Trumpcare, Ryancare, Trashcare: While the GOP celebrates its found money, the poor will get sicker and die

With the AHCA, the Republicans have put a price tag on the lives of America’s working class: $300 billion

Trumpcare, Ryancare, Trashcare: While the GOP celebrates its found money, the poor will get sicker and die
(Credit: AP/Susan Walsh)

Trumpcare, Ryancare, Trashcare — whatever you want to call it, the American Health Care Act is nothing more than a cheap stab at Barack Obama, a petty attempt on the part of grudge-holding Republicans, including President Donald Trump, to try to diminish Obama’s legacy. They can try, but that will be impossible — Trump’s follow-up act has been so bad so far that he’s making George W. Bush look practically Lincoln-esque. But let’s set legacies and agendas aside for now and focus on health care.

“We have come up with a solution that’s really, really, I think, very good,” Donald Trump has said. “It’s an unbelievably complex subject. Nobody knew that health care could be so complicated.”

I’m not a president or a billionaire. I could never afford the kind of routine checkups that Trump has access to from award-winning physicians with platinum stethoscopes and solid gold scalpels — or even a state-of-the-art Viking fridge stocked with spare teenage hearts and kidneys, all plump and ready to be inserted when Trump’s conk out. He’ll probably live to be 360 years old as a result. Most of us don’t have that experience, and the president, just like the congresspeople and senators who are aimlessly playing with the lives of their constituents by threatening to kill Obamacare, is taken care of. They have amazing health care coverage that we, the taxpayers, fund. Strangely, that never makes it into the conversation.

Is Obamacare perfect? Absolutely not. But it has already saved the lives of millions of people. People who would have never voted for Obama are calling him a hero, even as some die-hard right-wingers praise the Affordable Care Act for saving their loved ones, not realizing that it’s the same as Obamacare.

Trump loves his catchphrase, “Make America great again.” Obviously he doesn’t understand that “great” is a process that we must constantly work toward. Greatness is edited, nurtured and achieved after recognizing what works and what doesn’t. Scrapping Obamacare and replacing it with a trash plan that will leave millions of people who were born without the luxury of being Trump-level rich uninsured is not making anything great. It’s evil. According to the CBO analysis, the AHCA would “reduce federal deficits by $337 billion over the coming decade and increase the number of people who are uninsured by 24 million in 2026 relative to current law.” And every Republican is running to the cable news networks, bragging about saving $300 billion. What does that mean to the person the Wall Street Journal described, a 62-year-old person who makes $18,000 a year who will now face premiums of up to $20,000?

Imagine a sickly elderly woman running home from work to her family to share with pride that the government just saved $300 billion. There is nothing more important than that to the government, even if it means that you’re broke, your granddaughter is pregnant because she couldn’t get birth control, and your grandson overdosed and died because he couldn’t be treated for his prescription drug addiction, which he developed to self-medicate his depression over the factory jobs that Trump promised never coming. We should all celebrate because the government saved $300 billion? That’s $300 billion that regular people will never touch.

People will not be treated for their illnesses. Many will suffer, and some will die. But at least the GOP beat Obama!

D. Watkins is an Editor at Large for Salon. He is also a professor at the University of Baltimore and founder of the BMORE Writers Project. Watkins is the author of the New York Times best-sellers “The Beast Side: Living  (and Dying) While Black in America” and “The Cook Up: A Crack Rock Memoir.”

Is Health Care Doomed?

PERSONAL HEALTH
The Republicans’ new plan to replace the Affordable Care Act is worse than many expected. John Marty has a better idea.

Doctor Discussing Records With Senior Female Patient
Photo Credit: Monkey Business Images/Shutterstock

As Donald Trump and the Republicans aim a bulldozer at the Affordable Care Act, supporters of the ACA are making a strong case for its successes. One of them is Jonathan Cohn, who has covered health care for years. In a long and persuasive essay, he calls on witness after witness to show that “real people with serious medical issues are finally getting the help they need.”

