When Businesses Desert Americans

There has been a shameful hue and cry over the Affordable Care Act.  Shamefulness arises from (1) the fact that Congress could not agree to go further and enact a single payer, universal healthcare system, and (2) the reaction of many businesses to cut hours or outrightly withdraw healthcare coverage rather than comply with the provisions of the ACA.

Many businesses claim they cannot afford the premium costs.    Other critics say the ACA is another step towards “socialized medicine”.  Hmmm.

Employers have not always provided healthcare coverage.  During WWII era wage and price controls, employers found that they could attract and retain employees if they offered healthcare (since they could not pay them enough).  This benefit has proven so popular that most Americans think employers and healthcare are a natural match.

There are down sides to employer provided healthcare.  One down side is the dependence upon “risk pools”.  Those who work and receive employer provided insurance are part of a large group of people (a pool) and as a result most experience a lower rate (the employer does).  The young and healthy are charged the same as the older and less healthy.  So most Americans learn to believe that health insurance is available to all and is not that expensive.

Consequently, Americans tend to disassociate themselves from what health benefits really cost.

A second downside occurs when someone becomes unemployed.  Suddenly insurance costs appear huge and should the person have had a pre-existing condition, they might not be able to afford the new premiums or even find an insurance company willing to write a policy.

So it is darkly humorous to hear people decry universal healthcare.  Their standard line is they do not want socialized medicine because they do not want the government to stand between them and their doctor.  Hmmm.  What’s the difference with your employer or your insurance company standing between you and your doctor?

And the even greater hoot is the American healthcare delivery system is not even close to the best in the world (for the average American).

Experts predict it is only a matter of time before the ACA will have to give way to further reforms.  While the ACA is projected to be less costly than pre-ACA, it is still too costly.  Socialized medicine, here we come.

On a totally different front, AOL recently opened another reason to look more closely at European socialized plans.  AOL decided it would change its pension plan (401k) where they would time their contributions to once a year.  This would save AOL money while eliminating the time value for the employee.  Instead of matching employee contributions monthly, AOL would do it once a year.  If the employee left AOL before the magic date, the employee would receive no matching contribution for that period.

While this is characterized as a cost control measure, it is fundamentally another step in businesses abandoning their role in a “national retirement” program.

European Countries have national retirement programs where businesses are required to withhold wages and fund a national plan that provides income once workers retire.  This could be called a socialized retirement plan.  Social Security is a smaller version of this.

The march towards social democracy is not a movement to abandon capitalism.  Rather it is the consequence of capitalism abandoning its responsibilities towards the health and welfare of workers.  When businesses construct business plans whose earnings satisfy shareholders and these earnings come at the cost of cuts to healthcare or retirement benefits, they are inviting the public to choose social democracy over the free market, “you are on your own” type of governing Americans are used to.

 

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