vitamin D level can be more costly to do than many other tests. But, at $250 I would not want to order one for someone who had to pay the cost out of pocket.
Honestly…to answer post one…I don’t car.
But I am tired about worrying about this annually. I’m tired of wondering if my kids’ providers will be offering individual plans from year to year. I’m tired of the plans changing from year to year. I’m tired of wondering clearly what the subsidies will be for one my one kid’s RX coverages. I’m tired about changing copays, deductibles. I. Tired of wondering whether or not their plans will be accepted by their doctors.
I’m grateful both kids are able to get coverage. But I’m sick of the other stuff.