Cohn interviews a number of people who fell victim to “the old system at its callous, capricious worst” (before President Barack Obama took office) when “roughly 1 in 6 Americans had no health care insurance, and even the insured could still face crippling medical bills.” The ACA was an effort to address their problems, and after seven years, he reports, the list of what’s gone right is long:

– In states like California and Michigan, the newly regulated markets appear to be working as the law’s architects intended, except for some rural areas that insurers have never served that well. Middle-class people in those states have better, more affordable options.

– It looks like more insurers are figuring out how to make their products work and how to successfully compete for business. Customers have turned out to be more price-sensitive than insurers originally anticipated. In general, the carriers that struggle are large national companies without much experience selling directly to consumers rather than through employers.

– Last year’s big premium increases followed two years in which average premiums were far below projections, a sign that carriers simply started their pricing too low. Even now, on average, the premiums people pay for exchange insurance are on a par with, or even a bit cheaper than, equivalent employer policies — and that’s before the tax credits.

– The majority of people who are buying insurance on their own or get their coverage through Medicaid are satisfied with it, according to separate surveys by the Commonwealth Fund and the Henry J. Kaiser Family Foundation. The level of satisfaction with the new coverage still trails that involving employer-provided insurance, and it has declined over time. But it’s clearly in positive territory.

Overall, Cohn concludes, the number of people without health insurance “is the lowest that government or private surveys have ever recorded.”

Yes, there are problems. Cohn acknowledges where the Affordable Care Act has failed and why. Mostly because the president and his allies were so determined to succeed where those before them had failed, “they made a series of concessions that necessarily limited the law’s ambition:

They expanded Medicaid and regulated private insurance rather than start a whole new government-run program. They dialed back demands for lower prices from drug makers, hospitals and other health care industries. And they agreed to tight budget constraints for the program as a whole, rather than risk a revolt among more conservative Democrats. These decisions meant that health insurance would ultimately be more expensive and the new system’s financial assistance would be less generous.”

Cohn gives critics their due, especially those who focused on the law’s actual consequences: the higher premiums and out-of-pocket costs that some people face.

“The new rules, like coverage of pre-existing conditions, have made policies more expensive, and Obamacare’s financial aid frequently doesn’t offset the increases. A ‘rate-shock’ wave hit suddenly in the fall of 2013, when insurers unveiled their newly upgraded plans and in many cases canceled old ones — infuriating customers who remembered Obama’s promise that ‘if you like your plan, you can keep it,’ while alienating even some of those sympathetic to what Obama and the Democrats were trying to do.”

But remember: “When the Senate passed its version of the legislation in December 2009, then-Sen. Tom Harkin (D-IA) described the program as a ‘starter home‘ with a solid foundation and room for expansion.”

Yet the Republicans, many of whom reject the whole concept of health care as a right, are determined to rip it all up. Giving scant attention to what’s gone right, they claim the Affordable Care Act is “a disaster.” Their now-leader, President Trump, turned directly to the camera Tuesday night in his address to Congress and announced that he still wants the ACA “repealed and replaced.” If Trump and his fellow Republicans could, they would end it altogether, but they are nervous about the political consequences of depriving millions of Americans of coverage and raising deductibles. As longtime health policy experts Steffie Woolhandler and David Himmelstein — both physicians — point out in the current Annals of Internal Medicine, proposals by House Speaker Paul Ryan and the new HHS Secretary, Tom Price, both Republicans, would slash Medicaid spending for the poor, shift the ACA’s subsidies from the near-poor to wealthier Americans and replace Medicare with a voucher program. This would likely lead to their rout at the polls in 2018 and 2020. The vast majority of Americans want to keep their health care coverage.

We are at a stalemate. Opponents of the ACA have no viable replacement and supporters have no power to stave off the Republican bulldozer.

Is the situation hopeless? In Washington, probably — at least for now. But there are alternatives. As I noted above, two longtime advocates for universal health care, Drs. Woolhandler and Himmelstein, have renewed their campaign for single-payer reform, which candidate Barack Obama applauded when he was campaigning and then rejected after his election as part of those compromises he made to win support from conservative Democrats and the medical and insurance industries. In their Annals article, the two reformist physicians offer evidence that single-payer reform could provide “comprehensive coverage within the current budgetary envelope” because of huge savings on health care bureaucracy. It’s worth reading.

