New MD law forces Wal-Mart to provide health coverage - Fair or not?

[astro]

I'm in Maryland, and while I'm not a Wal-Mart cheerleader, to target them simply because they employ over 10.000 workers seems a bit discriminatory.

Is this law fair and reasonable? Is the point about the state's picking up some Wal-Mart workers health care costs any more valid for Wal-Mart than it is for a host of other employers of minimum and lower wage part time and hourly workers? Is Wal-Mart really getting free ride at the expense of the taxpayers?

Md. forces Wal-Mart to spend more on health (http://www.msnbc.msn.com/id/10827217/)

ANNAPOLIS, Md. - Maryland legislators voted Thursday to enact a first-in-the-nation requirement that Wal-Mart Stores Inc. spend more on employee health care. The measure, touted as a money-saver for the state-supported Medicaid program, takes effect despite the governor’s veto of the bill.

Labor unions have said they are seeking similar legislation this year in at least 30 other states. Supporters say the retailing giant unfairly takes advantage of taxpayer-funded health care plans because some workers can’t afford Wal-Mart’s health insurance.

“The taxpayers are giving a health-care subsidy to the largest retailer on earth,” argued Democratic Delegate Kumar Barve. The House and Senate, both controlled by Democrats, both notched the three-fifths margins needed to override a veto last May by Republican Gov. Robert Ehrlich.

The bill requires companies with more than 10,000 Maryland employees to spend at least 8 percent of their payroll on employee health care or pay the difference into the state’s Medicaid fund. Of the state’s large employers, only Wal-Mart spends less than 8 percent on health care.

The company employs about 17,000 Marylanders at more than 40 Wal-Mart and Sam’s Club stores, and about 1.3 million people nationwide.

Claims of ‘a slippery slope’
Critics of the legislation called it a dangerous precedent that ultimately would cost Maryland jobs.

A Wal-Mart executive called the bill a poorly worded mandate for a single company. Wal-Mart spokeswoman Mia Masten said Thursday that the bill “could be the beginning of a slippery slope.”

“We believe everyone should have access to affordable health insurance, although this legislation does nothing to accomplish that,” said Masten, who said the retailer may partially pull out of Maryland because of the bill.

[What Exit?]

Fair according to the law or fair according to Human fairness, a sense of what is right and wrong?
Fair in the law is not for me to answer, my WAG is; no it is not fair by normal business law but lets hear from some Professionals on this one.
Fair by human standards, yes, everyone should have basic health care coverage, but shouldn’t we as a nation provide the health care and not create legislation that singles out one company.

I think it is reprehensible that a company as large and profitable as Wal-Marts won’t provide health care to all its full time employees, but it seems to me that they have a right to be scumbags if they choose.
Morally of course I think they are in the wrong but again the USA is in the wrong. One of the best Pro-Small business and working class actions we could have in this country would be to enact laws to provide basic health care for all citizens.

Jim

[Crotalus]

I've been working in Baltimore for the past couple of weeks and have heard and read a lot about this during that time. The political ads have been particularly painful to hear. I'm a pretty strong free-market fan, so I'm generally against this sort of mandate, especially one that appears to have been designed to target one company. Two large unionized grocery chains have been active in support of this and have spent lobbying and campaign money on it. Walmart claims that they provide affordable health insurance for their full-time employees, which I believe is true, but their business model involves a huge number of part-time folks. The law of unintended consequences looms over this law, IMO. The majority of Maryland's counties border other states. Is it hard to envision strategic store and warehouse relocations to evade this law? Walmart employs 17,000 people in Maryland. Many of these are part-time. Some say Walmart prefers part-time people because it doesn't have to offer benefits to them. While that undoubtedly is part of the reason for this preference, I think it also stems from the nature of retail staffing, peak hours, etc. One way of evading this law would be to fill the required staffing hours almost entirely with full-time positions. This could create a bunch of full-time jobs, get Walmart below the 10,000 threshold, and eliminate a bunch of part-time jobs. I think that many people think of part-time jobs as less desirable than full-time ones, but that's not the case for everyone. I don't know whether pushing Walmart into shifting to more full-time employees is a net gain for Maryland.

[Neurotik]

I'm not a big fan. If you're so worried about this issue, maybe it's time to seriously look at universal health care and even the playing field that way.

[astro]

Fa
I think it is reprehensible that a company as large and profitable as Wal-Marts won’t provide health care to all its full time employees, but it seems to me that they have a right to be scumbags if they choose.
Morally of course I think they are in the wrong but again the USA is in the wrong. One of the best Pro-Small business and working class actions we could have in this country would be to enact laws to provide basic health care for all citizens.

Jim

To some extent their "profitability" (and continued existence) is because they control costs across the board and are a highly efficient company and retail distribution engine. Is the fact that they pay less than 8% of payroll into health care due to overall corporate efficiency (including health care expenses) or the act they they are niggardly misers letting the state carry their hourly workers?.

Does the fact that you are of a certain size as an employer impute a more rigorous moral and social duty to your employees relative to smaller companies?

[NurseCarmen]

Since Wal-Mart's actions were ultimately effecting MD in the form of medical bills getting covered by the state instead of private insurance, I don't have much of a problem with them addressing it. I won't be suprised if Wal-Mart soon has 9,999 employees in MD though.

[Crotalus]

NurseCarmen - The cost to Maryland's Medicaid program is one of the issues that has been driving me a little crazy during the couple of weeks I've been in Maryland. The Anti-Walmart faction claims or implies that every Walmart employee who does not have medical insurance through Walmart is therefore uninsured. This claim can't possibly be true. It would mean that there's no one at Walmart part-time who has coverage from another job, or from their spouse's job, or from their parents. I'm sure that there are Walmart employees who add to the Medicaid load. There are part-time, non-union employees of the two grocery chains who do the same thing. This issue has been a major point in the anti-Walmart argument, and I have yet to see any attempt to quantify it.

[Dewey Finn]

As I understand it, the law specifically addresses Wal-Mart. Is it legal (or proper) to write a law affecting only one employer?

[Crotalus]

I think it is reprehensible that a company as large and profitable as Wal-Marts won’t provide health care to all its full time employeesJim, or as I'd prefer to call you, What Exit?, I don't have a cite for this, but I've been hearing on the radio that Walmart does offer health insurance to all of its full-time employees. The issue is the large proportion of their employees who are part-time.

[Crotalus]

As I understand it, the law specifically addresses Wal-Mart. Is it legal (or proper) to write a law affecting only one employer?Dewey, the bill does not name Walmart. It is simply written with specifications that only match Walmart. There's a charming old political term for this.The legislation is what those around Annapolis call a "red-headed Eskimo." They are bills so specifically designed that they aid just one person, business or interest with unique qualifications - such as being an Inuit with red locks.

[What Exit?]

Jim, or as I'd prefer to call you, What Exit?, I don't have a cite for this, but I've been hearing on the radio that Walmart does offer health insurance to all of its full-time employees. The issue is the large proportion of their employees who are part-time.
Well that is why I carefully stated Full-Time. ;)
The Law seems wrong to me. Now very wrong.
I do not like many of Wal-Marts Employee practices but it does not seem fair on any level to ask them to do more than provide health care for Full-Timers.

Of course I really believe in a UHS, so I guess I put the blame elsewhere to begin with.

Jim

[John Mace]

Since Wal-Mart's actions were ultimately effecting MD in the form of medical bills getting covered by the state instead of private insurance, I don't have much of a problem with them addressing it. I won't be suprised if Wal-Mart soon has 9,999 employees in MD though.
Exactamundo!!

We need to get past the idea that every job has to come with medical benefits. In fact, employer paid heath insurance is one of the reasons health care costs are so high in this country. If something is "free", there is no incentive to use that something wisely. Before we go saddling a company with extra costs, we need to ask ourselves if we'd be better off without the company at all-- because that's the real alternative, especially in a geographically small state like Maryland.

[amarinth]

Fair by human standards, yes, everyone should have basic health care coverage, but shouldn’t we as a nation provide the health care and not create legislation that singles out one company. Also not commenting legally - but the reason it singles out just one company is that only one company has the gall to hire that many people and not pay a damn thing for their health care.

This makes me ask "Why am I, a taxpayer, subsidizing Walmart? I won't even shop there."

I would prefer national health care. But we don't have that. In the meantime, Walmart benefits greatly from Medicaid - they should (morally, ethically - again, I'm not commenting legally) pay something back.

[swissmtndog]

The ironic issue regarding legislation like this is that it may very likely have the opposite effect of its intent, over the long run.

Most companies of significant size are generally self-insured for their medical benefits. I'd be very surprised if Wal-Mart was not self-insured.

Mandating medical insurance will likely have employers ask more health related questions of applicants than they do know. The net effect of this will be that the less healthy (smokers, this means you) will have more difficultly getting hired, which will move more of the unhealthy group under the support of Medicaid, driving their costs up.

Heading toward the day where your typical employment application will involve a scale to help calculate body mass index.

[davenportavenger]

I would prefer national health care. But we don't have that. In the meantime, Walmart benefits greatly from Medicaid - they should (morally, ethically - again, I'm not commenting legally) pay something back.Yep. This law does seem unfair in theory, but Walmart is costing MD money. They have the right to foist the costs back onto the corporation. People DO need health care, and I'd rather the company pay for it than the taxpayers, if we are not going to institute universal care for all. If they have to be forced, well, that speaks badly for them.

And also, "part time" doesn't just refer to the workers who work ten hours a week. Walmart has a practice of cutting workers' hours to thirty-five a week, which is not full time but is way more than what I would consider "part time." They do this specifically to get around these health care laws. Why should they be allowed to take advantage of technicalities and hand off costs to the state? Walmart employs a huge number of people, and their actions have repercussions for everyone, not just the workers.

[mazinger_z]

Surprisingly, I'm going to have to agree with what Evil Captor said in another thread (the one about firing, paraphrasing: ), why are companies forced to give health insurance? It was originally given as a benefit when a company couldn't compete on salary, now we are mandating it? Are we going to mandate 401(k) to force people to save for retirement? Are we going to mandate corporate sponsored health programs so that people can stay healthy? Are we going to mandate corporations to have day care services so that its employees can be more productive? I didn't know Wal-Mart was in the business of health insurance.

This issue is only a small part of a much larger issue of universal health care. I would rather only have UHC for those who cannot afford it, even if working (well, I guess then it's not exactly universal, is it? Wait, isn't that Medicaid?) The idea should be that UHC should be as economic as possible, which is difficult, i.e. economizing something that is free.

Personally, I would like to see corporations give the option to its employees to whether or not take the corporate health insurance or get the equivalent in base pay. UHC for the poor, too (brightline threshold, like in taxes). Insurance premiums should be dependant on the actual person to, so, I should get extra benefit because I watch and maintain my health. Is there a reason why health insurance can't work like auto insurance? Why isn't there corporate auto insurance?

[davenportavenger]

why are companies forced to give health insurance?Because people get sick and it's more ethical to give them treatment than to let them die in the street? Especially when we live in one of the richest countries in the world? Face it, someone is going to pay. Isn't it better that a private company pays than taxpayers (if we do not institute universal care, which is a better option IMO than partial or total privatization)? I know that I don't like paying more taxes for other people's Medicare (which I do not receive) just because Walmart decides to plop itself down and drive out the higher paying, insurance carrying businesses.

Many insurance companies do force people with unhealthy lifestyles to pay more since they get sick more. Also, Walmart's health insurance policy is terrible. It does not pay for prescriptions, dental care (that's extra), counseling, or vision. So they are still foisting off costs onto the community. One business should not have that much power. Give everyone an equal plan and let us all pay in, none of this indirect corporate welfare.

[Pleonast]

And also, "part time" doesn't just refer to the workers who work ten hours a week. Walmart has a practice of cutting workers' hours to thirty-five a week, which is not full time but is way more than what I would consider "part time." They do this specifically to get around these health care laws. Why should they be allowed to take advantage of technicalities and hand off costs to the state? Walmart employs a huge number of people, and their actions have repercussions for everyone, not just the workers.Then why not close the part-time loophole? Require full-time benefits for anyone work more than N hours, where N is whatever floats your boat.

[davenportavenger]

Then why not close the part-time loophole? Require full-time benefits for anyone work more than N hours, where N is whatever floats your boat.Then Walmart will just make workers work just under whatever the new full time threshold is. They love exploiting technicalities.

