2007 April 06 Friday
Some Companies Want Government Health Care Funding

Some big businesses see employee health care costs as such a large and growing problem that they want the US government to step in and pay for it.

Since Hillary Rodham Clinton’s effort to overhaul the nation’s medical system was rejected in 1994, most big employers have stayed out of the debate on health care reform.

But with their medical costs ballooning, top executives of large companies are starting to speak up again — and many are calling for a national approach to fixing health care. Few advocate a wholesale shift to government-directed medicine, but most are seeking broad changes in the employer-subsidized health system, which they regard as unsustainable in its current form.

Some of the car companies are more blunt in their calls for government funding of worker health care. They want to get out of obligations they've been forced into by the United Auto Workers (UAW) union.

Since health care costs are rising a few times faster than the rate of inflation the cost increases aren't sustainable.

In general, employers “are more interested in reform today than at any time since the Clinton effort” in the early 1990s, said Robert S. Galvin, global health care and policy director at General Electric, which provides health benefits for 460,000 employees and dependents and 240,000 retirees and dependents.

The surge of interest, Mr. Galvin said, “is driven by compounding health cost increases at three times the general inflation rate, plus the entrance of Wal-Mart and other retailers” that are beginning to feel the pain of out-of-control increases in costs.

Employers which want government help are asking at a time when rising health care costs are hitting the government just as hard. The US government is about to get hit by the perfect storm of baby boomer retirements, a dumber younger generation due to immigration, and costs for medical care per person that are rising faster than the rate of inflation.

Employers of low skilled low wage workers expect the government to subsidize their employment of low skilled workers.

“The way it’s going, there will be 75 million uninsured in another 10 years,” said James D. Sinegal, chief executive of Costco Wholesale, which subsidizes health care for 81,000 of its 100,000 workers in the United States. “The federal government has to lend some assistance.”

Most commentary on problem of unaffordable health care focus on the rising cost of health care. But they are missing something obvious: a large and growing number of people have economic value in the labor market that is so low that they can't afford modern health care. Costco Wholesale employs tens of thousands of workers who are not worth that much in the labor market. They are not skilled enough and productive enough to make their health care costs a small percentage of their income. Think about that.

The problem of a large low skilled work force is going to get worse. Over on the Audacious Epigone blog pseudonymous blogger crush41 reports on a recent study by Robert Rector of the Heritage Foundation which found that low skilled households get more from the government in benefits than they earn in total income. They don't just get more in benefits than they pay in taxes. No, it is much worse than that. Their benefits from government (that would be you, higher income taxpayer) far exceed what they earn.

Strikingly, as Chart 4 shows, low-skill households in FY 2004 had average earnings of $20,564 per household; thus, the average cost of government benefits and services received by these households not only exceeded the taxes paid by these households, but substan­tially exceeded the average earned income of these households.

They get $32,138 per household in benefits. But they only earn $20,564 in wages. We pay for their medical care, food stamps, education for their children (which in some jurisdictions ranges as high as $14,000 per child or more per year btw), police, fire department, etc. They can not afford the costs of the modern society all around them.

I have a few practical suggestions on immigration: First, make immigration qualifications dependent on earning power. If would be immigrants can't make at least, say, $70,000 per year (or an even higher figure) then they should be kept out. Second, deport all the illegal aliens and those legal aliens who aren't earning much money. Third, make employers of all non-citizen workers to pay medical insurance or for the foreign workers to prove they have medical insurance.

Update: From the original article above, Pitney Bowes chairman Michael J. Critelli says that wellness programs have paid off by cutting health care cost increases.

By providing clinics, exercise and other wellness programs as well as low-cost or free drugs for certain types of patients, he said, annual cost increases for Pitney Bowes employees have fallen into the low single digits over the last 15 years. That is well below the double-digit percentage increases that many companies have experienced.

But competing big companies are already free to do this. I think government could help by funding wellness program research. Get more of the results of wellness programs into the public domain so that smaller companies, government programs such as Medicare, and individuals can find out what works.