So is a plan put forth by Minnesota State Sen. John Marty. Often described as “the conscience of the Minnesota Senate,” Marty has been an advocate for universal health care since he was elected 30 years ago. He has served as chairman of the Senate Health Committee and now serves as the ranking minority member of the Senate Energy Committee. Often ahead of his times, Marty introduced and eventually secured passage of the country’s first ban on smoking in hospitals and health care facilities. Long before public support had materialized, he worked to ban mercury in consumer products, create a legal structure for public benefit corporations and bring about a “living wage” for workers. In 2008, when he introduced legislation proposing marriage equality for LGBT couples and predicted it could pass in five years, colleagues dismissed him as a Don Quixote. Five years later Minnesota passed marriage equality legislation.

So this lifelong progressive has earned the right to chide his fellow progressives for “merely tinkering” with problems. He writes that “If 21st-century progressives had been leading the 19th-century abolition movement, we would still have slavery, but we would have limited slavery to a 40-hour work week, and we would be congratulating each other on the progress we had made.”

This timidity, Marty acknowledges, might be partially explained by decades of defeat at the hands of powerful financial interests and politicians beholden to those interests. But as a result, many politicians who espouse progressive change have retreated from a “politics of principle” to a “politics of pragmatism.”

Sen. Marty crisscrossed Minnesota to talk directly with citizens about what they need and want in health care. He has now proposed a universal health care system which he calls the Minnesota Health Plan. He’s distilled it into a small paperback book — Healing Health Care: The Case for a Commonsense Universal Health System. I asked him to write an essay for us summing up the plan’s basic principles and the case for it.

— Bill Moyers

A CALL TO ACTION
By John Marty

Our health care system is broken.

We have some of the best health care available in the world, but one of the worst systems for accessing that care. We squander outstanding health care resources — providers, clinics and hospitals, medical research and technology — on a broken system that makes it difficult and expensive for many people to get the care they need.

Our health outcomes, including life expectancy and infant mortality, are worse than most other industrialized countries.

President Obama provided hope during his 2008 campaign, saying health care “should be a right for every American.” Unfortunately, he never proposed universal health care, though the Affordable Care Act (ACA) was a big step forward. It reduced the number of people without health coverage by almost half. It made a (in some cases, literally) lifesaving difference for millions of Americans.

However, even if the ACA were beefed up, it would always leave some people without coverage. In addition, health insurance does not equate to health care — millions of Americans who have insurance still cannot afford the care they need due to exclusions in coverage, copays and deductibles. And because it added even more complexity to our already convoluted insurance system, the ACA is easy to attack.

Republican attacks during the 2016 campaign were wrong; the ACA is not the cause of the problems in the system. Nor is it the solution, despite the good it did for many people.

Now that President Trump has blurted out that “nobody knew that health care could be so complicated,” we will watch the ironic efforts of Republicans to replace the Affordable Care Act — an insurance-based plan, largely modeled on former Massachusetts Republican Gov. Mitt Romney’s “Romneycare,” which, in turn, was largely based on ideas from the conservative Heritage Foundation. We have Republicans attacking a Republican concept. It might be bizarre to watch, but lives are at stake.
We are headed in the Wrong Direction

Most of the health care “reforms” in recent decades aimed at saving money by making sure people don’t overuse health care, putting barriers in their way. These reforms included use of restrictive “networks” of providers, requiring “prior authorization” by the insurance company before treatments could be provided, copays and higher and higher deductibles. The Republican proposals this year head further down that path of adding barriers to care, especially when they cut Medicare and Medicaid.

After four decades of putting barriers between people and medical care, we do make fewer visits to the doctor than people in most other countries.

But it is hard to call this a success. About a third of Americans report that they fail to get the care they need, because they cannot afford to pay for it. Yet even after all those “reforms,” we are spending nearly twice as much as people in most other countries spend. That raises both an ethical and an economic question:

Why would any society make it difficult for its people to access health care? And, if our attempts to make health care less expensive through barriers to care isn’t working, shouldn’t we try a new approach?