[Quartz]

Then why not close the part-time loophole? Require full-time benefits for anyone work more than N hours, where N is whatever floats your boat.
Or simply say that part-time employees get the benefits of full-time employees pro rata.

[Fear Itself]

I won't be suprised if Wal-Mart soon has 9,999 employees in MD though.They have over 17,000 employees in Maryland. They would have to lay off 7,000 employees, or over one third of their workforce. I doubt if stockholders would be very happy with the effect on share prices if seven out of the 20 stores near Baltimore (http://www.walmart.com/storeLocator/ca_storefinder_results.do?sfsearch_city=baltimore&sfsearch_state=MD&sfsearch_zip=&continue=24&x=0&y=0) were to close.

[Gangster Octopus]

Isn't it better that a private company pays than taxpayers (if we do not institute universal care, which is a better option IMO than partial or total privatization)?

Not really. If making sure someone does not "die in the street" is a social goal then it is properly paid for by taxpayers (society). On the flip side, if it is not a social goal, then it probably is a personal one, and it is not the responsibiliy of a any other private entity any more so than my desire for a car or a plasma TV anyone welse's responsibility. Of course a private company is more than free to offer me health insurance (or a car or a TV) as inducement to get me to work for them. But required? No.

[Electrical Storm]

Since Wal-Mart's actions were ultimately effecting MD in the form of medical bills getting covered by the state instead of private insurance, I don't have much of a problem with them addressing it. I won't be suprised if Wal-Mart soon has 9,999 employees in MD though.


Yeah, like that Simpsons episode where Mr. Burns agrees to provide health benefits for his full-time employees, then turns around and makes Homer a freelance contractor? :D

[UncleBeer]

Also not commenting legally - but the reason it singles out just one company is that only one company has the gall to hire that many people and not pay a damn thing for their health care.
You can support this claim of fact, I assume? Because it sounds pretty extraodinary.

Most companies of significant size are generally self-insured for their medical benefits.
I seriously doubt this is true either. In these days of outsourcing even the smallest of tasks that aren't (and many that are) critical business processes, it doesn't seem likely to me that large corporations would be doing everything it takes to implement and maintain healthcare insurance in house. Claims and policy authoring alone would be prohibitively expensive. Let alone underwriting and legal counsel.

[swissmtndog]

Personally, I would like to see corporations give the option to its employees to whether or not take the corporate health insurance or get the equivalent in base pay. UHC for the poor, too (brightline threshold, like in taxes). Insurance premiums should be dependant on the actual person to, so, I should get extra benefit because I watch and maintain my health. Is there a reason why health insurance can't work like auto insurance? Why isn't there corporate auto insurance?

In some companies, via cafeteria plans there is some limited pay vs. benefits exchange. The reason this is not more widespread is that if you offered the option to opt completely out, largely only the heavy users would continue to opt for the insurance, which would drive up insurance costs significantly, to the point where benefit cuts would be much more widespread than they are today.

The companies response to any mechanism that required more benefits to part-time workers would be to replace more of the part time help with full time workers.

Businesses are not social programs. There will always be a market and financial-based response to any changing of the rules. That is why legislation like this will be ineffective. It will unlikely get anything like the intended result, because in general, legislators underestimate the market response. So the argument about whether the corporations or the taxpayer will pay for higher health care costs in the long run will be irrelevant. It is going to be the taxpayer.

[swissmtndog]

You can support this claim of fact, I assume? Because it sounds pretty extraodinary.


I seriously doubt this is true either. In these days of outsourcing even the smallest of tasks that aren't (and many that are) critical business processes, it doesn't seem likely to me that large corporations would be doing everything it takes to implement and maintain healthcare insurance in house. Claims and policy authoring alone would be prohibitively expensive. Let alone underwriting and legal counsel.

I'm the CFO of a 400 employee company. We are self insured. We outsource the claim payment, it's pretty cheap. Bet WalMart has this figured out.

[amarinth]

Also not commenting legally - but the reason it singles out just one company is that only one company has the gall to hire that many people and not pay a damn thing for their health care.You can support this claim of fact, I assume? Because it sounds pretty extraodinary.Perhaps I wasn't clear.

If multiple companies do that (hire a ton of people, fail to pay 8% of the payroll on insurance), then the law doesn't single out Walmart.

So far, however, it appears that Walmart is the only company. If you've got another one - great! That way, the law isn't singling out Walmart anymore. Who is it? Where are they?

[Rearviewmirror]

Perhaps the state should just raise its elgibility requirements for Medicaid?

Taxpayers that feel overburdened should write their representatives and request that elgibility for Medicaid be tightened.

Maybe the medical community should take up the slack?

Don't doctors make a fair amount of money? Isn't there something in the Hippocratic oath requiring doctors to care for those in need even though payment can't be made?

I remember in the Gunsmoke TV series, Doc Adams often treated patients without getting paid, or if he was paid, he got a pig or a couple of chickens or some home cooking.

Where is it written that Doctors have to make allot of money?

[Acsenray]

If something is "free", there is no incentive to use that something wisely.

And I am tired of the assumption that people who use their health care benefits are using them unwisely. First give me a definition of "unwise use of medical benefits" that I can agree with and then show me how much of that is going on. I don't accept that merely taking advantage of health care coverage is proof that there is wastage.

[mazinger_z]

In some companies, via cafeteria plans there is some limited pay vs. benefits exchange. The reason this is not more widespread is that if you offered the option to opt completely out, largely only the heavy users would continue to opt for the insurance, which would drive up insurance costs significantly, to the point where benefit cuts would be much more widespread than they are today. You're right. I totally forgot about this. This is adverse selection taking place in the health insurance industry. Still, I'd rather have the option of choosing my own plan, hopefully cheaper, because I take care of myself. I wonder what the landscape would look like if we take health insurance out of the employer's hands, and made the general public one large pool, and made insurance companies compete for the healthy people.

IOW, let me revision my vision: (Granted, I know nothing about the industry). There would be UHC, but it would super minimal and super crappy, but it will cover the basics. I rarely see a doctor, so I would rarely use it, and I would take the cash instead of the benefit. However, I would legislate the industry such that health insurance companies compete for the more healthy. To me, this makes sense: healthy people are less likely to see the doctor, to get sick, and to file claims. I would gripe about paying it and never using it, much like my car insurance. The more at risk people will have their cost displaced throughout the populace.

However, I can't avoid seeing how to avoid issues like the people in Canada (and the UK?) where the state will simply not pay for treatment because the citizen falls outside some set of parameters, and only the wealth (or super-wealthy) can afford such treatments. I guess this last part will be a bitter pill for society to have to swallow. Perhaps, this will be the incentive to not be complacent.

[light strand]

This will cost jobs. However, it's going to cost jobs because all of the folks who were getting screwed by a 35 hour/week schedule, will just get the extra 5 hours. It won't be very many jobs.

It's absolutely the right thing to do. Until we have universal health care in this country, the largest companies will have to shoulder the burden. I can almost guarantee you, that after this there will be a rising voice in the corporate community demanding universal health care coverage.

I’m just baffled by people who don’t mind subsidizing a family of billionaires by paying for the healthcare of their employees. If this were Microsoft, you’d be screaming from the rooftops.

[Cheesesteak]

Perhaps I wasn't clear.

If multiple companies do that (hire a ton of people, fail to pay 8% of the payroll on insurance), then the law doesn't single out Walmart.

So far, however, it appears that Walmart is the only company. If you've got another one - great! That way, the law isn't singling out Walmart anymore. Who is it? Where are they?Why is "a ton of people" important to this issue? If you have 20 companies that employ 5,000 people each, isn't it more important to get them on the right track than the one company who employs 17,000? How about the 1,000 companies that employ 500 people? The 10,000 mark seems awfully arbitrary to me, it is far too large a number to distinguish anything other than the enormous companies from the merely huge.

While I can appreciate that WalMart's actions prompted this law, what is the rationale for exempting the guy who hires 9,000 people? I'll tell you, it's a hell of a lot easier to pass a law that only sticks it to a few companies, than to pass a law that hits many companies. If the law was fair and just, you would fight to get it passed so that ALL employees get fair treatment, not just the ones working for WalMart. It was expedient to pass it with such a large clip level because so few companies would be on the hook and lobbying against it, and their competitors would be in favor of it, to take the big guys down a notch.

I guess if I was a 35hr a week no healthcare schlub working for Costco, it's just tough shit on me, they're not important enough for the law to care about how they treat me. I should have worked at a "big" company instead.

[amarinth]

I guess if I was a 35hr a week no healthcare schlub working for Costco, it's just tough shit on me, they're not important enough for the law to care about how they treat me. I should have worked at a "big" company instead.Costco offers health benefits for their part time employees - so, you wouldn't have had a problem.



As I said before, I would prefer universal healthcare. But right now, why not go after the companies who are causing the biggest drain on the state first?

[swissmtndog]

I’m just baffled by people who don’t mind subsidizing a family of billionaires by paying for the healthcare of their employees. If this were Microsoft, you’d be screaming from the rooftops.

Nope.

The reason Microsoft has better benefits than Walmart has very little to do with them being a good corporate citizen. They have better benefits because it's required to attract the employee skill set required for their business. Not the case for WalMart.

Very much doubt this would have the corporate world clamoring for universal health coverage. WalMart would certainly rather comply with the new legislation (via some combination of increased benefits, decreased pay, workforce reduction, combined with making up for any profit shortfall by further squeezing of vendors leading to further movement of jobs overseas), they'll be better off than if their profits were taxed at the rate required to pay for UHC.

Companies who offer above average benefits would also be against UHC, since that would take away an avenue to help competitively attract employees.

[John Mace]

And I am tired of the assumption that people who use their health care benefits are using them unwisely.
Well, it's a good thing I didn't say that then! I said there was no incentive to use it wisely. What do you think the incentive is, if it costs nothing?

[What Exit?]

I've always felt that UHC would most benefit small businesses and their employees.

I am not sure how it would hurt a large Corporation however.
Perhaps someone could do a better job of explaining how UHC would be bad for Big Business.

Jim

[Guinastasia]

Mandating medical insurance will likely have employers ask more health related questions of applicants than they do know. The net effect of this will be that the less healthy (smokers, this means you) will have more difficultly getting hired, which will move more of the unhealthy group under the support of Medicaid, driving their costs up.


Is that even legal? To try and ask about detailed health related problems, that in some cases might be rather personal, when hiring?


And no offense, Rearviewmirror, but surely you're not using an episode of Gunsmoke as a cite that doctors have to treat everyone? While I do believe you're right, I think I'd need a better source.


Also, please keep in mind peeps that not everyone with poor health did that to themselves. (Smokers, overweight people, etc).

[Cheesesteak]

Costco offers health benefits for their part time employees - so, you wouldn't have had a problem.Sigh.... Ok, CompanyX who employs under 10,000 people, does the same thing as WalMart with respect to healthcare, and gets a 100% free pass by this law. Defend the free pass, and help me to understand why CompanyX workers should get nothing because their huge company isn't quite huge enough to satisfy MDs lawmakers. Far more people are employed by companies with less than 10,000 MD workers than companies with more, and all of them are deliberately ignored by this law.

[Fear Itself]

Well, it's a good thing I didn't say that then! I said there was no incentive to use it wisely. What do you think the incentive is, if it costs nothing?Why do you think the wise use of health care need to be incentivized?

[Mr2001]

What do you think the incentive is, if it costs nothing?
People don't generally like going to the doctor all that much, especially if they're not sick. I wouldn't go have my appendix removed or order a set of X-rays just because I could do it for free. You can go take a free personality test at your local Scientology center anytime you like, so since you have no financial incentive not to, shall I assume you take one every day just for kicks? ;)

I might, however, go to the doctor more often when I suspect I might be sick. Right now, it's slightly cheaper for me to pick up some OTC medication and feel a little better than to shell out the $20 copay and see someone who knows what they're doing; it's much cheaper for my friends who don't have health care through their employers. I don't think it'd be a bad thing if people were less hesitant to see a doctor when they might be sick - the sooner they find out their sore throat is caused by an infection, the less likely they are to infect me.

As for the OP... when you pass a law forcing companies to pay health care, it seems to me you're admitting the market has failed. Just bite the bullet and set up a real health care system for everyone in the state, instead of expecting companies to do it for you and punishing them when they don't.