We also need much more automation of health care. Medicine is too labor intensive. Higher levels of automation could both cut costs and reduce mistakes.

Share |      By Randall Parker at 2007 April 06 05:55 PM  Economics Health


Comments
Jerry Martinson said at April 6, 2007 7:45 PM:

Randall,

What would your proposed policy be on dependents of these immigrants and visa-stay-length restrictions when "grandma" comes over from China or India to take care of the grandkids of these $70k+/year immigrants? Today, what I've seen is that after a surprisingly short amount of time, INS gives "grandma" the boot and the $70k+/year mom drops partly or wholly out of the workforce for several years to take care of the kids as a result. This doesn't seem optimal to me as we (meaning US) are losing substantial tax revenue and economic input during this time. Sometimes this results in these high-value immigrants moving back, taking skills and professional contacts with them. This is a non-trivial contribution to losing anchor employees in the US which fuels out-sourcing. I think we need to be very savy in maintaining the idea of making America the most attractive place for the talented and ambitious.

-Jerry

Randall Parker said at April 6, 2007 8:42 PM:

Jerry,

I personally know of examples of parents of immigrants coming over to stay at older ages. I figure they are goig to get Medicare and we are going to pay for it.

What to do about it: Do not allow it. Or make them pay some high entry fee to pre-fund future costs.

Mom drops out or goes part time: Make them buy residency and buy citizenship. Put the costs high enough that we don't have to worry so much about what'll happen once we let them stay permanently.

Also, if they get pregnant and are not citizens: repeal the automated granting of citizenship to their babies.

John S Bolton said at April 6, 2007 10:59 PM:

It is also very difficult to imagine a regime here in which immigrants would be denied health care. Even if it could happen that they were denied access to public funding for medical treatments in a broad way, there would still be the doctors' commitment to provide some level of care, which then turns into a charge on the general public by this other route.
Therefore we cannot honestly see a prospective immigrant as an economic unit, without regard to his existence as a biological and political one, as well.
Loyalty is owed to the net taxpayer of our citizenry, when a foreigner here is the occasion of an increase of the level of plundering of those taxpayers;
the nation cannot mean less than this.
Loyalty is not owed to foreign sufferers, as if they could only be taken care of here, and as if we did not owe loyalty first to the net taxpayers of our nation, relative to such foreigners.
Suffering is not a means by which legitimately to create superior privilege or rights.
The world's disease burden is not a bondholder against the wealth of our net taxpayers.

Kenelm Digby said at April 7, 2007 5:52 AM:

Just how are intelligent people sold on the lie that mass immigration 'benefits' the US economy, when quite plainly it doesn't, just taking the irreducible 'bottom-line' public spending issue for example, the case against is in controvertible - and this doesn't include other strong non-economic arguments such as displacement, ethnic genetic interests, crime etc.
I repeat just how were people conned by the obvious (but exceedingly expensive and destructive) lie?
By way of analogy to the average White american worker it is the equivalent of severing all of one's bodily extremeties starting from the fingers, then whole limbs, one-by-one with exsanginuation and infection thgat follows - and then claiming it benefits you!
And I haven't started on wages being ground down by the first law of economics (which most 'clever' economists somehow ignore), and capital being fattened up accordingly pari-passu.
Just how was this sold?
Just how 'clever' are the boys at the WSJ and 'The Economist'?

Lawrence Auster said at April 7, 2007 9:46 AM:

There is an inherent dynamic in modern society leading toward socialized medicine. It consists in the fact that advanced medical technology creates capacities in diagnosis and treatment that can save and extend life, but that are very expensive, which in turn creates a demand that the state step in to make these treatments accessible to all. As Mr. Parker shows, Third-World and illegal immigration hugely exacerbates this problem. We are deliberately filling our country with people whose earning power is and will always remain quite limited. They will demand that all the latest medical techniques be available to them as well, and the Democratic party will support that.

