Thanks to that case, co-employment laws are now well understood by most firms. I’m sure this would not be an issue.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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?
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?
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.
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.
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 . Cite . 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.)
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.
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.
Ah, so you support the Gattaca platform.
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
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.
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.
If you mean I support Vincent Freeman’s struggle to be judged on his merit, not the contents of his body, then yes.
Actually, many medical practices DO outsource claims processing.