[swissmtndog]

I've always felt that UHC would most benefit small businesses and their employees.

I am not sure how it would hurt a large Corporation however.
Perhaps someone could do a better job of explaining how UHC would be bad for Big Business.

Jim

Big business CEO: Hey our benefits costs will go down now that we have UHC. Yippee!!!
CEO secretary: Boss, you have 2,000 messages on your email.
BB CEO: Say what.
CEO sec: All of our employees are wondering when the pay raises are coming to make up for the benefit cuts.
CEO: Uh oh.......
CEO sec: The more financial astute of our employees are suggesting that the pay raise needs to be greater than the benefit cut, since the pay raise is taxed while the benefits are not.
CEO: egad, our payroll taxes will go up too. On top of the increase, to pay for the UHC. Hey, I thought all the employees tossed out that pamphlet we sent last year touting the value of our benefits.
CEO sec: Apparently not, also I have the union VP on line one, shall I put him through.
CEO: what floor are we on.
sec: the 23rd sir....
CEO: that is too high to jump isn't it....

Our company has good benefits, especially for a small company. In the long run, UHC will end up costing the company more, for lower benefits, and reduce the number of ways we can effectively compete for skilled employees.

[John Mace]

Why do you think the wise use of health care need to be incentivized?
Because it's expensive and finite.

When I worked for a big company not long ago, I had a great Dental Plan that paid something like 90% of any Dental care I had. Whenever my Dentist said he wanted to to "x", I said sure, go ahead. Sounds good to me. I'm self-employed now and my Dental Plan isn't so good*, and when my Dentist says he wants to do "y", I say let me do some research first. There have been several times when I've declined "y", and my research told me it didn't make one bit of difference. Previously, I had little incentive to do my own research.

Tying Healthcare Insurance to your employee is absurd, and is only due to an historical accident. During WWII, there was a labor shortage but there was also wage and price controls. In order to attract employees, employers had to offer benefits, like health insurance. The practice stuck, and now we're stuck with it.

The vast majority of Americans can afford their own Healthcare Insurance, just like most Americans can afford their own Car Insurance. Imagine the craziness if you had to requalify for car insurance everytime you changed jobs. We would be best served by disconnecting Healthcare Insurance from our employers entirely, and fund any subsidies we give to the truly needy thru the tax system. That way, the majority of Americans use the market to help control healthcare costs, and there wouldn't be any talk of employers getting a "free ride" by not providing Healthcare Insurance.

Everyone needs food, but we don't require employers to provide Supermarket Coupons to workers. That's because there's this amazing thing called "money" that employers can give to their employees so that they can use it for whatever they want-- food, cars, Big Screen TVs, even Healthcare Insurance.

*Note to self: look for a better Dental Plan in 2006!

[What Exit?]

Big business CEO: Hey our benefits costs will go down now that we have UHC. Yippee!!!
CEO secretary: Boss, you have 2,000 messages on your email.
BB CEO: Say what.
CEO sec: All of our employees are wondering when the pay raises are coming to make up for the benefit cuts.
CEO: Uh oh.......
CEO sec: The more financial astute of our employees are suggesting that the pay raise needs to be greater than the benefit cut, since the pay raise is taxed while the benefits are not.
CEO: egad, our payroll taxes will go up too. On top of the increase, to pay for the UHC. Hey, I thought all the employees tossed out that pamphlet we sent last year touting the value of our benefits.
CEO sec: Apparently not, also I have the union VP on line one, shall I put him through.
CEO: what floor are we on.
sec: the 23rd sir....
CEO: that is too high to jump isn't it....

Our company has good benefits, especially for a small company. In the long run, UHC will end up costing the company more, for lower benefits, and reduce the number of ways we can effectively compete for skilled employees.
That is an interesting scenario, But for a non-union shop I think it would play out more like this.

From the CEO:
... To all of our valuable employees.
With the introduction of UHC we can afford to give out raises, improved dental plans and eye glass plans. We are also all likely to see a large bonus this year.

Signed CEO.

Financial Picture if Health insurance was worth $3000 per employee, give a raise that works out to $1000 and spend $500 on increased benefits in other areas and give out a one time $1000 bonus and pocket the rest. Hooray for Big Business.

I believe that most places are not Union at this point, perhaps I am wrong.

Jim

[swissmtndog]

Signed CEO.

Financial Picture if Health insurance was worth $3000 per employee, give a raise that works out to $1000 and spend $500 on increased benefits in other areas and give out a one time $1000 bonus and pocket the rest. Hooray for Big Business.

I believe that most places are not Union at this point, perhaps I am wrong.

Jim

Guess I was too subtle. Do you think the average employee would take a one time $1k raise (for which they are taxed) and a one-time $1k pay (for which they are taxed) and $500 benefit increase, in exchange for a $3k benefit cut (for which they are not taxed), will think that is great trade.

Notice this rearrangement takes resources away from actually doing thing to run the business for a profit.

You'll have to pay the fat bonus you suggest to more than make up whatever you may save.

The CEO gets the union call when a few employees decide that trade doesn't bring a smile to their face. Unions will love mandatory UHC.

Any company who has effectively negotiated a good benefit mechanism that they think helps attract employees will end up paying more for the same employees, with higher taxes to pay for the UHC. Why do you think they are not lining up for it?

No free lunch, if there was, the problem would be solved by now.

[Magiver]

Since Wal-Mart's actions were ultimately effecting MD in the form of medical bills getting covered by the state instead of private insurance, I don't have much of a problem with them addressing it. I won't be suprised if Wal-Mart soon has 9,999 employees in MD though. Ding Ding Ding Ding.... We have a winner. If the State has a problem with Wal-Mart’s wage scale for part-timers then Wal-Mart will have to eliminate the problem or risk legal action.

On a completely different subject, anyone see those new self-checkout lanes popping up at retail stores? I wonder if they’re made in MD?

[John Mace]

On a completely different subject, anyone see those new self-checkout lanes popping up at retail stores? I wonder if they’re made in MD?
The Home Depots around here have them. The first few times they can be a bit tricky to use, but I always make a bee-line to them now. Hopefully, people will maintain their technophobia towards them so the lines stay short. :)

[flickster]

They have over 17,000 employees in Maryland. They would have to lay off 7,000 employees, or over one third of their workforce. I doubt if stockholders would be very happy with the effect on share prices if seven out of the 20 stores near Baltimore (http://www.walmart.com/storeLocator/ca_storefinder_results.do?sfsearch_city=baltimore&sfsearch_state=MD&sfsearch_zip=&continue=24&x=0&y=0) were to close.
Of course they could just outsource the majority of their workforce to a couple of different temp firms. Bingo, Walmart is no longer an employer with greater than 10,000 employees. I specified multiple temp firms so they would not have enough employees to be required to shoulder the burden either.

[Mr2001]

Guess I was too subtle. Do you think the average employee would take a one time $1k raise (for which they are taxed) and a one-time $1k pay (for which they are taxed) and $500 benefit increase, in exchange for a $3k benefit cut (for which they are not taxed), will think that is great trade.
Where is this "benefit cut" coming from? Under UHC, they're still getting health coverage. They're just getting it from someone else.

Any company who has effectively negotiated a good benefit mechanism that they think helps attract employees will end up paying more for the same employees, with higher taxes to pay for the UHC. Why do you think they are not lining up for it?
There's reason to believe UHC is more efficient overall than employer-provided health insurance - medical care providers in the US have a ton of overhead just to deal with all the various types of insurance. The savings from not paying for health insurance would likely outweigh the increased taxes.

[John Mace]

Of course they could just outsource the majority of their workforce to a couple of different temp firms. Bingo, Walmart is no longer an employer with greater than 10,000 employees. I specified multiple temp firms so they would not have enough employees to be required to shoulder the burden either.
And of course they needn't react immediately, either. Walmart certainly won't open any new stores, and may phase the existing stores out over time. They've closed stores in Canada (at least one store) when they were required to unionize. I wouldn't be surprised if they would considered it a good investment to shut down at least few stores to make sure other states get the message. You don't want us? Fine, we'll go where we're wanted.

[swissmtndog]

There's reason to believe UHC is more efficient overall than employer-provided health insurance - medical care providers in the US have a ton of overhead just to deal with all the various types of insurance. The savings from not paying for health insurance would likely outweigh the increased taxes.

Bill and Hilary thought this as well. Made it a campaign issue, figured they could make the numbers work. Then after they got elected they had to take on the issue for real, making real estimates of actually what it would take. Remember the Health Care Task Force Hilary was in charge of.

The situation is even more expensive now after a few more years of double digit increases.

Big business won't go for it, isnt to their benefit to subsidize smaller businesses.

Medical community won't go for it, the current system is better for them. They have easily made up for the overhead you mention by jacking up rates. Since as John Mace points out, the market is not price constrained since the user has little incentive to price shop.

The companies that have went self insured won't go for it (it was 65% of employers over 500 employees when we made the jump 5 years ago, probably higher now). What Mr2001's post misses is that any UHC plan that isn't way too expensive will be a benefit cut, and a significant one for any company that has provided above average benefits. The end result will be for my company to subsidize others who have worse demographics, and get less benefits. We will pay more in payroll taxes and increased make-up pay, the size of the numbers involved simply do not work any other way.

Drug companies won't go for it, UHC will put in price constraints, less incentive for drug investment with lower potential ROI's.

I'm not arguing against UHC, but suggesting that you can get it paid for without having it cost those who have made the current system work for them in some way is sheer fantasy.

[Mr2001]

Big business won't go for it, isnt to their benefit to subsidize smaller businesses.
Seems to me that big business has the highest health care costs. I'm sure you've seen headlines about, for example, GM desperately trying to spend less on health care.

What Mr2001's post misses is that any UHC plan that isn't way too expensive will be a benefit cut, and a significant one for any company that has provided above average benefits.
The experience of other countries has not shown this to be true. They generally get the same quality of care that we do, but they pay less.

I'm not arguing against UHC, but suggesting that you can get it paid for without having it cost those who have made the current system work for them in some way is sheer fantasy.
Of course. Any change has an negative impact on those who rely on the status quo, whether it's a change in health care, pollution regulations, education, tax codes... doesn't mean the overall result won't be positive, though.

[swissmtndog]

Seems to me that big business has the highest health care costs. I'm sure you've seen headlines about, for example, GM desperately trying to spend less on health care.

If you read the rest of the article rather than just the headlines you'll notice that despite the fact that GM is desperate, they are not clamoring for UHC, it isn't to their benefit. They probably have run the numbers.


The experience of other countries has not shown this to be true. They generally get the same quality of care that we do, but they pay less.

For now, maybe. This is because of government supported price constraints. Which sounds great for now, but not so great when future generations get the bill. As bad as our deficits are, most other countries are worse. What this means is that, amazing as this seem, they have done a more thorough job of robbing from the future to pay for the present (at least for health care, until the Bush perscription drug giveaway) than we have done. Implementing affordable UHC will have us do more of the same.


Of course. Any change has an negative impact on those who rely on the status quo, whether it's a change in health care, pollution regulations, education, tax codes... doesn't mean the overall result won't be positive, though.


Err.....the reason WalMart is successful is not because they 'rely on the status quo'.......the change Maryland is proposing will cause WalMart to actually do things other than merely bump up benefits.

Cut employees, shift part time to full time work.
Squeeze vendors, causing them to cut employees, benefits or both.
Cut pay to make the benefit % go up.
Revise hiring practices

Maryland is merely assuming WalMart will help fund the shortfall by passing this legislation. Pretty likely WalMart will pass most of this buck along to others, because they are likely going to be able to better adapt to change. Sure any change has a negative on someone, think that WalMart will not pass on most of the negative impact of the Maryland legislation to others is naive.

[swissmtndog]

sorry for screwing up the quote mechanics, probably should figure that out before I post some more.

[Fear Itself]

Of course they could just outsource the majority of their workforce to a couple of different temp firms. Nice end run, except for one thing; if Wal-Mart is paying near minimum wage, how can the temp agency add on a margin without increasing Wal-Mart's payroll? They can't pay them much less than they make now, they will bump up against the minimum wage law, and attract an even less qualified workforce. Not much of an opportunity for the temp agency, and if Wal-Mart's payroll goes up a few percentage points for the same man hours, they might as well pay the 8% into health care.