We have the most technologically advanced society in the history of the world, and are annually importing into it one million civilizationally backward people, not counting illegal aliens. The Republican "compromise" immigration plan would increase that number to a million and a half. The Democrats want to increase it to two million or more. The ever-smaller wealth producing percentage of the U.S. population will have the burden of caring for the ever-larger wealth-consuming percentage of the population.

Why do the open-borders proponents, who constantly promote immigration on the basis that it fuels the economy, not mention the economic costs of immigration? It is because in reality they don't care about the economic aspects of immigration. They use the economic argument merely as a front. Their real aim is to transform America into the liberal ideal of the racially diverse Open Society. What drives the open borderites is not economics, but the belief that a white-majority America is immoral and backward. Therefore the immigration debate cannot be won on the economic front. Since, at bottom, it is the belief in the moral illegitimacy of white-majority societies that makes people support the open-borders cause, only the opposite idea, that it is morally legitimate to have a white-majority society, can defeat it.

John S Bolton said at April 7, 2007 10:19 PM:

Can't this be stated in less particularist terms as well?
If we owe loyalty to the present citizenry, and pointedly including the net taxpayers thereof, regardless of the particular racial or ethnic identity of these, doesn't this morally legitimize the safekeeping of the existing populations' continuity as to race, etc.?
If the moral meaning of the nation is agreed to not be allowed to signify less than this:
that all those of our nation owe loyalty to the citizenry, who are or will be victimized by the increase of aggression upon fellow nationals, which occurs with the influx of another immigration cohort on to net public subsidy, and other kinds of aggression;
isn't this a universal moral absolute?
That is, before it is made political by considering how the actual counter-aggressional measures are to be arrayed, doesn't it first operate on such moral terrain?

John S Bolton said at April 7, 2007 10:57 PM:

Mr. Auster's argument also comports with what I've observed recently, when discussing this issue of the obvious negative results of having the society be open to aggression from the outside,
such as becoming the third world's free clinic,
the response is to bring up some utterly unrelated piece of propaganda-processed history,
from some chronicle of racial violence 100 years ago,
to the effect that America is somehow bad, or whites are in some way naturally inclined to be bad.
One could observe inductively how these two items correlate; deductively the line of causation may be as Auster indicates, or, at least, similarly connected.
When I come up against this, I anticipate that there will be a denial of our owing loyalty to the majority of our nation, and to the nation as an institution of government, and that this will indeed involve anticaucasian propaganda.
I respond that we all would owe loyalty to fellow nationals when some are attacked by foreigners here, regardless of what America has done.
This would be so even if FDR and Stalin had conspired to cause Hitler to become an efficient mass-murderer, by scheduling soviet advances in line with how the extermination programs were carried out, more or less efficiently. This is the extreme counterfactual that I used, simply because community of values has become so wasted among our nihilistic advocates of anti-discrimination

John S Bolton said at April 8, 2007 1:38 AM:

Another factor at work here would be the insincere use of the deligitimization-of-the-majority;
where the intention is to rhetorically maneuver the loyal side into a smearable position.
Since there is not going to be a rational argument given as to why America should become the
third world's emergency room, with all the increase of aggression on those to whom we owe loyalty, that is necessarily involved in that; what alternative does the open-to-aggression-society's advocate have, but to try to smear all objectors as racists, nazis, xenophobes, etc.?
He's for brotherhood and equality with hostiles and those who do damage, yet to whom we owe nothing, and for openness to more and more of these, none of which is rationally defensible.
Or, if it is, why are attempted smears used almost exclusively?
doesn't this alow for the conclusion that the real motivation is something further, the power which comes from greatly increased conflict, rather than some philosophical conclusion that a white-majority society is somehow illegitimate, as if we had no reasons to reject a very large percentage of foreigners?

