Sunday, February 13, 2011

Medical Insurance Legislation - A Job-Killer?

Former Massachusetts governor Mitt Romney spoke to his (anything but) like-minded Republican stalwarts and assorted Tea Party rabble at the Conservative Political Action Conference (CPAC) meeting in Washington this week. The consistent theme appeared to be get rid of President Obama who, as Romney claimed “… wants to look toward Europe” for solutions to the country’s ills – primarily medical insurance reform. [Room fills with laughter].

I’m thinking, Yeah – A European plan sounds OK to me! Let’s look at some simple statistics (Conservatives prefer things “simple”): The number of Europeans who suffer from lack of access to affordable medical care – Europe: 0, USA: 57,000,000. The number of Europeans forced to declare bankruptcy due to excessive medical bills – Europe: 0, USA, well medical bills are the second leading cause of bankruptcy in the country.

Fortunately the numbers of bankruptcies are down though, but not for reasons you might think. Yielding to lobbying efforts of the credit card industry, the Bush Administration and Republican congress changed the laws making it much more difficult for individuals (not companies, of course) to declare bankruptcy.

Recently House Speaker, John Boehner, rallied his minions to attempt to repeal the “Job Killing” medical reforms passed last year under the disgusting term, Obamacare. I am puzzled about what exactly in this bill, which expands medical access to millions of Americans, makes it a “job killer”? I can cite personal examples were I find instead, the LACK of affordable medical coverage is the real Job Killer.

Take, for example, my very bright son-in-law; an electrical engineer with several invention patents to his name, was mulling the possibly jumping from his current employer (in perpetual downsizing mode for most of the last decade), to a new technology start-up. This small tech start-up company is an example of one of these breed of “American Innovators” that this nation so prides itself on. In a country were we have been hemorrhaging manufacturing jobs, the bright hope for our future has always been our near mythical reputation as the innovator of the Next Big Thing. So here is a young bright mind poised to step in and be part of America’s big innovator comeback dream.

Well, no. You see this jewel of American daring-do apparently does not offer any employee medical benefits – none, zero, zilch! This bright young engineer is also smart enough to know not to risk the his health and that of his his wife and children by abandoning an employer who currently offers medical benefits.

Now let this point sink in – the LACK of available health care was the Job Killer here, and I can assume, in countless other cases. Innovation is stifled by the inability of this country to provide support for American innovation because we value the profit motive of for-profit medical insurance companies instead – our “innovative spirit” is stuck in the muck of the status-quo.

But the “job killing” examples from our lack of available medical insurance doesn’t stop there. In a country where highly qualified and motivated citizens are clamoring for work; millions of others who would like to retire, instead continue to work, thereby locking up those jobs which could be taken by younger and unemployed workers. These older workers hold onto their jobs because they would lose their paid or subsidized employee medical care if they retired. I can name several personal friends who are holding onto their jobs in State service because they cannot afford to pick up the $1,200 cost of their medical premium on a reduced pension income.

The “job killing” effects from the lack of a national health care system don’t even end there. Conservatives are always touting how Small Business is the backbone of the American economy. My daughter runs a small retail and internet business. But she cannot afford to provide medical insurance to her three employees; one of whom just quit to take a job that does offer employee medical her family needs.

The economic downturn has driven a lot of small businesses out of existence. Here in my own town, each month I see yet another empty building where a business has closed. Restaurants and stores that have been in this town for decades are now gone.

My wife and I no longer go out to dinner or shop to the extent we used to – we can no longer afford it. With paying a medical insurance premium of $1,200 a month, $14,400 a year, most of my disposable income is paid to an out-of-town medical insurance company. Multiply that figure by the thousands of other people in town in my situation and you can imagine the amount of lost consumer dollars that could instead support the local economy.

True, European style medical systems are not free, and their citizens are taxed to pay for these and other benefits. But I have a very strong suspicion that Europeans don’t pay $1,200 a month in taxes for their state medical care alone.