[flickster]

Nice end run, except for one thing; if Wal-Mart is paying near minimum wage, how can the temp agency add on a margin without increasing Wal-Mart's payroll? They can't pay them much less than they make now, they will bump up against the minimum wage law, and attract an even less qualified workforce. Not much of an opportunity for the temp agency, and if Wal-Mart's payroll goes up a few percentage points for the same man hours, they might as well pay the 8% into health care.
It becomes an entirely different accounting format. The expense would no longer be counted as payroll. Walmart would also be able to eliminate many HR positions in the process. So it's hard to put an exact number on what the hard & soft savings might be but a temp firm may be able to pay the same and still save Walmart money.

[Mr2001]

If you read the rest of the article rather than just the headlines you'll notice that despite the fact that GM is desperate, they are not clamoring for UHC, it isn't to their benefit. They probably have run the numbers.
I'd say they probably have no idea what universal health care would end up costing, and when universal health care does come to this country, I believe it'll be because companies like GM realized that having to pay for their employees' health care themselves is making it hard to compete with foreign companies.

Err.....the reason WalMart is successful is not because they 'rely on the status quo'.......the change Maryland is proposing will cause WalMart to actually do things other than merely bump up benefits.
You're right. I doubt this particular measure will have much success. The state trying to force companies to provide health insurance is a weak substitute for the state actually providing it on its own.

[Agnostic Pagan]

Just to throw in my 2 cents. I find WalMart's reasons for not offering sufficient healthcare completely bullshit. One of the main reasons Starbucks is not on my boycott list is that their employee benefits are some of the best out there, especially for part-timers, which they define as 20+ hours per week. And the coffee industry is just as competitive as the overall retail industry.

Hopefully Starbucks will continue their benefits, yet I can see them favoring some major healthcare reform. Cite. (http://www.forbes.com/facesinthenews/2005/09/15/starbucks-healthcare-benefits-cx_cn_0915autofacescan01.html?partner=yahootix)
I think business made a major mistake in '93 not supporting the Clinton reforms. For that I blame the insurance industry more than any other though. But I don't think anyone saw the dramatic rise in health costs over the last dozen years. And what may have made good sense then makes less and less sense now. If costs rise much higher, businesses will have to support UHC or similar measures since they will not be able to provide meaningful benefits at any level.

Health benefits were a strong competitive advantage when hiring, but as the article above shows, when the cost of benefits are higher than your cost of good sold, it begins to affect the core business. Instead of being a side issue, it becomes the main issue.

I have no problems with the law Maryland passed. WalMart lost any right to claim market interference long, long ago. They subvert the market by shifting as much of their costs onto others as much as inhumanly possible - whether it is their suppliers, their employees, or taxpayers. They have not participated in the free market for some time. That the taxpayers decide to shift some of those costs back to the firm(s) that incur them is fine by me.

If this were Microsoft, you’d be screaming from the rooftops.Of course they could just outsource the majority of their workforce to a couple of different temp firms. Bingo, Walmart is no longer an employer with greater than 10,000 employees. I specified multiple temp firms so they would not have enough employees to be required to shoulder the burden either.On a side note, I present Vizcaino v. Microsoft (httphttp://www.ms-permatemp.com/questions.shtml). The current situation is not much better. A friend of mine is still a 'contractor' after three years of employment. His benefits are decent, but nowhere near those of true Microserfs.

[astro]

They I have no problems with the law Maryland passed. WalMart lost any right to claim market interference long, long ago. They subvert the market by shifting as much of their costs onto others as much as inhumanly possible - whether it is their suppliers, their employees, or taxpayers. They have not participated in the free market for some time. That the taxpayers decide to shift some of those costs back to the firm(s) that incur them is fine by me..

If not the competitive "free market" what specific market are they participating in?

[Agnostic Pagan]

If not the competitive "free market" what specific market are they participating in?
That is a very good question. I cannot state what 'specific' market they are in. But they are certainly not in the 'free market'.
The free market defined as:
1) Commerce is governed by the laws of supply and demand. Government interference and regulation are limited to defining property and contracts.
Walmart has no problem lobbying for government subsidies and tax breaks that help their business. They thus lose the right to complain that government regulations are unjust if it affects only them. They have constantly sought deals where the only firm affected by a subsidy would be them. No cites yet, but I am certain I can find one.

2) The market consists of perfect competition, where no producer or consumer can influence prices. All firms are price takers.
As soon as a firm reaches a certain size that they can dictate prices to their suppliers and can sell products for a loss to undermine others, they have left the free market (and the fair market). Microsoft is in this category as well as most Fortune 500 companies.

3) Perfect information (http://en.wikipedia.org/wiki/Perfect_information): "In economics, a state of perfect information is required for a completely free market to function. That is, assuming that all factors are rational and have perfect information, they will choose the best products, and the market will reward those who make the best products with higher sales. Perfect information would practically mean that all consumers know all things, about all products, at all times, and therefore always make the best decision regarding purchase." Granted almost no market meets these assumptions, but WalMart disguises the true costs of their merchandise by transferring costs to others. My rule of thumb is to double the price of any item at WalMart to realize its true price.

They demand prices from suppliers based on internal proprietary information. The knowledge of their own sales figures for different product lines is enough to skew the information in their favor. Granted, this is true for most businesses of any great size, and those businesses have also left the market behind. They are not basing their purchases on actual demand, but on their own knowledge of what markets they can create.

The best criticism I have read so far that depicts how large corporations do not follow the 'rules' of the market is The New Industrial State by John Kenneth Galbraith. It is the great joke of economic classes that to describe the free market system they have to rely on either financial or agricultural markets (which have their own set of subsidies to subvert prices). The professors know that modern business practice has nothing in common the free market model.

So again, I do not what specific market Walmart and the rest 'compete' in, but it is not the free market.

[Agnostic Pagan]

...They have constantly sought deals where the only firm affected by a subsidy would be them. No cites yet, but I am certain I can find one.

Here is a good place to begin - Warning - PDF (http://goodjobsfirst.org/pdf/wmtstudy.pdf) And yes, this is pro-union.
"This report was funded in large part by the United Food and Commercial Workers
International Union."
It does not mean the facts are incorrect.
"This brought the total number of subsidy deals we identified to 244. The total value of all the subsidies was $1.008 billion." And these are only the deals they could actively identify.

[flickster]

On a side note, I present Vizcaino v. Microsoft (httphttp://www.ms-permatemp.com/questions.shtml). The current situation is not much better. A friend of mine is still a 'contractor' after three years of employment. His benefits are decent, but nowhere near those of true Microserfs.
Thanks to that case, co-employment laws are now well understood by most firms. I'm sure this would not be an issue.

[swissmtndog]

I'd say they probably have no idea what universal health care would end up costing, and when universal health care does come to this country, I believe it'll be because companies like GM realized that having to pay for their employees' health care themselves is making it hard to compete with foreign companies.


You're right. I doubt this particular measure will have much success. The state trying to force companies to provide health insurance is a weak substitute for the state actually providing it on its own.

GM can't compete for a variety of reasons. One of which is high health care costs because they have better than average benefits. They'd love to cut benefits, but have that pesky union issue to deal with. The UHC will be a cut in benefits, which the union will use to negotiate more pay that GM cannot afford.

As I said before, unions will love UHC.

Thousands of companies pay above average benefits, including ours, and compete just fine. Many companies including ours, use above average benefits as an incentive for employees. The end result of UHC will have companies like us have to make up the benefit cut in pay or something else.

Business did run the numbers during the Clinton health care push. Nothing in the
numerous plans suggested then were going to be a plus for those for larger business in general, and those who provide good benefits in particular. Big surprise they didn't get much support. They would get even less support now.

[swissmtndog]

I think business made a major mistake in '93 not supporting the Clinton reforms. For that I blame the insurance industry more than any other though. But I don't think anyone saw the dramatic rise in health costs over the last dozen years. And what may have made good sense then makes less and less sense now. If costs rise much higher, businesses will have to support UHC or similar measures since they will not be able to provide meaningful benefits at any level.



The notion that no one saw this level of health care costs coming is just simply wrong. Most saw the need for something then. The argument was then, as it always is and will be, is who is supposed to pay for it.

Business won't support UHC if costs go up higher, they will largely keep responding as they do now, largely by cutting benefits as much as they can without losing what edge providing good benefits. The definition of what 'good benefits' are will continue to slide.

Gotta love Howard Schultz (Starbucks head from you cite), says he can't sustain his high beneifts. Doesn't want to make the hard choice everyone else has to make. Note that he didn't suggest a solution, just wanted to raise awareness of the problem. Am sure he would be in favor any healthcare reform that would reduce his costs without hurting his competitive position. Err..good luck with that Howard. Pretty much the same viewpoint everyone has on this issue, it's a problem that they'd like someone else to pay for.

[Mr2001]

The UHC will be a cut in benefits, which the union will use to negotiate more pay that GM cannot afford.
You keep repeating this, but it isn't making any more sense the more you say it. It's not a cut in benefits; employees are still getting health care, just not from the employer. The employer is paying higher taxes to support UHC, and they can tell that to the union.

[swissmtndog]

You keep repeating this, but it isn't making any more sense the more you say it. It's not a cut in benefits; employees are still getting health care, just not from the employer. The employer is paying higher taxes to support UHC, and they can tell that to the union.

You've never ran a business, I guess. Not everyone pays the same amount of healthcare benefits. Moreover, not every company can get the same negotiated rate.

I'll use our company for example, in our state (Washington) the average health care bill per employee is somewhere between $6,000 and $6,500. We pay around $4,500 for above average benefits. Why? Because our demographics, allowed us to largely self-insure. A good chunk of our employee base is young and male, rarely goes to the doctor.

Many companies get better than average deals like this because of either demographics, size or both. UHC would give everyone an average deal at an average price. This basically will cost our company money. Our employees will ask for compensation for the benefit cut. We lose our competitive advantage in the market place, for this portion of employee compensation.

Clinton's plan focused on managed care, fee-for-service mechanisms. Business opposed it for two reasons.....a few simply didn't believe in managed care, but most felt they could do a better job on their own. In most cases, this has been proven true. It isn't my job to keep everyone's medical costs down, it's my job to keep us competitive, which means in this case, paying less than my effective competition for health care benefits. In other words, it doesn't matter to business whether overall health care costs go up, it generally matters if they have to pay less for them than the competition. Health care cost have went up, so have wages, which have the same basic strategic decisions, only the scale of increase has been different.

Over the long run, I believe we will have UHC. Because as John Mace has repeatedly pointed out, the reason for the health care cost bump has been the lack of price constraints (i.e. the user pays directly for very little of the service), and that corporate benefit programs are a big reason why. Howard Schultz of Starbucks bemoans his father's fate of not having health insurance. Medical costs were much cheaper when his father was paying for them, because the system then had far more users paying directly for the service. Medical costs will continue to increase under the current state.

How do we get to UHC? The reason we don't have it now is because the cost of providing what the general public would accept is prohibitive, as usual it is about the money. What is going to have to occur for this to change? Corporate benefit programs will need to be cut to reduce the general public's perception of what good medical benefits low enough so that a UHC plan can be feasibly affordable without either a substaintial tax increase (either now or for future generations).

Companies are cutting benefits all the time now, so eventually this will happen. As long as most companies can get better than average deals, they have no incentive for UHC, almost no matter how high medical costs go. The WalMart's of the world who provide low benefits aren't slowing this process down. It is company's like Starbucks and ours.

So the best thing UHC advocates can do to speed the process up is:

* Tell my boss (maybe not just mine, I'm talking the collective here) to not give his CFO a fat bonus, for avoiding medical cost increases and benefit cuts by going self insured, saving the company hundreds of thousands of dollars and..
* Tell Howard Schultz (again the collective here) to bite the bullet and cut his benefits.

[Mr2001]

You've never ran a business, I guess. Not everyone pays the same amount of healthcare benefits. Moreover, not every company can get the same negotiated rate. [...] UHC would give everyone an average deal at an average price. This basically will cost our company money.
You seem to be assuming that any universal health care system would charge everyone the same rate. There's no reason it would have to be funded that way; just as different companies pay different effective rates for other taxes, they could pay different effective rates for health care. Insurance companies have no problem charging higher rates to riskier clients, so why would it be any different when the insurer is the government?

Of course, any change in funding will result in some entities paying more and others paying less. Your individual company might pay more, or less, but what matters is whether the change results in an overall savings and/or an overall increase in the availability of health care.