Ned said at April 8, 2007 4:13 PM:

Privatize profits, socialize costs. I love it when big-business types ask for "help" from the government. I wonder what form this help is suppose to take? Uncle Sam just takes over all the health care costs for the employees? Who's going to pay for all this, with the federal budget chronically in the red and most of the social welfare programs, such as Medicare and Social Security, headed down the toilet as the baby boomers retire. What these bastards really want to do is have the taxpayers foot the bill for their own incompetence and mismanagement, and, when the employees complain about the rotten care they're receiving from the government, the bosses can just shake their heads sadly and tell them to write their congressmen. Many employers are dealing creatively and successfully with rising health care costs, but these brilliant management "experts" want "the gummint" to do it all for them. Some of the most mismanaged American industries, such as automobiles, seem to favor this approach. By the way, those union contracts that have created such high legacy costs for the auto companies don't just bear the signatures of union officials - the auto executives signed them too. The auto companies and their unions have no one but themselves to blame for the mess they are in. For decades they have operated under the polite fiction that semi-skilled labor was worth $60/hour, that no layoffs would occur even as market share slipped away at about 1%/year, and that they could continue to sell mediocre, overpriced vehicles to Americans and that the good times would roll on forever. Well, welcome to globalization, GM, Ford, Chrysler and the UAW. I am totally indifferent as to whether these dinosaurs survive or not. They got themselves into this mess, and they'll just have to get themselves out of it. It makes no difference to me whether they prosper or go under. There will always bee a US auto industry - it just may be located in the low tax, right-to-work South rather than Detroit. By the way, if you want to see what government health care would look like, take a peek at Walter Reed - rotten facilities, long waits for care, lots of paprework , indifferent bureaucracy, no accountability.

Lawrence Auster said at April 8, 2007 7:09 PM:

The problem with the "citizenist" approach that Mr. Bolton takes is that it doesn't describe the actual motivations of the mass immigration proponents. Their motivation is not to displace "the present citizens of the United States," regardless of who those citizens are. Their motivation is to replace the actual white American people. If America had become majority Hispanic and East Asian and Muslim and black, the compulsion to transform America would no longer be there.

Everyone wants to find a non-racial way of discussing the immigration problem, because there is the deep sense that discussing it in racial terms puts you beyond the pale. But we can't get away from the truth. The truth is that immigration is about replacing white America with non-whites. It is the deep belief that the existence of a predominantly white society is morally disgusting that makes people support or acquiese in the open borders policy. Therefore arguing with people about the harm immigration causes to the economy or to the "present citizens of the United States" is not going to persuade them not to support immigration. Since it is the belief in the inherent immorality of white-majority America (and of all white societies) that makes people support immigration, persuading them otherwise is the only way to make them stop supporting the immigration.


John S Bolton said at April 8, 2007 10:53 PM:

There are those, such as myself, who make a point of drawing out the racial angle, and from the immigration-restrictionist side.
Before someone even gets the chance to say, you care only about the effect of immigration on the racial balance of the future, as it should be anticipated that they will, by those who are not awfully ignorant of how the other side enters this debate,
I say mass immigration of affirmative action-eligibles means increasing conflict on a racial basis, for so long as it continues.
Instead of hoping that the racial questions will not be raised, I welcome their predictable appearance; since this gives me the chance to say that the advocates of racially-transformative, and undesirable, immigration in general, have no rational arguments for their cause, but only attempted smears (of their opponents).
There are arguments to be made along the lines of how increasing the intensity of genetic difference can be expected to increase conflict in society, just as children are known to be in greater danger of violence the less closely-related they are to their caregivers and those who live in the same residence with them.
If you want to see statements of that kind, well, there it is.

Kenelm Digby said at April 9, 2007 3:34 AM:

Of course, if the advocates of open-door immigration were really concerned about achieving 'equity' and 'equality' amongst the polyglot nations of man by allowing any third-worlder who wishes it 1st class American medicine and welfare, then these people are nothing but shallow brainless hypocrites.
What of the untold billion 'bretheren' left behind in the third-world?
Only a whole world distribution and dividend of 'wealth' could possibly do - and if this happens the dividend would be effectively worthless.