Fixing these problems requires fundamental changes in our health care system. We need a new model.
Health care should be covered like police and fire

We could start by looking at other public services. Nobody goes without police and fire protection — nobody has to apply for new “police and fire coverage” each year, nobody has to worry that they may no longer be qualified, nobody has to worry about a $3,000 deductible before the fire department will come. Nobody has to worry that the local sheriff won’t accept their “police insurance” plan. And nobody gets a letter informing them that their police or fire coverage is being terminated, for any reason.

A civilized, humane society that takes care of its people with universal police and fire coverage needs to do the same with health and dental care.
Designing a new system

Before leaving on a trip it is important to know where you are going: Focus on your goals and where you are headed. The same is true for designing a health care system.

Here are some basic principles that need to be followed if a health care system is to serve the public well. The health care system must:

  • ensure all people are covered;
  • cover all types of care, including dental, vision and hearing, mental health, chemical dependency treatment, prescription drugs, medical equipment, long-term care and home care;
  • allow patients to choose their providers;
  • reduce costs by cutting administrative bureaucracy, not by restricting or denying care;
  • set premiums based on ability to pay;
  • focus on preventive care and early intervention to improve health;
  • ensure there are enough health care providers to guarantee timely access to care; and
  • provide adequate and timely payments to providers.

These principles offer an entirely different approach to health care reform. Instead of trying to design a health care system that restricts care, we design a system that keeps people healthy and helps them get care when needed.

Perhaps counterintuitively, that logical health system actually saves money. To illustrate why a system focused on health is less expensive than one based on insurance, consider an analogy between schools and hospitals:

If schools were funded the way we fund hospitals, each teacher would need to spend a half hour or more each day calculating and reporting how much time was spent with each student, along with the amount of supplies each student consumed. Those calculations would be forwarded to the school’s billing office, where a portion of janitorial costs, facility costs, and administrative overhead would be allocated to each student.

The billing office would bill each student’s “education insurance plan,” at a highly inflated price (Hospitals call it a “chargemaster” rate.). Each education insurance plan would negotiate with the school, ultimately reducing their cost by about two thirds. Those families who don’t have any “education insurance” would be liable for the full, inflated “chargemaster” price. Many families would struggle to pay. As a result, the school would also need a collections office.

Would this improve education? No. It would make it worse, shifting teacher and administrator time from education to billing.

Would it save money? No. It would cost much more, adding these significant administrative duties.

We would never want to fund schools the way we fund hospitals.
Our proposal — A Minnesota Health Plan

I have introduced legislation to create a Minnesota Health Plan (MHP), a proposal designed to meet all of the principles mentioned above. The MHP would be governed by those principles, setting it apart from other health systems in its focus on public health and well-being instead of profit or politics. While this plan is designed for Minnesota, a similar model could be used in other states.

The MHP would be a single, statewide plan that would cover all Minnesotans for all their medical needs. Equally important, it would reduce the need for costly medical care through public health, education, prevention and early intervention. It would be governed by a democratically selected board that would be legally bound to those governing principles.

Under the plan, patients would be able to see the medical providers of their choice without network restrictions, and their coverage by the health plan would not end when they lose their job or switch to a new employer.

Dental care, prescription drugs, optometry, mental health services, chemical dependency treatment, medical equipment and supplies would all be covered, as well as home care services and nursing home care. Consumers would use the same doctors and medical professionals, the same hospitals and clinics, but all the payments, covering all of the costs, would be made by the MHP, and everyone would be covered.

There would be no filling out of complex application forms, no worrying whether a provider is “in network” or not, no worrying about whether the treatment was covered or how you are going to pay for the drugs.

The MHP would be prohibited from restricting or denying care to save money, but would lower health care spending through efficiency, the elimination of billing and insurance paperwork, and through public health prevention.

The MHP would restore medical decision-making to the doctor and patient, removing health insurance companies from making treatment decisions. The plan would end not only access problems caused by cost, but also access problems caused by an inadequate number of health professionals and facilities around the state, because the health plan would be required to ensure sufficient providers to meet medical needs around the state.