[swissmtndog]

You seem to be assuming that any universal health care system would charge everyone the same rate. There's no reason it would have to be funded that way; just as different companies pay different effective rates for other taxes, they could pay different effective rates for health care. Insurance companies have no problem charging higher rates to riskier clients, so why would it be any different when the insurer is the government?

Of course, any change in funding will result in some entities paying more and others paying less. Your individual company might pay more, or less, but what matters is whether the change results in an overall savings and/or an overall increase in the availability of health care.

If the economics were as simply as you suggest, this problem would be solved, so, let's try this again......

We are largely self funded, like most business of size. Under a UHC, we will be asked to contribute to a fund to spread the risk. The chance that our rates, even if they are better than average, will go up is pretty much 100%, since we are going to be asked to subsidize others.

The question is why should we......

If universal health care is important to you, what would be wrong with a proposal for a government program to include everyone who cannot get health insurance via their employer funded via an increase in personal income tax or a national sales tax. Eligibility could work like Medicare does today, folks who qualify for Medicare via age and generally not eligible for benefits if they are covered at work.

We could have a national plan, but companies would still have the option to provide above average benefits to help attract employees if they could justify the cost......

Well, the reason you have not been presented with such an option is that the bill is too big........politicians like to get re-elected just as much as business owners like to make a profit, they know the general populace will balk at the cost.

It isn't about what is right or wrong, it is always about how much it will cost and who is supposed to pick up the check.

[What Exit?]

If the economics were as simply as you suggest, this problem would be solved, so, let's try this again......

We are largely self funded, like most business of size. Under a UHC, we will be asked to contribute to a fund to spread the risk. The chance that our rates, even if they are better than average, will go up is pretty much 100%, since we are going to be asked to subsidize others.

The question is why should we......

If universal health care is important to you, what would be wrong with a proposal for a government program to include everyone who cannot get health insurance via their employer funded via an increase in personal income tax or a national sales tax. Eligibility could work like Medicare does today, folks who qualify for Medicare via age and generally not eligible for benefits if they are covered at work.

We could have a national plan, but companies would still have the option to provide above average benefits to help attract employees if they could justify the cost......

Well, the reason you have not been presented with such an option is that the bill is too big........politicians like to get re-elected just as much as business owners like to make a profit, they know the general populace will balk at the cost.

It isn't about what is right or wrong, it is always about how much it will cost and who is supposed to pick up the check.
You make some great arguments, I wish I could refute them, but I am in way over my head and now need to rethink the feasibility of UHC.

You really didn't need to be insulting earlier however, I really was just looking for information.

Jim

[Agnostic Pagan]

The notion that no one saw this level of health care costs coming is just simply wrong. Most saw the need for something then. The argument was then, as it always is and will be, is who is supposed to pay for it.I will disagree with this. During the nineties, business hoped to contain costs through the use of HMOs, in which it was successful, until the HMO model failed at the consumer level - patients wanted to be treated by their physician, not accountants. Productivity increases from technological breakthroughs, particularly in data management, were also supposed to keep costs manageable. I remember how we were supposed to be in a paperless world by now. I would argue that significant productivity increases were made, but went into the executives' wallets, rather than the employees.

Business won't support UHC if costs go up higher, they will largely keep responding as they do now, largely by cutting benefits as much as they can without losing what edge providing good benefits. The definition of what 'good benefits' are will continue to slide.I don't understand this statement. Health care is reaching a new crisis point precisely because the costs have risen too high. The cost of providing health care benefits are exceeding any gains or edge from comparitive advantage. If business wants the benefit of a healthy productive workforce, they will have to support some form of UHC to provide that benefit. The costs have risen too high for the private sector.

Employers created this mess by offering health insurance in the first place to attract better employees. I consider health care an equivalent to education. It is the responsibility of society through government to provide basic care. Let business compete with extraneous benefits like they do with tuition vouchers. I have never heard anyone state that employers should be required to pay for a persons education, even though one could argue that they are the primary beneficiary after the persons themselves.

And under UHC, employers would seek a new set of benefits to offer for a comparative advantage. Vacation time, parental leave, flex-time, health club memberships, country club memberships. There are a hundred ways company can get an edge.

Gotta love Howard Schultz (Starbucks head from you cite), says he can't sustain his high beneifts. Doesn't want to make the hard choice everyone else has to make. Note that he didn't suggest a solution, just wanted to raise awareness of the problem. Am sure he would be in favor any healthcare reform that would reduce his costs without hurting his competitive position. Err..good luck with that Howard. Pretty much the same viewpoint everyone has on this issue, it's a problem that they'd like someone else to pay for.Reading between the lines, which is open to interpretation, I think that he would openly support UHC except that he knows that Wall Street would punish Starbucks severely. I am certain he has it on the table.

I do agree that the primary problem is determining how UHC is paid for. I do not have any problems with a national sales tax or income tax increase for that purpose. It would be a bargain. But the insurance and pharmaceutical industry would adamantly oppose it. I don't think employees would demand a full replacement of the 'wages' lost since they no longer have to worry about the loss of insurance. That is worth quite a bit to most people I have spoken with. It would also lead to a strong empowerment of employees since they no longer have to worry about keeping a job they hate so that their kids can go see a doctor. (Which is perhaps another strong reason business does not support UHC. I have been in management and know that companies love to have carrot/stick over their workers. WalMart in particular.)

I do not believe that employers should be responsible for health care at any level more than as general taxpayers, the same fashion that business taxes support education and the rest of government. Yet if WalMart wants their employees to rely on government health care, then they should do so openly and honestly and come out in favor of UHC, instead of abusing Medicaid. Right now, they were free riders who were told to pay up.

Also, if this does lead to layoffs by WalMart, I honestly believe those workers will be better off finding employment elsewhere. If Wal-Mart followed the Starbucks and Target model of hiring non-primary wage earners, I would have less of a problem with their benefit package, but they do not. Many of their employees are working because they need the money, not just to get through school or whatnot.

[swissmtndog]

I will disagree with this. During the nineties, business hoped to contain costs through the use of HMOs, in which it was successful, until the HMO model failed at the consumer level - patients wanted to be treated by their physician, not accountants. Productivity increases from technological breakthroughs, particularly in data management, were also supposed to keep costs manageable. I remember how we were supposed to be in a paperless world by now. I would argue that significant productivity increases were made, but went into the executives' wallets, rather than the employees. .


You misunderstand how business works in terms of costs. Rising costs aren't necessarily bad per se. If costs are generally high for everyone, they can be passed on to the customer without losing market. If costs are high and you can get a competitive edge via better costs, that is good. Patients wanted to be treated by their familiar doctor AND they wanted someone else (companies, government, didn't matter) to pay more for the priviledge, that helped push prices up. Great marketing by the medical community, by convincing the general populace that option was a free lunch, when it wasn't.

Everyone thought health care costs would continue to increase at a high rate in '93 if nothing was done. Hence Clinton's campaign point. It defies logic to assert that no one thought health care costs would continue to rise when nothing (or very little) was actually done.

I don't understand this statement. Health care is reaching a new crisis point precisely because the costs have risen too high. The cost of providing health care benefits are exceeding any gains or edge from comparitive advantage. If business wants the benefit of a healthy productive workforce, they will have to support some form of UHC to provide that benefit. The costs have risen too high for the private sector..


This is why you are seeing widespread benefit cuts. Again just because costs are high or low doesn't mean the competitive edge goes away. You can gain a competitive edge by going self-insured (if your demographics allow it), firing smokers, changing hiring practices, etc as long as you are doing it faster and better than the competition. All of which are occuring. You should be encouraging faster benefit cuts. If you agree with this, you'd have to agree that encouraging WalMart to increase their benefits is bad public policy. Companies like Starbucks who give out high benefits, then whine about the costs without cutting benefits are the problem.

Employers created this mess by offering health insurance in the first place to attract better employees. I consider health care an equivalent to education. It is the responsibility of society through government to provide basic care. Let business compete with extraneous benefits like they do with tuition vouchers. I have never heard anyone state that employers should be required to pay for a persons education, even though one could argue that they are the primary beneficiary after the persons themselves.

And under UHC, employers would seek a new set of benefits to offer for a comparative advantage. Vacation time, parental leave, flex-time, health club memberships, country club memberships. There are a hundred ways company can get an edge.


Agree. But the current rules allow us to offer benefits. Guess we should apologize for that. Write your congressmen to change this, maybe encourage Maryland to lay off WalMart since they really are closer to being the solution than the problem.

Reading between the lines, which is open to interpretation, I think that he would openly support UHC except that he knows that Wall Street would punish Starbucks severely. I am certain he has it on the table.


He isn't supporting UHC because it reduces the opportunity for his competitive edge via benefits = less profits. Wall Street would punish him for that because shareholders are interested in profits, as is Howard. Wall Street would applaud a benefit cut for the same reasons. But poor Howard is whining because he wants to keep his competitive edge and having some magic cut the cost of his high benefits. He wants his free lunch, just like everyone else.

I do agree that the primary problem is determining how UHC is paid for. I do not have any problems with a national sales tax or income tax increase for that purpose. It would be a bargain. .

You don't know it is a bargain until you have seen the bill. The average person doesn't really understand the high cost of universal health care, because they pay so little of the real cost of health care out of their pocket. Write your congressmen. If he believed the general populace would agree after seeing the bill, we would have UHC today.

[Mr2001]

If universal health care is important to you, what would be wrong with a proposal for a government program to include everyone who cannot get health insurance via their employer funded via an increase in personal income tax or a national sales tax.
It'd do nothing to address the costs associated with each doctor's office having to keep track of all those billing systems. When you have to hire two new people to handle billing and insurance claims, rather than having one existing employee handle it among other tasks, the people who need health care end up paying more for it.

You can gain a competitive edge by going self-insured (if your demographics allow it), firing smokers, changing hiring practices, etc as long as you are doing it faster and better than the competition. All of which are occuring.
I won't shed a single tear if it stops being advantageous, or even becomes illegal, to fire smokers or refuse to hire people who might need health care down the line.

[And under UHC, employers would seek a new set of benefits to offer for a comparative advantage. Vacation time, parental leave...]

Agree. But the current rules allow us to offer benefits. Guess we should apologize for that.
Don't apologize, just move on to offering other incentives. Compare the average vacation time here to any European country, for example; you'll find plenty of room for improvement.

[swissmtndog]

It'd do nothing to address the costs associated with each doctor's office having to keep track of all those billing systems. When you have to hire two new people to handle billing and insurance claims, rather than having one existing employee handle it among other tasks, the people who need health care end up paying more for it.




Pretty sure it actually would address costs. One thing I've wondered about is why doctors don't outsource this function like employers outsource claim processing. Actually I know why this doesn't occur. It is because doctors have much less incentive to control costs than the average business because their revenues are much easier to bump up since the users rarely pay much of the bill.

If every one was insured, essentially all of their revenues would be fee-for-service. There would be much more incentive to cut processing costs from the doctor's end, because the avenue for bumping up revenues with impunity for those outside a fee-for-service mechanism would not be there. You would see much more effecient outsourcing of billing functions. You wouldn't see one person in every office for billing. You'd see an outsource firm who would have one person do billing for multiple offices.

Would you shed a tear for the poor medical community who would actually have to watch their spending as much as the rest of us do?

[Mr2001]

Actually I know why this doesn't occur. It is because doctors have much less incentive to control costs than the average business because their revenues are much easier to bump up since the users rarely pay much of the bill.
You don't think the insurance companies pressure them to keep their costs down? You don't think there's internal pressure - i.e. if they cut billing costs, they can charge the same amount and pocket the savings?

If every one was insured, essentially all of their revenues would be fee-for-service. There would be much more incentive to cut processing costs from the doctor's end, because the avenue for bumping up revenues with impunity for those outside a fee-for-service mechanism would not be there. You would see much more effecient outsourcing of billing functions.
My understanding is that most patients are covered by private insurance or Medicare/Medicaid, and self-pay patients are only about 5%. Why are we not seeing this efficient outsourcing already?

