qotd: More on a business case for universal health care

American University
Health Law & Policy Brief
Spring 2014

A Business Case for Universal Healthcare:
Improving Economic Growth and Reducing Unemployment by Providing Access
for All
By David Sterret, Ashley Bender, David Palmer

From the Introduction

This report will illustrate that the United States economy is currently
hampered in numerous ways by having an inefficient, inequitable
healthcare system. The research on which we relied was completed before
the full implementation of the Patient Protection and Affordable Care
Act (ACA). However, we expect that even if the law works as intended, it
will not resolve the problems that we raise because the law largely
preserves our employment-based healthcare system. In Part I, we discuss
specific harms to the economy inflicted by our system's reliance on
employers to provide healthcare benefits. Part II examines how the
United States economy compares through the lens of several indices,
including some published by conservatives. These comparisons illustrate
that most countries with more vibrant economies than the United States
have government- directed, universal healthcare systems.

II. Implementing a Universal Care System Would Improve American
Competitiveness Internationally

A. The United States Trails Many of Its Competitors by Various Economic
Measures

B. How the Employer-Funded United States Healthcare System Harms Businesses

C. Why a Universal Care System Would Lessen Burdens on Businesses

No universal care systems, including pure single-payer systems, are a
free lunch for businesses. In one way or another, often through a
payroll tax, businesses end up providing at least some of the money to
finance the system.

There are several reasons to believe that a universal care system would
mitigate this impact on businesses. Primarily, such a system would cause
future costs to be lower, or at least stem the trend of cost-increases
far exceeding inflation. Secondly, businesses' overall share of
healthcare bills would likely be lower. Finally, a universal care system
would distribute costs far more equitably among businesses.

Conclusion

If the United States were to implement a system to ensure universal
care, American companies would no longer face a disadvantage in
competing with businesses from countries, such as Canada, that provide
national healthcare systems. Additionally, healthcare would cease to be
a large factor guiding individuals' career decisions. A national,
universal care system would level the playing field among domestic
businesses, and eradicate the free-rider problem. For all of the above
reasons, economic growth would likely improve, which would yield
additional self-perpetuating benefits.

There is an argument that the taxes to finance such a system would
constrain business. This claim is seriously undercut by examples from
around the world. For instance, Hong Kong, viewed by many as a "beacon
of capitalism," has universal healthcare. So does Denmark, which has
higher levels of entrepreneurship than the United States. What is
becoming increasingly clear now is that the current employer-sponsored
healthcare system in the United States does hurt business.

http://jts.hbp.com/pdf/design/135358_AU_HLP_3.pdf

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Comment by Don McCanne

The majority of Americans obtain their insurance through their
employment. Business has a vital concern in the financing of health
care. This report adds to the plethora of evidence that business owners
would be better off if they were relieved of their responsibilities of
providing health benefit programs for their employees. So why is there
not an outcry to switch to a proven financing system that would serve
their employees well? Is it ideology?

The Affordable Care Act (ACA) calls for a financial penalty for larger
employers who do not provide health care coverage for their employees.
Could that be the reason? No, the resistance to change existed before
ACA was enacted. Further, there are now so many experts in the policy
community across the political spectrum who are calling for repeal of
the penalty that it is likely that it will be eliminated anyway.

If so, what are employers likely to do? We are already seeing much
interest in private health insurance exchanges. If ACA requirements on
employers were lifted, they may be willing to provide their employees
with a voucher to purchase plans in the private exchanges. Since that
converts the benefit into a defined contribution, that would pass on to
their employees the burden of future health care inflation.

Another possibility is that they might want to give their employees
raises and then let them select their own plans in the state-based ACA
exchanges. That would remove the employer entirely from the
responsibility of supporting a health benefit program.

A concern that employers might have is that health care costs are now
too high and income inequality has increased to the level such that
health care benefits must be progressively financed if people are to
receive the care they should have. Employers could be concerned that
their tax burden may be increased to pay for the higher subsidies that
will be needed for premiums and cost-sharing in the exchange programs.
Not knowing what that tax burden might be could cause some reluctance to
change from a system that at least they understand.

Most employers are well aware of the inefficiencies and high costs of
our private insurance-based system. Would employers be ready to embrace
a more efficient government-financed and government-administered single
payer system? This may be their greatest fear because the financing
would no doubt be through explicit progressive tax policies. Most
proposals would reduce total health spending for 95 percent of us, but
would increase it for those in the top 5 percent of income.

Although some in the business community might be opposed simply because
of ideology, for most it's the money. We've learned the lessons that
Thomas Piketty has for us, but we can't apply them until we are willing
to exercise democracy by changing the politics. That push for change
will not come from the business community.