The plan would be funded by all people, with premiums based on the ability to pay, and a payroll tax on employers, along with existing state and federal funds that have been committed to health care. Those payments would replace all premiums currently paid by employees and employers, as well as all copayments, deductibles and all costs of government health care programs. The premiums paid by all but the wealthiest would be less than the premiums, copays and deductibles they currently pay.

Although the MHP is not cheap, it is significantly less expensive than our current system, and it would provide a full range of health care services to everyone, improving the health of Minnesotans.
The politics of health care reform in 2017

Republican gains in recent years show that progressives need to spell out solutions that would actually fix our problems. We cannot win policy battles by negative attacks against the other side. We will win when the public realizes that our solutions will improve their lives. Thus, when fighting against Republican efforts to eviscerate Medicare, Medicaid and the ACA, saying “no” isn’t enough. We need to articulate a solution.

Republicans typically describe health reform proposals they don’t like as “government health care.” But that is not an accurate description of this plan. The MHP is a patient-directed health plan. It lets people choose the providers they trust, and medical decisions are made by patients and their doctors, not government or insurance companies.

The MHP is publicly governed, which means that it is more accountable to patients than insurance companies. It encourages competition and innovation among doctors and hospitals based on an efficient financing system in the background.

Finally, let’s not forget the ethical dimension. What does it say about a society that allows some of its people to suffer from untreated health crises? Should profit and individual wealth continue to determine who gets care, or should health care be available to everyone?

The proposed Minnesota Health Plan and the principles that underlie it are nothing more than what any caring society would desire in order to ensure good health for all of its people. It is time to replace health insurance for some with health care for all.

 

Bill Moyers is the managing editor of Moyers & Company and BillMoyers.com.

Sen. John Marty has been a Minnesota state senator since 1987. He is former chair of Minnesota’s Senate Health Committee and is currently the ranking member of the Energy Committee.

http://www.alternet.org/personal-health/health-care-doomed?akid=15289.265072.-2n41U&rd=1&src=newsletter1073670&t=30

Bernie Sanders: Democrats Need to Wake Up

CreditAdam McCauley

Surprise, surprise. Workers in Britain, many of whom have seen a decline in their standard of living while the very rich in their country have become much richer, have turned their backs on the European Union and a globalized economy that is failing them and their children.

And it’s not just the British who are suffering. That increasingly globalized economy, established and maintained by the world’s economic elite, is failing people everywhere. Incredibly, the wealthiest 62 people on this planet own as much wealth as the bottom half of the world’s population — around 3.6 billion people. The top 1 percent now owns more wealth than the whole of the bottom 99 percent. The very, very rich enjoy unimaginable luxury while billions of people endure abject poverty, unemployment, and inadequate health care, education, housing and drinking water.

Could this rejection of the current form of the global economy happen in the United States? You bet it could.

During my campaign for the Democratic presidential nomination, I’ve visited 46 states. What I saw and heard on too many occasions were painful realities that the political and media establishment fail even to recognize.

In the last 15 years, nearly 60,000 factories in this country have closed, and more than 4.8 million well-paid manufacturing jobs have disappeared. Much of this is related to disastrous trade agreements that encourage corporations to move to low-wage countries.

Despite major increases in productivity, the median male worker in America today is making $726 dollars less than he did in 1973, while the median female worker is making $1,154 less than she did in 2007, after adjusting for inflation.

Nearly 47 million Americans live in poverty. An estimated 28 million have no health insurance, while many others are underinsured. Millions of people are struggling with outrageous levels of student debt. For perhaps the first time in modern history, our younger generation will probably have a lower standard of living than their parents. Frighteningly, millions of poorly educated Americans will have a shorter life span than the previous generation as they succumb to despair, drugs and alcohol.

Meanwhile, in our country the top one-tenth of 1 percent now owns almost as much wealth as the bottom 90 percent. Fifty-eight percent of all new income is going to the top 1 percent. Wall Street and billionaires, through their “super PACs,” are able to buy elections.

On my campaign, I’ve talked to workers unable to make it on $8 or $9 an hour; retirees struggling to purchase the medicine they need on $9,000 a year of Social Security; young people unable to afford college. I also visited the American citizens of Puerto Rico, where some 58 percent of the children live in poverty and only a little more than 40 percent of the adult population has a job or is seeking one.