[Agnostic Pagan]

You misunderstand how business works in terms of costs. Rising costs aren't necessarily bad per se. If costs are generally high for everyone, they can be passed on to the customer without losing market. If costs are high and you can get a competitive edge via better costs, that is good. If you can transfer an entire set of benefits from one payer, business, to another payer, taxpayers and the government, you free up far more revenue than any competitive edge could provide, and then concentrate on achieving that edge with lower margin products. And what may be true for the firm is rarely true for the economy.
Patients wanted to be treated by their familiar doctor AND they wanted someone else (companies, government, didn't matter) to pay more for the priviledge, that helped push prices up. Great marketing by the medical community, by convincing the general populace that option was a free lunch, when it wasn't.This is broadening the debate perhaps too far, by I would argue that more price pressures developed from the supply side than from the demand side. The largest increases in health care costs over the last ten years have been from the rise in new medications and from treating the uninsured. Cost recovery drove up prices, not consumer/patient demand for new treatments, which even then are often driven by the pharmaceutical companies. Malpractice insurance was another great factor.

Everyone thought health care costs would continue to increase at a high rate in '93 if nothing was done. Hence Clinton's campaign point. It defies logic to assert that no one thought health care costs would continue to rise when nothing (or very little) was actually done. I should make myself clearer. Everyone thought that prices would rise out of control if nothing was done. Correct. The debate was how much it would rise if something was done, and what that something should be – the Clinton plan, or shifting from traditional indemnity plans to managed care plans. Industry preferred the later and prevailed. And prices did not rise appreciably, but remained constant as a percentage of GDP, from 13 – 14%. Cite (http://www.newsbatch.com/healthcare.htm) . Cite (http://content.healthaffairs.org/cgi/content/full/25/1/186/T1) . And from those cites, the current debate is similar: Prices are going out of control – what new controls are needed. UHC looks better and better. The employer-based health care system cannot last for much longer. (And Clinton's plan would only have extended that system, not replaced it.)

This is why you are seeing widespread benefit cuts. Again just because costs are high or low doesn't mean the competitive edge goes away. You can gain a competitive edge by going self-insured (if your demographics allow it), firing smokers, changing hiring practices, etc as long as you are doing it faster and better than the competition. All of which are occuring. You should be encouraging faster benefit cuts. If you agree with this, you'd have to agree that encouraging WalMart to increase their benefits is bad public policy. Companies like Starbucks who give out high benefits, then whine about the costs without cutting benefits are the problem.
He isn't supporting UHC because it reduces the opportunity for his competitive edge via benefits = less profits. Wall Street would punish him for that because shareholders are interested in profits, as is Howard. Wall Street would applaud a benefit cut for the same reasons. But poor Howard is whining because he wants to keep his competitive edge and having some magic cut the cost of his high benefits. He wants his free lunch, just like everyone else. Under the current system it is bad public policy to allow corporations to pass on costs to the taxpayers when the firms can easily afford those costs. It is nice to know that I am helping the Scions of Sam increase their precious profit margins by having my tax dollars pay for their employees health care. It is part of their strategy though to pass on as many costs onto others as possible, as I noted above. Forcing firms to pay the true costs of doing business is not bad public policy.

My main argument is that the competitive edge no longer exists, or will not for much longer. The competitive edge does go away if costs rise too high. The margin no longer exists. This is why executives receive so many perks over workers. It is affordable as part of million dollar compensation package. They are not when offered for hourly wage employees.

Competitive advantages do exist in the status quo, which Starbucks has achieved. They are understandably reluctant to sacrifice those gains singlehandedly. Transferring those costs would create a new playing field for all firms.

And WalMart tries to seek some strange advantage at the expense of employee loyalty, high turnover and an increasing poor public image. I find very odd that WalMart with its immense economies of scale and purchasing power does not use the same to provide a fair package of benefits and seek their competitive edge from doing so.

You don't know it is a bargain until you have seen the bill. The average person doesn't really understand the high cost of universal health care, because they pay so little of the real cost of health care out of their pocket. Write your congressmen. If he believed the general populace would agree after seeing the bill, we would have UHC today.I find it hard to believe that the average person does not the real cost of health care since that is one of the primary budget items they worry about. Even the best health plans I have seen for workers (as opposed to executives) still had out-of-pocket expenses. And the savings would not be strictly monetary as I noted also. Peace of mind knowing your family will be insured regardless of employment has a great value also.

Removing the profit taking from the system would also realize significant savings.

[davenportavenger]

I won't shed a single tear if it stops being advantageous, or even becomes illegal, to fire smokers or refuse to hire people who might need health care down the line.Ah, so you support the Gattaca platform.

[Sefronia777]

From your article: "Labor unions have said they are seeking similar legislation this year in at least 30 other states."

This is not meant to target WalMart or even Maryland, but it is meant to show that we as a people have a responsiblility as an industrialized nation to provide health care to the citizenry. The US is the only country that does not have a national health care plan; too many are uninsured or underinsured, adding to illness and injury.
Let us hope this is just the beginning of a new era.

Sefronia777


Mama's worry was a burden
They had seen her everywhere
and since her little one was now a dead man
they patted his back
and she thought
why did she let them?
Sefronia777.com
Drops 2/8/06
Let's evolve together

[John Mace]

This is not meant to target WalMart or even Maryland, but it is meant to show that we as a people have a responsiblility as an industrialized nation to provide health care to the citizenry.
No, it's an attempt to get a free lunch by making corporations pay for health care. If we as a people were doing it, we'd follow my suggestion-- let those who can afford it pay their own way, and subsidize the needy through the public treasury.

[Saint Cad]

I've been trying to hold off on this discussion because I think that this has nothing to do with health care costs at all.

First of all, no company should be required to provide health insurance to their employees. A business should not be required to provide social welfare systems, that is the work of the government. They should be required to provide appropriate pay for appropriate work. (Of course we can discuss minimum wage, exhorbident pay for execs, gender/racial issues in pay, etc. but not benefits. However, a company that does not provide health care for their employees will lose qualified candidates to other companies in the same field (in this case Retail), but that is a business decision.

As for the new law, it has nothing to do with health care, insurance, state costs, or anything else. It is all anti-Wal-Mart legislation. Not that that is a bad thing. The are renowned for abusing their employees and damaging small-town economies.

[Mr2001]

Ah, so you support the Gattaca platform.
If you mean I support Vincent Freeman's struggle to be judged on his merit, not the contents of his body, then yes.

[artemis]

Pretty sure it actually would address costs. One thing I've wondered about is why doctors don't outsource this function like employers outsource claim processing.

Actually, many medical practices DO outsource claims processing.

[swissmtndog]

If you can transfer an entire set of benefits from one payer, business, to another payer, taxpayers and the government, you free up far more revenue than any competitive edge could provide, and then concentrate on achieving that edge with lower margin products. And what may be true for the firm is rarely true for the economy. .

????? Your terminology does not make any business sense, at least not to me, the competitive edge any business any employer could gain via benefits is a cost advantage, has nothing to do with revenues. I'm guessing you are really suggesting that the whole bundle of medical costs would be cheaper under a UHC. Maybe true, maybe not. But one thing if for certain, the main reason you haven't seen progress on this issue is that everyone seems to believe that better health care for all is a good idea as long as someone else has to pay for it.

This is broadening the debate perhaps too far, by I would argue that more price pressures developed from the supply side than from the demand side. The largest increases in health care costs over the last ten years have been from the rise in new medications and from treating the uninsured. Cost recovery drove up prices, not consumer/patient demand for new treatments, which even then are often driven by the pharmaceutical companies. Malpractice insurance was another great factor..

????? Your terminology regarding supply and demand (as used in the general business sense) in a little faulty. Other than the malpractice insurance, which can and does drive doctors out of the profession, every factor you mentioned is a demand issue. The demand is created because the user pays so little of the direct cost, the service seems far cheaper to the user than it actually is. That is why the pharmaceutical companies are succesful marketers, 'just ask your doctor'. Compared to nearly any other service, there is very little price constraint. Medical services are generally availiable to everyone, except for the ability to pay, that makes it a demand issue.

Prices are going out of control – what new controls are needed. UHC looks better and better. The employer-based health care system cannot last for much longer.

From a business perspective sure it can, business can easily keep cutting benefits, changing hiring practices, finding other mechanisms to fund benefits, etc. The debate, as it always is, is who will pay for the uninsured.

Forcing firms to pay the true costs of doing business is not bad public policy..

If you think the employer based system is not sustainable, how does forcing a business to increase it's benefits help?

My main argument is that the competitive edge no longer exists, or will not for much longer. The competitive edge does go away if costs rise too high. The margin no longer exists.

Again this is quite simply wrong. When costs go up, there is probably more opportunity for competitive advantages than if they stayed static. It isn't about whether costs go up or down. The advantage comes when you can contain costs better than your competition.

Competitive advantages do exist in the status quo, which Starbucks has achieved.

The reason Starbucks is whining is because they are not getting the competitive advantage they want, and can't sustain what they have. Those older workers they attracted with their plan are costing a lot more than they hoped. They need to cut benefits. If you wanted to move away from an employer based system, Starbucks has a lot more to lose by that than does WalMart.

And WalMart tries to seek some strange advantage at the expense of employee loyalty, high turnover and an increasing poor public image. I find very odd that WalMart with its immense economies of scale and purchasing power does not use the same to provide a fair package of benefits and seek their competitive edge from doing so. .

This strange advantage is called cheap labor. Below average benefits (and pay) are enough to attract the skills required. The reason you find it odd is that you think Walmart should be less of a business and more of a social program. Let's face it, the only reason you want WalMart to pay more is so that you can pay less.

That's the reason you don't see a change. Everyone.....you, me, Howard, wants someone else to pay for it.

I find it hard to believe that the average person does not the real cost of health care since that is one of the primary budget items they worry about. Even the best health plans I have seen for workers (as opposed to executives) still had out-of-pocket expenses.

Removing the profit taking from the system would also realize significant savings.

Your comment here basically proves my point. The out-of-pocket expense for an employee is a fraction of the real cost of a health care plan. Unless you know how much your employer is paying for the benefit, you don't know the cost.

[swissmtndog]

Actually, many medical practices DO outsource claims processing.

Thanks for correcting me on that. That does make a lot more sense. Our employees do field some inquires from doctor's offices asking them to pay a claim instead of having to clear up some paperwork snafu with our outsourced claims group, so I assumed that these were mostly coming direct from the medical practice (plus it does seem like most medical offices are well staffed). But these inquires could easily come from a claims processor for the doctor. Thanks again.

[Agnostic Pagan]

