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.

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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.

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

The Vanishing Hope of Jobs

I had lunch with a new acquaintance made recently through the blogging spheres. Like a few of my other friends, he is a former employee of Hewlett Packard in our city. At one time HP employed close to 10,000 people on it’s industrial campus in town; today there are roughly less than 2,000 people remaining.

The photo above is the empty Nypro manufacturing facility, a company that provided services to HP. Nypro shifted the remainder of it’s manufacturing overseas laying off all it’s workers and closed the plant. The empty Nypro building is located along an increasingly desolate row of empty buildings on “Technology Loop” not far from my home where I ride my bike.

The HP campus on the other side of the city is turning into a ghost town as well; many of the buildings are empty and shuttered, a few are leased by other companies as warehouse space.

I heard on the news recently that even companies considered particularly American, such as Cisco, IBM and Sun essentially have little to no domestic manufacturing facilities. Though the “design” may be done here, the manufacture of the actual products is contracted out to companies outside our borders.

Leo Hindery, a former CEO who heads the US Economy/Smart Globalization Initiative at the New America Foundation, is one of the foremost advocates of a U.S. industrial policy.

"I think you have to start with the premise that a country as big as ours -- the largest of the developed economies -- can't survive with less than 8 percent of its men and women making something,"

According to the latest figures, about 7.6 percent of the workforce is currently engaged in manufacturing.

"It needs to be 20 to 25 percent," Hindery said, "and it needs to be 20 to 25 percent of GDP, otherwise the gap that you have to fill is achieved only through consumer credit." ¹

The country is scratching its collective head puzzling over our “jobless economy”. We have an expectation that things will turn around and be the way they once were; that unemployment will somehow return to 1980’s level. And we demand quick fixes - the Republican machine rode a populist wave into the House of Representatives on the implied promise that Jobs would mystically arise from thin air merely by putting the Conservatives back into power.

But I don’t think the Republicans give a damn whether or now the Great Unwashed have jobs. They care only to be in control of the factors which will direct corporate profits; and profits are no longer dependent on the domestic market any more, their sights are overseas. Indeed, the top few percent whose wealth is based on equities have seen unprecedented growth recently. But where are the jobs for the middle class? The answer is that the wealthy no longer need us as either employees or consumers.

I believe we are waiting for a recovery that is never going to come. Some of the vacant buildings on Technology Loop have now been rented by local governments needing office space. But now Americans graduating from university have almost a better chance of finding jobs outside the country than here at home. “Shanghai and Beijing are becoming new lands of opportunity for recent American college graduates who face unemployment nearing double digits at home.” ²

I have been accused of being depressed about the future of our country; that I lack the optimism that many others do. But optimism must to be based on something more tangible than faith and hope; and in romantic notions that our past reputation as a world leader in innovation will carry us into the future. That was then, this is Now.

Suggested further reading:
"The Real Economic Lesson China Could Teach Us", Robert Reich, January 19, 2011.

References:
1. “Hu's Visit Is Reminder Of One Way China Leaves The U.S. In The Dust”, Dan Froomkin, Huffington Post, January 20, 2011
2. "American Graduates Finding Jobs in China", NY Times, August 10, 2009

An ounce of prevention...

I see that many are hailing the President’s recent “tax rebate” as a brilliant stroke of financial daring-do. Those people, of course, are morons.

The US economy started to go south in February. Since then gasoline prices have gone up over 20% and inflation has already eroded much of the potential gain of such a “stimulus”. By summer, nobody will remember the money they got or what the hell they spent it on. The stimulus will be as effective as spitting in the ocean.

The idea behind this bold economic action is that people will essentially go out and “blow” the money on crap at Wal-Mart. This is truly an amazing concept to me; that the core economy of the largest economic power in the world is based on people mindlessly buying consumer crap. With dwindling world natural resources and stagnating wage growth, just exactly how sustainable is that?

Independent analysts believe that roughly the same percentage of people who DIDN’T vote for George Bush will put their tax rebate into reducing their personal debt. Of course, it is then assumed that shoppers, with now lower credit card balances, will run back out the following months and rack up more debt. They are probably right. I have low expectations of most of Moron America, and seldom do they fail to meet them.

Of course people can create their own personal economic stimulus package simply by grabbing their credit card and spending more money they don’t have anyway. That is exactly what the Bush administration is proposing anyway; except he’s using the US Treasury’s Master Card to help us all relieve a little pent-up consumer demand.

Hey, our national budget deficit is now already the largest ever in our history; so what’s the harm in racking up a little more national debt? Either way, whether you pull the money from the US Treasury or your credit card, it’s all eventually going to have to be paid back. Take your pick, monthly installment payments or higher taxes.

So whether you receive $300, $600 or ever $1,200 in economic aid, just remember, $165,000,000,000 has just been added to our tax bill. Oh well, you could always just make the minimum payment.

Try to smile: Dave Barry’s FAQ on the Economic Stimulus Payment