Let’s be clear. The global economy is not working for the majority of people in our country and the world. This is an economic model developed by the economic elite to benefit the economic elite. We need real change.

But we do not need change based on the demagogy, bigotry and anti-immigrant sentiment that punctuated so much of the Leave campaign’s rhetoric — and is central to Donald J. Trump’s message.

We need a president who will vigorously support international cooperation that brings the people of the world closer together, reduces hypernationalism and decreases the possibility of war. We also need a president who respects the democratic rights of the people, and who will fight for an economy that protects the interests of working people, not just Wall Street, the drug companies and other powerful special interests.

We need to fundamentally reject our “free trade” policies and move to fair trade. Americans should not have to compete against workers in low-wage countries who earn pennies an hour. We must defeat the Trans-Pacific Partnership. We must help poor countries develop sustainable economic models.

We need to end the international scandal in which large corporations and the wealthy avoid paying trillions of dollars in taxes to their national governments.

We need to create tens of millions of jobs worldwide by combating global climate change and by transforming the world’s energy system away from fossil fuels.

We need international efforts to cut military spending around the globe and address the causes of war: poverty, hatred, hopelessness and ignorance.

The notion that Donald Trump could benefit from the same forces that gave the Leave proponents a majority in Britain should sound an alarm for the Democratic Party in the United States. Millions of American voters, like the Leave supporters, are understandably angry and frustrated by the economic forces that are destroying the middle class.

In this pivotal moment, the Democratic Party and a new Democratic president need to make clear that we stand with those who are struggling and who have been left behind. We must create national and global economies that work for all, not just a handful of billionaires.

Obamacare health insurers seek double-digit rate hikes for 2016

obamacare-hurt

By Kate Randall
7 September 2015

A recent poll found that people enrolled for health insurance through the Affordable Care Act (ACA) exchanges are more dissatisfied than any other group of insured Americans, mainly due to cost. A new study now reveals that enrollees insured under what is popularly known as Obamacare have even more reason to be dissatisfied.

The study released last week by AgileHealthInsurance shows that premiums for plans sold on the ACA federal exchange HealthCare.gov are expected to increase substantially in 2016, with many insurers requesting double-digit rate hikes. A statewide analysis showed that in three states—Delaware, South Dakota and West Virginia—insurers are seeking double-digit increases for 100 percent of Obamacare plans.

Under the ACA, signed into law by President Obama in 2010, people without insurance through their employer or a government program such as Medicare or Medicaid must obtain insurance or pay a tax penalty. The health insurance exchanges set up under the ACA offer insurance for sale from private, for-profit insurers.

For 2015, the penalty for not adhering to the Obamacare “individual mandate” rises to 2 percent of household income above $10,150, or $325 percent per adult and $162.50 per child, whichever is higher.

It should be noted that AgileHealthInsurance has not compiled its data in an effort to push back against the proposed rate hikes, but to peddle their own insurance products. The company is a leader in the sale of Term (or Short-Term) Health Insurance, temporary insurance sold for periods of less than a year, which can be purchased outside of the Obamacare open enrollment period.

The company’s Advantage plans come with deductibles as high as $7,500, with the policyholder responsible for as much as 50 percent of subsequent “eligible medical expenses.” A 61-year-old male in California could pay $507 per month for a plan with a $7,500 deductible and 20 percent coinsurance.

Since term coverage is generally bought to cover catastrophic medical events, and does not have to offer the essential services mandated by the ACA, purchasing such a policy does not qualify as obtaining health coverage, and an individual or family can still be slapped with the Obamacare penalty for not obtaining coverage.

The AgileHealth data shows that 31 percent of all plans on the federal ACA exchange had double-digit rate hikes proposed for 2016. Fourteen percent of Obamacare plans have proposed rate hikes of at least 20 percent, while 7 percent have proposed hikes of at least 30 percent. The study did not cover the 12 states plus the District of Columbia that run their own exchanges.