????? Your terminology does not make any business sense, at least not to me, the competitive edge any business any employer could gain via benefits is a cost advantage, has nothing to do with revenues. My main argument is that the competitive edge no longer exists, or will not for much longer. The competitive edge does go away if costs rise too high. The margin no longer exists. This is why executives receive so many perks over workers. It is affordable as part of million dollar compensation package. They are not when offered for hourly wage employees.
How do address the above point? I do not understand how you calculate competitive advantage in a way that disregards revenues. Basic accounting: expenses > revenues = bankruptcy.
Again this is quite simply wrong. When costs go up, there is probably more opportunity for competitive advantages than if they stayed static. It isn't about whether costs go up or down. The advantage comes when you can contain costs better than your competition. I simply do not understand how you can argue that costs can ignore revenue. A great many dot.coms had a competitive advantage – which is how they got VCs to throw piles of money at them. And unless that advantage has a strong correlation with getting customers to buy your products and services, it aint worth jack. You may be able to achieve wonderful cost advantages over me with regard to health care, but if I can avoid the costs altogether, I have an even more distinct advantage in being able to deploy my capital toward my core business and increase my top line while you are focusing on the bottom line. (And this is the WalMart model – I will address the apparent contradiction in a moment.)
????? Your terminology regarding supply and demand (as used in the general business sense) in a little faulty... The demand is created because the user pays so little of the direct cost, the service seems far cheaper to the user than it actually is. That is why the pharmaceutical companies are succesful marketers, 'just ask your doctor'...If it was a demand issue, the marketing departments of the pharmaceutical companies would not need to be the size they are. In the end, they are manufacturers. They need new products (with their competitively advantaged patent protection) and more importantly they need people to buy them. Thus we bombarded with their wonderful ads and lists of side effects. The demand is created by the supply.
If you think the employer based system is not sustainable, how does forcing a business to increase it's benefits help?Because offering workers insurance creates less stress on the system than by not doing so. Employees with good health care benefits will stay healthier since they will seek treatment sooner, and in less costly measures. One of the greatest stresses on the system is the uninsured which use the ER for their primary physician. Until we do switch to UHC, employers that have the ability to offer fair benefits should do so. To address the above contradiction, what I believe may be good for a firm, is bad for the overall economy. The costs are only shifted, not eliminated by not offering benefits.
<snip> If you wanted to move away from an employer based system, Starbucks has a lot more to lose by that than does WalMart.
Starbucks will likely gain more – they can shift the resources they are now using to provide health care toward a different set of benefits. WalMart would have to divert a different set of resources to provide those benefits.
This strange advantage is called cheap labor. Below average benefits (and pay) are enough to attract the skills required. The reason you find it odd is that you think Walmart should be less of a business and more of a social program. Let's face it, the only reason you want WalMart to pay more is so that you can pay less.And I believe they will soon find that such 'advantage' was penny wise and pound foolish. The quality of their workforce is showing its worth more and more.
And do I believe that businesses should society rather than society serve businesses? Hell yes. And unfortunately that seems to be a very small minority opinion. And I have never stated that I wish to pay less. I am quite willing to pay more in taxes for UHC since it will go toward making our country healthier, and thus hopefully wiser. I do not shop at Wal Mart and do not support their policies since I have no desire to help increase the wealth of spoiled-rotten billionaires.
That's the reason you don't see a change. Everyone.....you, me, Howard, wants someone else to pay for it.No, not me. I doubt Howard either honestly. He wants to shift the costs from his books to the governments, but I do not see him wanting to shift the burden. I think he would favor higher taxes if it could be shown that the increase was less than the overhead Starbucks is now spending. Which I do not think is that difficult, but brings us to the heart of the problem. We are not experiencing a business or economic crisis as much as we experiencing a political failure to address these issues. The Maryland law is welcoming change in the right direction. To partially address the contradiction again, is this the best solution, forcing businesses to offer benefits? For the short run, I think so. For the long run, I think UHC is the better solution.
Your comment here basically proves my point. The out-of-pocket expense for an employee is a fraction of the real cost of a health care plan. Unless you know how much your employer is paying for the benefit, you don't know the cost.Most employees do know the costs, and that they are asked more and more to pick up a greater share of increases. Almost every strike I have seen in the past two years had been over this issue more than other. Yes, employers pay a significant amount, but out-of-pocket expenses place a greater burden on the employees than the employer, and that 'fraction' is increasing faster than the employers 'fraction'.

Cite (http://www.nchc.org/facts/cost.shtml)

One half of workers in the lowest-compensation jobs and one-half of workers in mid-range-compensation jobs either had problems with medical bills in a 12-month period or were paying off accrued debt. One-quarter of workers in higher-compensated positions also reported problems with medical bills or were paying off accrued debt.
A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy is $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses (11). Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
Nearly one-quarter (23 percent) of the uninsured reported changing their way of life significantly in order to pay medical bills.


Do employees want others to pay for it? The greatest stress to the system is not those that have health care, but the unhealthy who have less coverage and higher expenses and the uninsured that receive more costly treatment. If they have to pay more per month or year in taxes, they will gladly do so then incur the debt the current system forces them into. They want everyone to pay a fair share. Since everyone would benefit from a healthier population, I agree with that sentiment. UHC receives its support not just for financial reasons, but for the peace of mind issues I addressed earlier.

[DMC]

But one thing if for certain, the main reason you haven't seen progress on this issue is that everyone seems to believe that better health care for all is a good idea as long as someone else has to pay for it.Who said that progress isn't being made? With very little actual marketing taking place, the number of people who support UHC is becoming quite dramatic, and it's just a matter of time before it becomes one of the vital issues in the voting booth. 75% of Americans favor UHC while only 17% oppose it. (http://online.wsj.com/public/article/SB112973460667273222-7Jjp4Ckx_LsV4qI5rjzrENNIcAQ_20061020.html?mod=blogs). I don't want UHC for selfish reasons, as I can easily afford my insurance premiums. I want it for those who can't afford it, which could easily be myself or you tomorrow.

I also fully pay my own insurance premium, so I'm quite aware of what it costs. I'm also willing to pay slightly more than I do now if that's what it requires for everyone to be covered. I don't think it actually has to cost more to do so (as demonstrated by many countries), but that's a different debate.

[Acsenray]

Well, it's a good thing I didn't say that then! I said there was no incentive to use it wisely. What do you think the incentive is, if it costs nothing?

Unless you believe that people are using their health care benefits unwisely, then there's no reason to worry about the incentives.

In any case, there's no great incentive to use it unwisely either. People go to the doctor when they're unwell, not when they feel like misusing their benefits.

[swissmtndog]

How do address the above point? I do not understand how you calculate competitive advantage in a way that disregards revenues. Basic accounting: expenses > revenues = bankruptcy.
I simply do not understand how you can argue that costs can ignore revenue..

Easy.......I pay less for cost A than you do, my competitive advantage. Revenues are Z and are what the market will bear and for this example, are static. I will make more profit than you. I can also bid up costs B, C and D, such that Z - A, B, C, D means loss for you and profit for me. You exit the business. I count the cash. Business 101.


A great many dot.coms had a competitive advantage – which is how they got VCs to throw piles of money at them...

They had a marketing advantage (at least for the VC's) they couldn't turn into a real competitive advantage.


If it was a demand issue, the marketing departments of the pharmaceutical companies would not need to be the size they are....

Marketing departments create demand, they do not make the drugs (supply). Marketing departments are large to create demand. You said price pressures came more from the supply side. Supply side price pressures mean you do not have enough supply, so the price goes up. As you noted, they have plenty of drugs, prices would go up merely because you have a lot of drugs. Nearly all of the price increase in health care is created by demand.

One of the greatest stresses on the system is the uninsured which use the ER for their primary physician. .

It would be piling on to note that this is a demand issue as well.

Until we do switch to UHC, employers that have the ability to offer fair benefits should do so. To address the above contradiction, what I believe may be good for a firm, is bad for the overall economy. The costs are only shifted, not eliminated by not offering benefits.

Translation, let the other guy pay. Why business and not government, isn't this a social issue, isn't that what governments are for? Sure you could tax WalMart more....and as much as you would like them to do things that are other than the good of the firm, they may feel otherwise.

I am quite willing to pay more in taxes for UHC since it will go toward making our country healthier, and thus hopefully wiser..

The argument isn't about whether you are willing to pay. The argument will be about how much you are willing to pay. If it's too much, let the other guy pay.

He wants to shift the costs from his books to the governments, but I do not see him wanting to shift the burden. I think he would favor higher taxes if it could be shown that the increase was less than the overhead Starbucks is now spending...

Spending less money net on this issue does seem like shifting the burden to me. Yeah, let the other guy pay. Seems like an economic problem.

Which I do not think is that difficult, but brings us to the heart of the problem. We are not experiencing a business or economic crisis as much as we experiencing a political failure to address these issues....

Maybe a political failure to address that pesky 'let the other guy' pay problem.

The Maryland law is welcoming change in the right direction. ....

Yes, I can't get sell a tax increase without getting voted out of office.....so let the other guy pay.

To partially address the contradiction again, is this the best solution, forcing businesses to offer benefits? For the short run, I think so. For the long run, I think UHC is the better solution.....

Let's see, you've stated employer benefit programs are a big reason for health care cost increases. I agree. So let's make them bigger until we come up with the long term solution. Doesn't that make the problem bigger, and the eventual long term solution, whatever it is, even tougher?

Yes, employers pay a significant amount, but out-of-pocket expenses place a greater burden on the employees than the employer, and that 'fraction' is increasing faster than the employers 'fraction'......

This is the reason you see support for UHC, which is really support for anything that has me pay less, or the other guy more. Hey maybe some would would be willing to pay a little more. The problem is that for UHC or something like it to be implemented, somebody, (hopefully the other guy) will have to pay a lot more.

I would bet a poll asked, would you be willing to pay a lot more for your health care to pay for the uninsured, you wouldn't see anywhere near the support. Politicians already know this. That is why UHC is not availiable, yet.

We will get there when employers cut enough benefits, so that the average person actually pays enough of his own health care to accept a lower standard of insurance (say catastrophic) that can feasibily be financed. Asking employers to bump up benefits is actually slowing this process down.

[swissmtndog]

I also fully pay my own insurance premium, so I'm quite aware of what it costs. I'm also willing to pay slightly more than I do now if that's what it requires for everyone to be covered. I don't think it actually has to cost more to do so (as demonstrated by many countries), but that's a different debate.

It isn't going to be just 'slightly'. If 45 million are uninsured, your share will go up far more than slightly. Unless you wan't the other guy to pay. Sure maybe a new government program will rid the system of waste and inefficiency. How's the new Medicare program working?

[mazinger_z]

Marketing departments create demand, they do not make the drugs (supply). Marketing departments are large to create demand. You said price pressures came more from the supply side. Supply side price pressures mean you do not have enough supply, so the price goes up. As you noted, they have plenty of drugs, prices would go up merely because you have a lot of drugs. Nearly all of the price increase in health care is created by demand. empahsis added
While I largely agree with you on everything you posted, I avoided butting into this argument because I thought you made better points than I would have. (Though I was debating whether or not to debate Agnostic Pagan's needlessly strict definition of capitalism).

However, you are incorrect about large supply = high price. A large supply will lower the price. If I have one cheeseburger left, a bunch of hungry people, I can command a very high price to my cheeseburger relative to a scenario where I have 10,000 cheeseburgers and the same bunch of hungry people. If there are so many cheeseburgers around, then there is low or no price competition for those cheeseburgers, because there is more pressure for you to get rid of those cheeseburgers than for people to eat them, simply stated. I would draw a graph for you, but I have no idea how to ascii much less do it on a message board.

[swissmtndog]

empahsis added
While I largely agree with you on everything you posted, I avoided butting into this argument because I thought you made better points than I would have. (Though I was debating whether or not to debate Agnostic Pagan's needlessly strict definition of capitalism).

However, you are incorrect about large supply = high price. A large supply will lower the price. If I have one cheeseburger left, a bunch of hungry people, I can command a very high price to my cheeseburger relative to a scenario where I have 10,000 cheeseburgers and the same bunch of hungry people. If there are so many cheeseburgers around, then there is low or no price competition for those cheeseburgers, because there is more pressure for you to get rid of those cheeseburgers than for people to eat them, simply stated. I would draw a graph for you, but I have no idea how to ascii much less do it on a message board.

Thanks, I misposted, what I meant to say was that prices wouldn't go up when there was lots of supply. Poor editing on my part. Thanks.

[Mr2001]

We will get there when employers cut enough benefits, so that the average person actually pays enough of his own health care to accept a lower standard of insurance (say catastrophic) that can feasibily be financed. Asking employers to bump up benefits is actually slowing this process down.
The experience of other countries has proved that you don't need drastic cuts in benefits for UHC to be feasible. And although it might make some twisted sense from a cold-hearted economic perspective, cutting benefits would be a step backward, not forward, because the primary goal is making sure people can see a doctor when they need to.

[swissmtndog]

The experience of other countries has proved that you don't need drastic cuts in benefits for UHC to be feasible. And although it might make some twisted sense from a cold-hearted economic perspective, cutting benefits would be a step backward, not forward, because the primary goal is making sure people can see a doctor when they need to.

This concept forgets why medical costs are so much higher in the US than other nations. Somebody is raking in the dough.

Shockingly, Walmart is not mentioned (http://www.annals.org/cgi/content/full/142/12_Part_1/996)

[Mr2001]

This concept forgets why medical costs are so much higher in the US than other nations. Somebody is raking in the dough.

Shockingly, Walmart is not mentioned (http://www.annals.org/cgi/content/full/142/12_Part_1/996)
The gap between health care expenditures in the United States and those of other nations began more than 40 years ago (46) and was associated with hegemonic market power of hospitals and physicians, who were able to garner high prices for their services. While this price gap persists, a more recent development contributing to the widening difference between costs in the United States and those of other nations (47) is the more rapid diffusion of innovative technologies in the United States. The cost of administering the health care system is another reason why the United States is an outlier in its health care expenditures.
Two of those problems can be solved by moving to a single-payer UHC system.

[swissmtndog]

Two of those problems can be solved by moving to a single-payer UHC system.

Maybe you are on to something. Guess I missed the part of the UHC proposal that unwinds 40 years of hegemonic power of hospitals and physicians asking them to take a huge revenue cut to even out their take with other countries. Sign me up.

