The economy has dominated the news in the last year, with the housing crunch, job losses, the bankruptcies of major car and airline companies. My own city of Duluth has been hit hard, both in our city budget and in the employment possibilities (or lack of them) in town. Labor Day is certainly an excellent time to think, not about the glories of past labor movements, but about the sad job situation that we are facing today, and the difficulties our younger generation is going to face as we go into the future.
Health care coverage has an important part to play in this picture. Not that it is the central or only element – there are others – but it’s a common thread that runs through many of the stories. When GM finds it more profitable to build cars overseas than in the US, part of the cost they’re trying to shed is health care – both the insurance for its current UAW employees and the bill for future health care when the worker retires.
According to Robert Reich in Supercapitalism, employers created a health insurance “benefit” as a form of wages to employees that would not be taxed. The practice grew so that this became the major way in which health care is provided. The lack of coverage for people who were unemployed was always a problem. As the cost of health care soared, employers found ways to reduce the proportion of employees eligible for health care.
- In retail sales, employers often covered all full-time employees – and then made most of the lower level jobs 30 or 35 hour-per-week jobs, just short of qualified for health insurance.
- Other employers provided health insurance to salaried workers, and kept large numbers of hourly workers without insurance.
- The increasing use of temporary and contract workers, who don’t receive health benefits, reduced the number of positions that had health care benefits
The uninsured had new problems . Trying to buy insurance on the private market, where its costs were higher often meant having to work more part-time jobs to cover insurance costs – or going without. The invention of “pre-existing conditions” as an exclusion from care coverage meant that even a job with health benefits might not cover needed treatments for quite some time, or ever. Treatments covered under one plan might not be covered when an employer got a new insurer or a worker got a new job. For many people, especially the parents of young children, a serious illness was often the last blow that forced bankruptcy or eviction. For many families, financial stresses were at the center of divorces that, in the end, increased the costs for the family while generating unhappiness and lasting trauma for the children.
Public option. There is a lot of debate about having a public option in a health care package. I don’t think we are looking at it very clearly.
- We have dozens of public programs, but available only to particular segments of the population. While no one likes Medicare’s mountain of paperwork, no elderly person wants to give it up – “Don’t touch my Medicare” is probably the most commonly heard phrase at the various Town Hall meetings, even by those who do not understand that this is a government program.
- Medicaid, funded from the Federal government but administered in the states, has provided care for poor people for decades. However, the asset limits require people to entirely deplete savings and sometimes to sell-off assets. When I worked as a hospital social worker, I saw first hand how a terminal illness often left the surviving spouse, often elderly, nearly destitute.
- Federal employees, including the hundreds of thousands in the military, are covered by a public plan with an admirable level of benefits.
- Some states already provide a public option. We have Minnesota Care in my state, with premiums based on household income up to about 200% of the federal poverty limit. Some small business owners have found that their overall disposable income is higher if they limit the size of their business to stay within the bounds for this public plan: the premiums for private insurance were so large that they ate up all the profits of doing a higher level of business. This provides both experience and a model for a version of a public plan.
How private is “private” insurance, anyway? How is private health insurance funded? Most people would say, “employers pay for it, with employee contributions and co-pays.” However, the health care premiums paid by employers are – as Reich points out – a form of wages. Rather than giving us money, the company gives us insurance; the overall cost is lower because the risk of hundreds of people is pooled. But we don’t pay tax on these wages.
Tax Expenditure. This is a public option for health care. It does not show up as an item in the Federal spending budget, it is part of the invisible, but real, Tax Expenditure Budget. The tax-break for health insurance, like the breaks for home mortgages and education, are a part of the way that the government subsidizes those parts of the economy. Wages paid as a health insurance benefit are not subject to the federal and state income taxes, nor to the social security tax.
While most consumers don’t know much or think about the Tax Expenditure budget, they certainly understand its impact. As soon as the possibility of taxing health benefits like other wages was even mentioned, all sorts of protests arose. Few of those protesting realized that, in effect, they were demanding the continued provision of a subsidy for health care.
Understanding tax expenditures also makes it harder for Catholics to decide on which policies to support in health care reform. We have been vigorous and active about not providing direct and visible tax-payer coverage for abortions through various federally-funded health care plans. The fact that tax dollars support abortion through tax expenditures – both for private insurance plans that cover them and for individual medical expense deductions on income taxes – has received much less attention.
Consumer Expenditure. The cost of health insurance is currently being paid by tax-payers, but not as taxes. We pay it as a small portion of the price of everything we buy – the insurance of the workers who made it (if they have any), of the managers of companies and stores, of the truckers who transported it, and of the retail sales person from whom we actually bought it (if they have insurance). For big-ticket items, the costs of health and other benefits significantly increases the cost of the item – shedding some of these costs in bankruptcy was part of the plan to make GM and Chrysler competitive again. It’s less visible – but present – in other items.
Added costs. The other hard issue is the added cost. If we’re honest, it’s clear that any plan to gives health insurance to more people will mean that more health care is used – there will be an increase in costs. It also seems likely that there will be savings: people who did not go to the doctor until they were seriously ill (and then fell onto budgets for charity care) may go sooner, avoid serious illness, and cost less. If health improves, savings may come elsewhere – reduced absenteeism, higher productivity. If reform streamlines procedures at all, reduction in administrative costs could be a savings. Overall, health care costs more in the U.S. than in many developed nations, yet our health outcomes – as measured across many dimensions – often place us well below the top. Rather than argue that we cannot afford to cover more people because it is too expensive, we need to figure out why we pay so much more than other nations – and cut back those costs.
Finding solutions. The U.S. bishops issued a statement for this Labor Day holiday titled “The Value of Work – The Dignity of the Human Person” which included a paragraph on health care reform:
Health care is an essential good for every human person. In a society like ours, no one should lack access to decent health care. Perhaps no other topic has engaged such a large number of citizens or produced such a wide range of opinions and points of view. This can help us avoid the pitfalls that occur when legislation passes without enough dialogue and reflection. I urge you to join the bishops in advocating for health care reform that is truly universal and protects human life at every stage of development. We must remain resolute in urging the federal government to continue its essential and longstanding prohibitions on abortion funding and abortion mandates. Our government and laws must also retain explicit protection for the freedom of conscience of health care workers and health care institutions. For more on USCCB advocacy on health care reform see our website, http://www.usccb.org/healthcare/.
In the concluding section of the statement, the bishops wrote: “Too often in our public discourse anger trumps wisdom, myth outweighs fact, and slogans replace solutions.” In the case of health care, the ethical and practical reasons for reform and change are clear. We need to put our energies and our prayers into actions that will be based in facts and guided by wisdom to reach real solutions.
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- The Cost of Not Having a Public Option (dailykos.com)
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- Asymmetrical information (meganmcardle.theatlantic.com)
- New Poll: 77 Percent Support “Choice” Of Public Option (huffingtonpost.com)