Anonymous said at April 10, 2007 1:59 AM:

The idea of "single payer" healthcare is to get blood out of a stone. The Left and the minorities believe they can tax the aging white baby boom generation to pay for the healthcare needs of the immigrants and other groups that block-vote for the Democratic Party. But the first Boomers turn 62 next year. I suspect they'll start retiring at that time. Many believe Social Security won't last for many more years. Why not get it while you can ? And if the Left slaps a 15% tax (similar to Social Security) on all working people, many will feel "why bother ?", and will bail on the system by retiring early. The likely result -- mass inflation. I don't really see any other possible outcome.

D Flinchum said at April 10, 2007 4:49 AM:

"What would your proposed policy be on dependents of these immigrants and visa-stay-length restrictions when "grandma" comes over from China or India to take care of the grandkids of these $70k+/year immigrants? Today, what I've seen is that after a surprisingly short amount of time, INS gives "grandma" the boot and the $70k+/year mom drops partly or wholly out of the workforce for several years to take care of the kids as a result."

If INS gave grandma the boot, she must have been here illegally, probably on a tourist visa, which she overstayed. A much bigger problem IMHO is that a number of immigrants bring their aged parents to the US LEGALLY via family reunification and sign papers promising that these parents will NOT become dependent on the public for support, even as they are planning to sign them up for SSI, etc as soon as the deeming period is over (3 years, I think).

Norm Matloff did a study on this subject in the mid-90's (dealing mainly with Chinese immigrants)which would be funny if it wasn't so infuriating. It's as if the US wears a sign saying "I'm a fool. Please take advantage of me."

http://heather.cs.ucdavis.edu/pub/Immigration/WelfareUse/WelfareUsageReport/FullNMReport.html

One of the things the report points out is that some immigrant couples bring "grandma" to the US as a free babysitter and then kick her out once the kids are older. She then becomes a ward of the state. I especially liked the advice columns that some of the publications geared toward these elderly immigrants put out. Below are questions straight from the report:

A California reader writes, ``Until recently my wife lived with our daughter, and I lived separately from them. My wife's and my SSI checks totaled $1,110 per month. We are now living together again. Will our check have to be reduced?''

A reader from Chicago asks, ``I came to the U.S. in 1989 on a tourist visa to see my children. I overstayed my visa, and have been here illegally since then, being supported by my children. I will soon receive my green card. As I have already been in the U.S. longer than the three-year period, can I immediately apply for SSI and Medicaid?''

A California reader asks, ``I currently receive $520 per month SSI. I live with my daughter, and I pay her $300 per month in rent. I would like to move to HUD-subsidized housing, since HUD policy is that one pays only 1/3 of one's monthly income for rent. Please tell me how to apply.''

A reader from Florida sends these queries: ``My mother is an SSI recipient. She wishes to return home to Asia for a year and a half. Will her SSI benefits automatically be canceled? And when she returns, will she have to re-apply for SSI from scratch?''

A reader from Oklahoma asks: ``Three years ago, [my wife and I] and our oldest son jointly purchased a town house near San Francisco. We plan to live there after we retire [this year]. Please advise me:...In the three years since we've bought the town house, I have been paying $500 per month for the mortgage...Can I move to California and immediately apply for SSI? Can I use my SSI check to continue paying my share of the town house's mortgage and property tax? Will my SSI check be reduced accordingly? My wife and I have $7,000 in an IRA...We plan to give the IRA money to our daughter. (She is married, but recently immigrated to the U.S. and is having financial problems.) When we apply for SSI, will this cause problems?...When we are too old to take care of ourselves, will the government arrange for us to live in a nursing home?''

Glaivester said at April 11, 2007 12:05 AM:

The fact that U.S.ers are the fattest people in the world sure doesn't help our health care cost profile either.


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