Everywhere you turn these days, you hear worry about health care and health insurance. Politicians in the House and Senate, expressing alarm at the numbers of employees who have no health benefits, have introduced bills requiring employers to cover all full- and part-time workers.
Meanwhile, the nation's largest companies have been shocked by mounting liabilities for retiree health benefits. Estimates are that each company in the Fortune 500 owes $1 billion to present and future retirees--$500 billion.
Compounding the problem is a pending accounting rule that would require companies to set up reserves now to pay those future benefits--raising the prospect of dramatically reduced earnings for the largest companies in the land.
A seeming bright note is that a new law will expand Medicare benefits to prevent catastrophic illness expense from sending elderly people to the poorhouse.
But of course, the need for such a law only proclaims that the greatest threat to family solvency in this country is catastrophic illness.
And few would dispute that the second-greatest threat is hospitalized illness of any kind, if you're not covered by insurance.
Two questions: Why are we hearing about these problems now? And why are we having such problems in the first place?
We're hearing about them because the U.S. system of paying for health care as an employee benefit is straining like an old engine patched together.
But the more we patch, the more today's changing economy reveals new flaws. Unlike other nations--which finance health care for all their people through taxes on individuals and business--the United States made health coverage a fringe benefit. You had insurance if you worked for a big company or belonged to a union or other group.
"American society provided medical insurance primarily to the well off and well organized," says "The Social Transformation of American Medicine," a Pulitzer Prize-winning history published in 1983. The system helped steadily employed people pay hospital bills.
System a Mess
But it's a different world today. Small- and medium-sized companies--many providing lesser health benefits or none at all--have accounted for the employment growth of the last decade. Big companies, meanwhile, have been shrinking, forcing jobless people to pay hundreds a month for individual coverage. Meanwhile hospital costs keep rising, making insurance more of a necessity than ever.
Nobody denies the system is a mess: Uninsured families terrified of illness, hospital bills for insured patients quietly inflated to offset losses on the uninsured and companies cutting retiree benefits.
But solutions are patchwork. Sen. Edward Kennedy (D.-Mass.) and Rep. Henry Waxman (D.-Los Angeles) have a bill requiring all employers to cover everyone who works 17 1/2 hours a week. Rep. Patricia Schroeder (D.-Colo.) has a bill to extend coverage to part-timers for the hours they work. No talk of raising taxes to pay for such coverage; employers can pay (and presumably pass costs along by cutting wages or raising prices).
On retiree benefits, companies may cover their liabilities with insurance policies, says Fred Van Remortal of Brown Bridgman & Co., a benefits consulting firm. But that would require a new corporate tax break--something a budget-conscious government isn't eager to give. As usual, all sides prefer passing the buck to paying it.
The solutions are Band-Aids in any case, says Audrey Freedman, chief economist of the Conference Board. They tie insurance to employment when that no longer makes sense, she says. "It doesn't take account of today's accordion-like work force, in which 20 million people at any time can be between jobs or self-employed--and therefore without coverage."
Is there a better way? Yes, says Freedman. Establish a national health trust, with contributions or tax payments from employers and employees--but something that individuals will keep whether they change jobs or not.
That way everybody would have health coverage, and everybody would pay for it. That's how other nations have done it for years, while we have fooled with a tax-free sleight of hand. Now the trick is wearing thin.