When organized labor's most inventive union president and the Republican lawmaker in line to chair the powerful House Ways and Means Committee are both touting the same revolutionary idea, it may be time to bend an ear.
Andrew Stern, the liberal president of the Service Employees International Union, and conservative Rep. Jim McCrery (R-La.), favored to succeed Rep. Bill Thomas (R-Bakersfield) as head of Ways and Means if Republicans keep control of the House, don't agree on much.
But both believe it's time to replace the central arch of the American healthcare system: the link between health insurance and work. Their arguments may represent the opening notes of the first significant domestic debate of the 2008 presidential campaign.
The connection between health insurance and employment dates to World War II.
After President Franklin D. Roosevelt imposed wage and price controls, companies could not compete for workers by offering bigger paychecks. Instead, they provided richer benefits, including health insurance. After the war, the big unions reinforced the trend by bargaining for health coverage in their contracts with major employers.
Congress cemented the connection between work and health coverage in 1954 by creating a generous tax subsidy for employer-provided coverage. Employers that provide health insurance for their workers can deduct the cost of the premiums as a business expense, the same way companies write off the wages they pay to workers. But although workers pay taxes on the wages they receive, Congress decided they would not be taxed on the value of the insurance their employers purchased for them. That subsidy encouraged employers to shift more of a worker's total compensation from wages to health benefits.
Linking health coverage to work had other benefits. It created insurance pools that shared risk between workers who were young and old, healthy and sick. And it allowed employers to handle the headache of administering insurance plans, rather than requiring workers to bargain directly with insurance companies.
With all these advantages, the employer-based system grew enormously over the last half a century. Today, more than 174 million workers and their families receive health insurance on the job.
But the system is cracking. As the cost of insurance rises, fewer small employers are offering it. Almost all large employers still provide coverage. But more of them argue that the rising cost is hurting their ability to compete against companies from other countries that spread the cost more broadly through government-provided healthcare.