Our lack of a coherent, universal and cost-effective public medical system is what is stifling or innovative spirit and economic revival - THIS is the true Job Killer. Not Obamacare.
My personal retiree factoid:
Just to give an example of how medical premium increases have outstripped income, in 2006 our group medical plan premium was $894 – in six years it has risen just under
30% to where now in 2011 our premium is $1,160. In that same time our retirement income has increased only 6.6%. The growth in cost of our insurance has outstripped our income by 4.5 times. After deducting the insurance premium, my wife's remaining net retirement check is less than $600.

Actually our premium this year would have been $100 higher had we not opted for the lower cost plan version. Unfortunately under the new plan, we have to change doctors; the physicians we’ve used for those past decades are not on this plan. Government private insurance company bureaucrats have now come between us and our physicians.

In six years of group insurance coverage we have been forced to accept four different medical insurance carriers. We had no practical choice in selecting other insurance plans.

Our medical insurance premium is now higher than was the mortgage payment on our house.

Further Reading: Experts doubt claims that health care law is a 'job killer', Pittsburgh Post-Gazette, February 13, 2011.


DJan said...

I had to wait until I turned 65 to retire, because I needed Medicare to have any medical coverage at all. It just astounds me that when somebody says the health care law is a job killer, nobody cares to find out whether or not it's true. Thanks for that link: I'm heading over to check it out now.

John Myste said...

I wrote a long argument inspired by the cost of healthcare. In it, I plead ignorance. Is that plagiarism?

Antares Cryptos said...

Great post.
The lack of prioritizing health above all else astonishes me.

Austerity measures are being implemented in Europe as well, but they know that if too many cuts are made to their respective health care systems, the public will take to the streets.

It is not just a job killer, but like you said, some of the brightest will remain where they are, simply because of health care.

I haven't looked at the link yet, but do wonder who those alleged "experts" are.

Jerry said...

And this is one of the major reasons that I am not retired. My wife will not be eligible for Medicare for another couple of years.

Robert the Skeptic said...

DJan Yes, I have several friends who have waited until Medicare eligibility to retire because of that very reason.

John It is, but I grant you "fair use" so plagierize away.

Cryptos US Conservatives I don't think realize that private insurance companies continue to exist in Europe as well. But it's a tough nut for black-and-white thinkers to grasp.

Jerry Yet again, I find this a very common strategy among people our age.

Rain said...

You made the case and very well. Too bad logic isn't a factor for the tea party.

Our daughter and son-in-law run a small veterinary clinic with several employees for whom they have always provided health care out of a feeling it's the right thing to do. They are an example of small business where they say it will help them to have more profit which might mean the ability to hire more employees. This is a win win for small business.

Antares Cryptos said...

I think they know, but the value of money supersedes the lives of the "masses"...

How much productivity would increase if people were not focused on the cost of health care but their careers is rarely taken into consideration. Or the stress, or the additional health care costs as a result, or infinitum.

billy pilgrim said...

i can't imagine paying $1200 per month on medical insurance.

how much would the cost devrease if malpractice lawsuits were brought under control? not just the cost of insurance but the myriad of often unneccessary tests doctors order to cover their arses.

The Heathen Republican said...

I'll try to leave out my own opinion and just articulate the Republican argument to aid the discussion. Here's the logic of the health-care-law-as-job-killer argument:

Companies larger than 30 (?) employees must now offer a full suite of health insurance coverages. Not just any coverages, but those specified by the law, which includes a few things most companies didn't do before, like covering children up to age 26.

Companies that didn't provide any insurance, now must start providing for all of their existing employees and any new ones they hire. Companies that provided coverage, but of lower quality (according to the government), now have to provide additional coverage for their existing employees and any new ones they hire.

The economics of the health insurance industry are varied, but in general, an insurance company charges a price per employee. The employer decides what percentage they will cover, and the rest is passed on to the employee. Self-insured companies are responsible for all medical costs over and above the premiums that employees pay.

Under the new law, a company with 10,000 employees has an incremental new cost for each existing employee (insurance companies don't cover children between 22-26 for free). If that cost is $10 per employee, that's one or two full-time equivalent positions that the company must re-evaluate before hiring.