I can see why Starbucks didn't mention any support for UHC, now. All those medical professionals who spend $4 bucks on a half-calf, laff-a-caff may have to cut back to Maxwell House.

WalMart, however, may be interested.....I hear Maxwell House is cheapest at WalMart, they would probably kick in a coupon if that would help. Especially if you get Maryland to quit beating them up and go after those overpaid doctors.

I'm sure these last two paragraphs probably made it obvious I'm not a coffee drinker.

[antechinus]

Of course it is unfair to force a single company to provide healthcare. It is an inconsistantly applied rule.

Much better off having healthcare provided to all by the government - now thats fair.

A company should pay workers' compensation insurance for its employees, since it is directly related to the job. However, the whole idea of a company covering the cost of health care or employees childrens education, or the cost of maintaining their swiming-pool, or dog grooming fees is absurd. These do not have anything to do with the job.

[DMC]

It isn't going to be just 'slightly'. If 45 million are uninsured, your share will go up far more than slightly. Unless you wan't the other guy to pay.While it's certainly possible that my share will go up, it's definitely not a requirement if implemented properly, and in fact should drop quite a bit. This (http://www.pnhp.org/publications/a_better_quality_alternative.php) article discusses some of the problems with our current system, and why it's so expensive. Lots of examples are given, such as oversaturation of expensive technologies, which are then underused, thus increasing their per use cost, which is passed on to the end user. This actually results in fewer people getting mammograms, for instance, even though we have plenty of machines to take care of everyone. It's quite an interesting article.

Sure maybe a new government program will rid the system of waste and inefficiency. How's the new Medicare program working?If you mean the new plan that was implemented by foes of UHC, then not so well. That's like asking me how a Republican implemented abortion clinic would work out for pregnant teenagers who are afraid of talking to their parents, and using that as an argument against Planned Parenthood, isn't it? If your argument is that a business-favoring political committee shouldn't be in charge of how we implement UHC, you won't get any argument from me, as I want health care as widely separated from financial interests as possible. If you just wanted to throw out random BS to swat down, then you're wasting both of our time.

[Mr2001]

Maybe you are on to something. Guess I missed the part of the UHC proposal that unwinds 40 years of hegemonic power of hospitals and physicians asking them to take a huge revenue cut to even out their take with other countries. Sign me up.
Huh, I thought you would've read that article before posting a link to it. Guess not. Here you go (emphasis added):
Some observers believe that provider market power explains much of the outlier status of U.S. health expenditures compared with those of other nations (5-7). According to this view, when payers have market power, costs rise more slowly; when providers or suppliers wield market clout, costs increase more rapidly. When health insurance developed in Canada, the market power of the sole payers of health services—provincial governments—enabled those payers to restrict prices paid to hospitals and physicians. In contrast, the U.S. health insurance industry was initially dominated by Blue Cross and Blue Shield, institutions that were controlled by hospitals and physicians. This uncontested provider market power allowed lucrative reimbursement formulas for hospitals and physicians.

[swissmtndog]

Huh, I thought you would've read that article before posting a link to it. Guess not. Here you go (emphasis added):

I did read the article. Guess you didn't read my post. If medical costs were reduced to what other countries pay, UHC would be 'solve the problem' as you put it. My sarcasm was intended to portray the difficultly of getting the medical community to accept reduced revenue stream.

Your response suggests that if UHC was implemented earlier we wouldn't have this problem. Sure maybe. The article I cited includes this summary about the high cost of medical care.

'High and rising health care expenditures may not threaten the vitality of the U.S. economy, but they are a serious concern for groups within the economy: employers, employees, governments, taxpayers, and patients. For individuals and organizations who earn their income by providing or supplying health services—hospitals, pharmaceutical companies, and physicians—high costs may be beneficial. '

I know it's nice to blame business in general, but maybe instead of targeting WalMart, maybe it's better to take on the group who really benefits from the current system. Note that none of the articles (including the 13 year old one that DMC quoted) comes up with general numbers such as:

To insure the 45 million uninsured it will cost X, this program will be paid for reduced medical cost A + reduced adminstrative costs B + net employer contributions (say via a payroll tax) C + increased corporate and personal income taxes or some value added tax D + net increase in premiums to the insured to cover the uninsured E (who almost surely as a pool are in a higher risk group than the insured).

It's much easier to say, the current system is inefficient, a new system is a panacea, and let's get WalMart to pay there fair share, than it is to make the numbers work.

If there is a UHC proposal the could be sold to make the math work, why haven't we seen it? My take is that is because the total of A, B, C, D and E that the various groups will actually accept doesn't come anywhere near X. Not to mention all these various groups are waiting for the others to pay more.

I think we will eventually see UHC, but only until we get a plan the gets X way down from where it is. When people begin to realize that universal care is not going to include an MRI when you want it because the clinic has one availiable, or the latest drug availiable you've seen on TV. So the first step is likely just catastrophic care.

The expectation gap is actually worse now thanks to Bush's give away on prescription drugs/Medicare. The cite DMC posted that said 75% of people favor UHC, also said something like over 90% of people favor Medicare. Sure we like it, the plan is so financially hocked in the future it makes the Social Security future shortfall like manageable by comparison, it's set so the other guy (or in this case the other guy's kids) to pay for it.

[Mr2001]

I did read the article. Guess you didn't read my post. If medical costs were reduced to what other countries pay, UHC would be 'solve the problem' as you put it. My sarcasm was intended to portray the difficultly of getting the medical community to accept reduced revenue stream.
[...]
For individuals and organizations who earn their income by providing or supplying health services—hospitals, pharmaceutical companies, and physicians—high costs may be beneficial. '

I know it's nice to blame business in general, but maybe instead of targeting WalMart, maybe it's better to take on the group who really benefits from the current system.
Doesn't seem too difficult. If all common medical care in the country is paid for by one entity, the medical community will either accept what that entity is willing to pay, or go out of business. If you want those hospitals to cut their costs, what better way than to tell them "You're only going to get paid $X for providing service Y, same as in any other civilized country, so go figure out what they're doing right"?

The expectation gap is actually worse now thanks to Bush's give away on prescription drugs/Medicare. The cite DMC posted that said 75% of people favor UHC, also said something like over 90% of people favor Medicare. Sure we like it, the plan is so financially hocked in the future it makes the Social Security future shortfall like manageable by comparison, it's set so the other guy (or in this case the other guy's kids) to pay for it.
If you think that's why people like Medicare, take off those economist glasses and think a little harder. People like it because they don't like the idea of elderly and disabled people going without medical care.

[pantom]

To the argument that companies will attempt to gain a competitive advantage as far as hiring and retaining workers through their health plans: interesting, entirely true, and completely irrelevant. Mere standard market behavior. Big farkin' deal. Has zip to do with whether or not this is good for the society at large.
Even more to the point, it has zip to do with whether or not it's even good for the company in question, which presupposes that the decision-makers in a company have a clue. Having spent more time than I would really want to add up scrolling through stock screeners and reading annual reports than I would ever want anyone to total, I can tell you that my overwhelming conclusion from all of this is: CEO's are no better than Presidents of the US, and in many many cases are actually worse. So looking at their behavior, which is the current behavior of the market participants in health care, apart from the government itself, isn't going to provide meaningful or useful insight into this problem. Or any other, for that matter, but as this one is the one before us, let's just leave it at this: GM is not atypical. The managers at GM should have known long ago that Toyota was going to have them for breakfast, lunch, and dinner if they continued to fund healthcare at the levels at which they were funding it. That they didn't address the problem until this past year is proof enough that your average management is worse than useless if your looking for someone whose behavior is in any way rational in this or any other sphere.
To the argument that it's unfair to target Wal-Mart with this Maryland law: laughable. Like Wal-Mart cares what's fair. If they don't, the average Maryland taxpayer shouldn't either. They should approach the question in the same way Wal-Mart does: does it improve my bottom line? If it does, screw Wal-Mart to the wall. If not, not. Wal-Mart isn't going to reduce its employees to less than 10000, because as has been shown, it can't, not without adversely affecting its revenues and profits. Given that, Maryland has every right to screw them in any and every way it feels like, because if the shoe were on the other foot, Wal-Mart would do the same.
That's the way the real world works.
Which brings us to the larger perspective on all this: the US is in this mess because its workers are so cowed that very large segments of them actually believe that their interests are aligned with those of their employers. This stupid fantasy doesn't afflict the average working Joe in Canada or Britain or France. The result is that they get equal healthcare for a lot less, and not only that, their employers do too. Why? Because everyone in those countries aggressively pursues their own interests, like A Smith would have wanted them to. Out of the melee that ensues, a solution that is good for the entire society involved emerges. The only reason, the ONLY reason, why the US has healthcare costs that are spiraling into the solar system and beyond is that its workers walk around thinking they can negotiate the best deal for themselves all by themselves, as if every worker were an island. Stupid wouldn't even begin to describe this behavior.
So, even though you wouldn't want to look to your average management for a solution, the fault doesn't lie with your average manager; it lies with the worker, who is unable to see his own interest and to pursue it aggressively. A small minority, becoming smaller every day, does pursue that interest aggressively, and that minority is made up of unionized workers, the people who pushed for and got the Maryland law. They pushed for it and got it not because it was their preferred solution to the problem, but because it was the only way for them to advocate for the interests of the average Wal-Mart employee.
Now, stepping back, the point of this whole diatribe is that health-care, like pensions, or any other insured risk, has an inverse relationship between the size of the insured pool and the size of the cost: the larger the pool, the smaller the cost. So, if the workers of the US were to pursue their interest aggressively in this question, they would go for and get a Federal, nationwide solution to this problem, otherwise known as a UHC. That some individual business might see this as being bad for their competitive position vis-a-vis others would be irrelevant, especially given that globalization very definitely makes the domestic interests of an individual US-based business completely irrelevant and parochial. GM is finally beginning to figure this out. Given that they've been operating globally since the end of WWII, you can see that your average manager is more than a little obtuse when it comes to society-wide questions, or ones that involve looking out into the future more than a year or two.
So, you can't expect a management or a management-oriented worker to make the case for UHC; it has to be made by workers who's interest lies with making healthcare universally available and cheap.
Once that's done, management will come around, once they see how much it lowers their costs and allows them to get on with the actual task of managing their individual businesses. But they're not going to see that ahead of time; ahead of time all they'll see is the situation before them and the competition that's breathing down their necks, because that's what they're paid to see. But jumping from that to thinking that that form of thinking is actually good for either society or for any individual member of it is to make a jump without looking down to see just how far you will fall if you don't make it to the other side. Like the coyote in the Road-runner cartoons.
Poof!
Except the results are a bit bloodier than that, usually.
As for whether or not the medical community would accept a lower payrate, this doesn't even qualify as irrelevant. What are they going to do, move to Canada? Threaten their Congressman that they aren't going to vote for him? Except for a very few very rich Congressional districts, this threat would mean exactly squat. Honestly.
Besides which, note the following well: the lion's share of medical inflation accrues to hospitals, not doctors. See Table 128 (http://www.census.gov/prod/2005pubs/06statab/health.pdf) of the Statistical Abstract, and note that, for an index based on rates as they were in 1982-1984, the hospital cost index was at 417.9 in 2004, while the physician cost index was at 278.3, below even that of dentists. The problem lies not with your doctor, but with your hospital, you know, the guys who charge you for an aspirin as if were a toilet seat for the Defense Department. Note as well, by looking at Table 708, (http://www.census.gov/prod/2005pubs/06statab/prices.pdf) that the index for doctors is lower than that for garbage collection, roughly equivalent to that for fresh fruits and vegetables, and way below that for educational books and supplies. Hospital costs, OTOH, are second only to college tuition in their rate of increase since the base year.
In having these discussions, it helps if you know where to direct your ammunition.

Full disclosure: I'm married to a doctor. I like to think that she's as good for me as an apple a day. (index = 251.7, a bit below her cost)

[Wesley Clark]

Yeah it is fair. If their employees cannot afford healthcare on their salaries I see nothing wrong with requiring them to provide more healthcare. Medicaid ends up paying for walmart employee's healthcare. The system of tying healthcare to work is a horrible idea, but right now it is what we have. I'd personally prefer that walmart just pay a little more in taxes to go to medicaid instead.

I saw this story on Cavuto, that was pretty funny. He brought Steve Forbes on and pitched a bunch of softballs about how evil government mandates are and how good the free market system is. I thought it was funny.