[lbo-talk] Baucus to Meet with Single-Payer Advocates

Marv Gandall marvgandall at videotron.ca
Mon Jun 8 08:22:35 PDT 2009


Wojtek wrote:


> > As to the single payer - a while ago I mentioned the
> issue of the cost
> > of the current (employer provided system) as an
> obstacle to business
> > profitability to Dr. Vincente Navarro of JHU (he was
> on Clinton's
> > health care task force). My argument was that
> business should support
> > universal health care as a way of externalizing their
> cost. He
> > disagreed. In his view, the capitalists did not
> mind bearing that
> > cost because it accorded them control of labor.

--- On Fri, 6/5/09, Itamar Shtull-Trauring <itamar at itamarst.org> wrote


> Last week the Economist cited some economist (I can't look
> up the exact
> reference now) who believed that most businesses didn't
> care about the
> cost of health care since it had been effectively
> externalized to
> workers via pay cuts; this was cited as one of the major
> reasons for pay
> stagnation over past few decades in the US.
>

[WS:] This supports the argument that Navarro made - that employers viewed health care as a labor control measure rather than a cost saving measure. I find this argument very appealing, albeit very difficult to prove. This is not the stuff that gets recorded in economic or social data... ============================================ Last week's Economist reported that health care costs "are passed on to insurers, who pass them on to employers in the form of higher premiums, who then pass them on to workers in the form of lower pay", and continued:

"This last point is not widely understood. Many Americans think of soaring health-care costs as a burden on companies. And it is true that some high-profile ones, such as carmakers, have come unstuck by promising health benefits that subsequently became too expensive. GM spends more on health insurance than on steel. It is also true that small firms find the bureaucracy of health insurance hasslesome. However, in general the real victims of health-care inflation are not businesses but ordinary Americans. As the cost of coverage rises, their wages are squeezed, or coverage is dropped altogether.

"The proportion of the cost of employer-provided health insurance shouldered by employees is “at or close to 100%,” says Jonathan Gruber, an economist at the Massachusetts Institute of Technology. Last year, employer-provided health insurance reduced wages by 7.9%, according to the Bureau of Labour Statistics..."

Bruce Bartlett, a former Treasury official in the Reagan and Bush the Elder administrations, also cited the BLS number in a remarkable (for a conservative) article in Forbes last month defending higher taxation and government spending against the tea baggers to his right in the Republican party:

http://www.forbes.com/2009/04/09/tea-party-taxes-opinions-columnists-bartlett_print.html

Among other things, Bartlett observed:

"Another way that workers in other countries benefit is in having almost all of their basic health care expenses covered by the government. According to the OECD, 19 of its 30 member countries cover 100% of health care costs, and another eight cover more than 89% of costs. Of the three remaining countries, Turkey covers two-thirds of health expenses, and Mexico pays for half.

"In the U.S., however, the government covered only 27.4% of health costs in 2006. And almost all of that went either to the elderly in the form of Medicare or the poor in the form of Medicaid. The American average worker either had to pay for his own insurance in the form of deductions from his pay or go without.

"In 2008, employer-provided health insurance reduced the cash wages of American workers by 7.9%, according to the Bureau of Labor Statistics. If businesses didn't have to pay for health insurance, they could afford to pay their workers 7.9% more and be no worse off. If workers paid 7.9% more of their income in taxes to pay for national health insurance, they would also be no worse off.

"To a large extent, this is exactly what happens in other countries. Workers see the higher taxes they pay the same way Americans view the deduction from their pay for health insurance--not as money down a rat hole, but as the payment for a tangible benefit."

Perhaps a bigger issue for US capitalists as a class than the premium costs individual corporations pass on to their workers is the obstacle which employer-paid health care plans place on labour mobility. Tying health care to jobs hinders movement between workplaces, especially for SME's, in much the same way as the much higher incidence of US home ownership crimps labour mobility geographically.



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