If you think about it another way, every large company considers the cost of an employee as Salary + (Salary x 20%) for Benefits. If the new calculation for benefits is 25%, there will be fewer dollars available for hiring.

While the new law may be a good thing for society, and employees love the new benefits, there is a real cost borne by all companies.

Robert the Skeptic said...

Heathen Welcome. You bring up a point which I didn't include as I was trying to keep my post short. You bring up one of the biggest criticism I have for both the old system and the new legislation: Why would employers even want to be responsible for providing ANY health insurance benefits for their employees?

As you so clearly pointed out, this is "overhead"; it cuts into profits and adds to the cost of goods. I tried (unsuccessfully) to find the specific reference but I had heard that the cost of medical insurance adds somewhere between $1,500 and $2,500 to the cost of a new American manufactured car.

Conversely, European businesses don't have to worry about this expense AT ALL! They have no administrative costs, no personnel assigned to employee benefits - their governments FREE their business community from the costs associated with providing medical to their employees.

My question to the business community would then be: Would you rather keep the new legislation -OR- scrap it for a national medical plan like ALL the other industrialized nations have?

"None of the above" is not a viable option as the current system dooms us to paying more and more for less and less care. It is unsustainable.

My personal preference would be the medical reform legislation is rendered unconstitutional FORCING the only option of a single-payer plan.

Kay Dennison said...

I'm a stroke patient and have been so for over 30 years and am finally on medicare/medicaid and the second is about as useful as a screen door on a submarine but it beats the heck outta nothing. I was forced into retirement and had to fight for disability and it took me 6 years to get it but they wouldn't give me Medicare until I was 62.

I am so tired of the GOP and their antics. My new Tea Party congressman (a millionaire who's been bankrupt 7 times) is against health care reform -- funny since he owns two nursing homes. I don't know why anyone voted for him. I live in a town that ran on the steel industry. Steel is dead and unemployment is 12%. We need decent healthcare desperately.
And yeah, I campaigned against Jim "TeaBagger" Renacci and will do so again in 2012 along with any and all GOP candidates. And I used to be an independent.

Paul said...

Et tanta stultitia mortalium est says it nicely I think...:-)

KleinsteMotte said...

What kind of doctor takes an oath to help his patients and then opts out of seeing them based on care plans?
Seems to me that they have chosen business and incomes over the care of patients that trusted them as their medical adviser. Why is that even possible? I find it sad.

Robert the Skeptic said...

Kay Many share your frustration with medicaid, here funding goes from Fed to state and state administration can vary. We have relatives who applied for SS disability and it seems the administration just routinely denies all claims, requiring a lawyer and court hearing to get any benefits.

Yes, amazing how many times these Republicans with business backgrounds have histories of driving their businesses into the ground - multiple times.

The Republicans have dug a hole for themselves, I believe - they got their tax cuts, so now where are all the jobs?? The Tea Party nuts (hopefully) will someday wake up and realize they have been sold a bill of goods.

Paul Not up on my Latin - thankfully Google gives me access to a Latin-English translator. When I ponder the overwhelming support that insurance companies have over the individual consumer, the more appropriate Latin phrase might be "caveat emptor".

KleinsteMotte Well I don't believe that people go into medicine purely for financial gain. Medical school (at least in this country) is very expensive. Another factor which complicates this issue is the high cost physicians must pay for malpractice insurance. Any move toward a single-payer system will need to address this problem.

The Heathen Republican said...

Robert, a minor point, but there weren't any tax cuts in December. Republicans argued that we had to prevent tax increases on January 1st. The argument was not that keeping taxes the same would increase job growth, but that raising taxes would create more job losses.

You think a lack of job growth will make Tea Partiers give up on Republicans? Has Obama's promise to keep unemployment at 8% made progressives abandon him?

Robert the Skeptic said...

Heathen Thanks for checking back and providing some clarification.

Correct, an important distinction - the Bush era tax cuts were merely extended, preventing an increase.

