As you may or may not have noticed from the little “Reading Desk” gadget I added to my sidebar, I have been reading a book called Supercapitalism, by Robert Reich. This book is outstanding, and it has drastically changed my perception of what’s wrong in our economy.

Anyway, below, I have reproduced an excerpt from the book, wherein Reich opines on employment linked healthcare. I typed it by hand, so please excuse any typos.

Finally, not only are corporations unfit to decide what is socially virtuous, but under supercapitalism they are often unable to deliver services that are inherently public. Pushing them to do so begs the question of whether the responsibilities would be better undertaken by the public sector. The campaign against Wal-Mart charged in full-page advertisements that “Wal-Mart’s low pay and meager employee benefits force tens of thousands of employees to resort to Medicaid, food stamps, and housing assistance. Call it the ‘Wal-Mart Tax.’ And it costs you $1.5 billion in federal tax dollars every year.” The problem with this logic is that America had already decided to provide Medicaid, food stamps, and housing assistance to the poor–even if the poor are also working. It seemed more efficient for these benefits to flow from government, and for employers to alert their low-income employees of the availability of them, than for the private sector to provide them as conditions of employment. If we wish to change the rules an require private employers to pay wages and provide health benefits sufficiently high that no employee has to rely on government largesse, we should seek to do that through the democratic process. But it makes little sense to chastise one employer–even one as large as Wal-Mart–for playing by the rules.

A major theme in the book is that corporations are money making machines; that’s their purpose, and that’s their design. It’s therefore foolish to rail against them when they engage in socially irresponsible behavior like cutting benefits and externalizing costs to the public at large–we shouldn’t expect anything different. The solution is to use our power as citizens of a democracy to impose social responsibility, through legislation, not market choices, as you’re about to see…

Should the rules be altered, as Wal-Mart’s critics advocate? What would be a worthy political debate, but we’re not having it. I, for one, think the minimum wage should be raised to be about half of the average worker’s hourly pay. That was the ratio in the Not Quite Golden Age[*], and it seems to me a reasonable compromise. But Wal-Mart’s critics also want Wal-Mart to provide employees with good health insurance coverage, which, in my opinion, is no longer a responsibility employers should take on.

Bear with me for a moment, because this is just the sort of issue the nation ought to be debating but that the focus on Wal-Mart obscures. The reason employers got into the business of providing their workers health insurance in the first place, remember, was because it is a form of payment that avoids being taxed. This made it attractive to both employers and employees in the Not Quite Golden Age, before medical costs skyrocketed and competition intensified. Even though employer-provided health care has diminished since then, in 2006 it still constituted the biggest tax break in the whole federal tax system. According to recent estimates, if health care benefits were considered taxable income, employees would be paying $126 billion a year more in income taxes than they do now. In other words, employer-provided heath care is a backdoor $126-billion-a-year government health insurance system that’s already up and running.

But it’s a crazy system. You’re not eligible for it when you and your family are likely to need it most–when you lose you job and you income plummets. And these days, as we’ve seen, no job is safe. Why add to family anxieties by ending eligibility for this backdoor government health insurance just when an employee is shown the front door? The system also distorts the labor market. It prevents lots of people from changing jobs for fear they’ll lose their health insurance, or won’t get the benefits they do now. And it invites employers to game the system by seeking young, healthy employees who pose low risks of ill health, while rejecting older ones who are likely to have more costly health needs. The system also encourages employers to try to push married employees onto their spouse’s health insurance plan so that the spouse’s employer bears the cost.

It’s also an upside down system. The lower your pay, the less coverage you’re likely to have. Even if Wal-Mart is pressured into providing more health insurance for its lowest-income workers, this wouldn’t change the overall pattern across America. Workers in the lowest-paying jobs don’t generally get any health insurance from their employers. The higher your pay, the more health coverage you get, with top executives and their families getting gold-plated plans guaranteeing top-notch medical attention for just about every health-risk imaginable. As a result, our current $126 billion backdoor government health insurance system mainly benefits upper income people.

[Emphasis added]

That seems like a knock down argument for socialized medicine to me; in a sense, we’re already paying for it! By making it an explicitly socialized structure, we’d only have things to gain. Direct oversight of the system would guarantee that we weren’t subsidizing care for the super rich, and we could be sure we were doling out coverage to those who need it most. Decoupling healthcare from employment would increase job mobility because employees would be more confident to switch jobs knowing they wouldn’t lose health coverage. Moreover, taking healthcare decisions out of the hands of sticky fingered business managers would make the system fairer, as well as free them up to do what they should be doing: running a business.

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I highly recommend this book. It’s enlightening, and empowering, and it’s not that heavy.

*The Not Quite Golden Age is the name Reich uses to refer to the seeming boon times of the ’50s.

Tags: Capitalism, Health Care, Robert Reich, Socialized Medicine, Supercapitalism, Wal-Mart

This entry was posted on Thursday, May 21st, 2009 at 2:13 pm and is filed under Economy, Politics, über-tight. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.