Actually no, I think the Tea Party folks will continue to remain ideologically deluded and support the Republicans even though their policies run against their own self interests. I don't believe equally so of Democrats however; many indicate their loyalties can swing to a greater extent. There is a lot of criticism of Obama from within the ranks; some believing he has gone too far, others not far enough.

Here is the one thing that puzzles me, though. Businesses (at least mine) pay taxes on our NET income after expenses are taken from gross profits. The businesses I have known hire employees when they need the bodies to produce the product or service, not because lower taxes encourage them to hire unnecessary workers. Just what exactly is the mechanism whereby lower taxes increases employment? I've never seen an explanation.

Since the Bush Era tax cuts have been extended, we should expect a spate of hiring and a drop in unemployment. For reasons too extensive to put in these comments, I seriously doubt that tax breaks for the top 2% (who mainly get their wealth through equities) will result in job growth.

The Heathen Republican said...

You're right, it's not about a company's net income. Here's the way I understand the link between lower taxes and business hiring. Two methods.

One: Cutting personal income taxes increases dollars in the pockets of consumers. Consumers use those dollars to buy more stuff.That stuff translates into higher revenue to businesses. Businesses hire more employees to keep up with consumer demand.

Two: Cutting personal income taxes will also increase dollars that go into savings. There is a misperception that dollars saved are unproductive, but that's false. Every dollar saved is deposited into a bank account (dollars buried in mattresses are, in fact, unproductive). The bank does a variety of things with those dollars, including loaning them to people and businesses. This leads to spending by consumers (see above) or expansion by businesses.

A large portion of savings dollars, particularly now, are not loaned out; they are invested in the market. Investment in the stock/bond market directly benefits businesses. Buying a corporate bond puts cash in the company's accounts. Buying a company's stock increases the market capitalization of the firm, which can be leveraged to fund expanded operations, new products, etc. All of that allows businesses to hire more employees.

Robert the Skeptic said...

Heathen The first 12 years of my career was in banking, so yes, I understand the concept. However the skeptic in me ends up falling back on the words of the great philosopher, Yogi Berra who (supposedly) said: "In theory, there is no difference between theory and practice.

My suspicion rather is that monetary gains instead follows self-interest rather than wholesale benefit. Currently corporations are experiencing record profits - so where are the jobs??

A rising tide supposedly raises all boats, but currently the yachts are the only boats not stuck in the muck.

The Heathen Republican said...

Sorry, hope I wasn't being preachy. I thought you were looking for a restatement of the Republican argument.

Where are the jobs? Honestly, boards and business owners are holding back because they feel that the current administration chooses winners and losers in the marketplace. Without fully understanding their future costs, or if they will draw the ire of Obama, they find it safer to sit on their cash.

If you didn't see my News link over at The Heathen Republican, here's another way of making the point from Investor's Business Daily.

GutsyWriter said...

I'm not an expert on this, but if I understand correctly, in Britain, Doctors working for the national Health plan earn around $200,000/year and are content. In the U.S. doctors want to become specialists so they can earn millions a year and own several houses and cars. Until we can change that greedy mentality as well as the insurance companies greedy mentality, we cannot have the same as in Europe. I don't care which plan we get.

Paul said...

One thing I think that we can all agree on is that health care costs for average Americans are way too high. How to provide health care for all is the sticking point. Old people (like me) start to get a little nervous when Uncle Sam wants to launch health care reform and a lot of our anxiety is caused because of lack of information.

The Heathen Republican said...

Paul, I think what you mean to say is how to provide FREE health care for all. Because, even before ObamaCare, we had universal health care in the U.S.

Sure, it was expensive. So let's try to take out some of the cost drivers (like frivolous lawsuits that drive up malpractice insurance). But let's not deny the fact that anyone in need of health care received it. They just received a bill after the fact.

So if your complaint is the high cost of health care, I agree with you on that. But I don't agree that everyone is entitled to affordable health care. Who is the government to define affordable? Look what affordable housing got us into.

Maybe I could get on board with government subsidized cars, TVs, and iPads, because I think we all have a right to those, and costs are simply too high.

T. Paine said...

If the cost of health care insurance is the main problem, I do not see how our new health care law does anything but exacerbate the problem.

In the new plan, doctors are provided numerous disincentives to the point where their income earned is seriously reduced.

As Robert pointed out, just the cost of medical student loans are quite expensive. If a new doctor no longer has the same earning potential to pay off those loans as quickly or if government-dictated fees for services rendered don't cover the doctor's costs, then we will see far fewer doctors entering the field of medicine and many exisiting doctors leaving their practices.

If you thus have far fewer doctors in the country now providing health care for 30 million more patients, simple supply and demand economics tells you that the increased demand for fewer services will drive up the cost of those increasingly scarce doctors.

Far better to scrap the new law and enact some free-market reforms that will actually address the issues of higher costs.

As has already been stated, frivolous lawsuits need to be curtailed via REAL tort reform. This alone will help with the cost of malpractice insurance for doctors which is passed on in the fees to the patient. Further, doctors won't be as inclined to order tests which they don't think are necessary but order anyway just to cover their butts.

Next, allow insurers to compete across state lines thereby increasing competition and lowering prices. Instead of having only a handfull of providers to choose from, having hundreds would definitely create much needed competition.

I think we all agree on the problem, but the current "solution" of having an ever-increasing amount of involvement by the federal government will NOT help our cause here. It will only cause higher costs and rationing. Having such health care is not an asset if one has to be on a waiting list simply to have an MRI, like what is typically done in our neighboring Canada now.

Robert the Skeptic said...

Gutsy, Paul, Heathen, T.Paine Far too much here to engage in a "forum" discussion in the comments column. As we are engaging in sweeping generalizations here I will make a couple of my own then move on.

I've never met anyone having a medical need without health insurance who thought they shouldn't have it or didn't want it. The moneyed interests who control this country are not the ones suffering for lack of medical care or coverage; their needs are met, so screw the rest of us.

In a country where almost HALF our population believes in some combination of ghosts, UFOs, creationism, biblical genesis (seemingly endless list), I have come to the conclusion that the British, French, Swiss, Norwegians, Japanese, Germans, Australians, Dutch, Danes, Canadians, Chinese... even Mexico, are smarter than we Americans who apparently have become too stupid to figure out a solution to this problem.

In my personal case, medical insurance bureaucrats are coming between me and my physician - I see my "new" doctor this week. I expect my net retirement (disposable income) to continue to erode further until I can get on Medicare in a few years.

If you believe our current medical delivery system is GOOD for our economy, then I guess the discussion ends there.

T. Paine said...

Robert, indeed I don't think that our current system is viable, and certainly not after the passing of the inaccurately named Affordable Health Care Act.

That is why I mentioned a few specifics on how to fix the problem, sir.

Rain said...

actually everyone needing health care does not get it along with the bill. There are plenty of procedures in this country that people know they need but the hospital or doctor want proof up front that they can afford the price. They can go to an ER and not be denied care but that's not where you get preventative medicine. Also if you do get the care you want, with a bill so high that it causes you to lose your home, is that the kind of thing Republicans want for the middle class?

Robert the Skeptic said...

T.Paine I agree that shifting more of the cost of medical on business is not the answer. But the status-quo is not sustainable. The solution will be multi-faceted and many vested interests will not like it.

Rain In answer to your final question, "yes" that is exactly what the Republicans want. You see some people have not "earned" the right to have medical care because they have not been self sufficient.

Marylinn Kelly said...

How any elected official, of any party, can be other than ashamed of what amounts to sanctioned criminal behavior in the health care system is beyond me. We are not a world leader when our citizens cannot be employed, healthy and educated. And I have no answers.

Robert the Skeptic said...

Marylinn Ah but our Conservative friends say that "self-determination" is the hallmark of our country, not "socialism". And besides, as long as THEIR personal self-determination is preserved, the hell with the rest of us... we are, of course, The Undeserving.