The largest insurers are making the biggest premium hike requests for 2016. For example, Blue Cross and Blue Shield of North Carolina proposed an overall rate hike of 26 percent in June, and then two months later raised the increase request to 35 percent.

Rate hikes must be approved by insurance regulators. But if past practicesare any indication of future action, the insurers have little to worry about. State regulators have generally approved the rate hike requests, either accepting them, marginally reducing them or in some cases approving increases in excess of the insurance companies’ requests.

In Oregon, for example, Health Net requested rate increases averaging 9 percent and was granted hikes averaging 34.8 percent. Another insurer in the state, Health Co-op, requested a 5.3 percent increase and the state approved a 19.9 percent hike.

In four states, insurance companies were requesting premium rate hikes in excess of 50 percent for one of their products. Alabama had the product with the largest proposed rate hike: 71 percent. This was followed by New Mexico, 65 percent; Pennsylvania, 58 percent; and New Hampshire, 51 percent.

A study published last month on Jots.pub showed that from 2014 to 2015 the largest insurance companies in each of the states covered by HealthCare.gov had a 75 percent higher premium increase compared to other same-state insurers. The largest insurers hiked rates on average by 23.9 percent, while the other insurers raised rates by an average of 13.7 percent.

Authors Eugene Wang and Grace Gee write: “Our findings suggest that even after the Affordable Care Act, the largest on-exchange issuers [insurance companies] may be in a better position to practice anti-competitive pricing compared to their same-state counterparts.” In other words, the ACA has emboldened the largest insurers to utilize their near-monopoly of the insurance market to raise premiums to unheard of levels.

Both of the recent studies on insurance rate hikes are further demonstration that the Affordable Care Act has been crafted in the interests of the insurance companies to boost their profits. They expose the reality that that Obama’s signature legislation is aimed not at expanding the availability of affordable, quality health care for ordinary Americans, but at enriching the giant insurers while cutting costs for corporations and the government.

 

http://www.wsws.org/en/articles/2015/09/07/obam-j01.html

How the digitization of everything means that corporations can monitor your every move

In the future, insurance companies will make sure that you exercise  

In the future, insurance companies will <em>make sure</em> that you exercise
(Credit: YouraPechkin via iStock/Salon)

Imagine this scene: You go to the kitchen for a beer, but your home has automatically locked the fridge; a text explains that you’ve already exceeded your calorie count for the day. You consider driving to a bar, but the beer you already drank sets off your car’s alcohol sensors: Driving privileges revoked! You decide to fire up the BBQ, but the gas line to your grill has been shut off — likely because you set off your smoke alarm twice this week while frying bacon. In the future, you can’t hide from the Internet of Things.

The Internet of Things is a venerable (in Internet time) catchphrase commonly used to describe a universe of connected hardware devices all talking to each other. In your home, for example, your fridge, your coffee maker and your baby monitor will all be two-way “smart” devices — configurable from afar and constantly transmitting data back into the cloud. Want to turn up the heat before you get home from work? No problem!  Curious about your energy consumption habits? Google will help you analyze the data! But that’s just the beginning.  The Internet of Things will also be wearable — full of fitness trackers and smart-watches and Google Glass-style devices that keep tabs on your health and whereabouts. The Internet of Things is already in your car, if you happened to have purchased one recently. Just Google the word “telematics.”

Hype over the Internet of Things has been flowing out of Silicon Valley for at least 15 years, but this week the rhetoric bumped up a couple of notches, after a rumor made the rounds that Apple is planning to roll out a new software platform that will turn your iPhoneinto a remote control for each and every device in your house. More than one industry analyst interpreted the purported move as a strategic response to Google’s  $3.2 billion acquisition in January in cash for Nest, the “smart” thermostat and smoke alarm maker — a move that many took as a sign that the Internet of Things was finally upon us.



(Silicon Valley and San Francisco are already getting their own dedicated cellular network, just to accommodate the tremendous outgrowth of traffic that such “things” might require.)

The Silicon Valley utopians tell us to get ready for a glorious future in which our “things” figure out what we want before we know we want it. Our thermostats will “learn” when we typically get up in the morning and automatically turn up the heat. Our fitness trackers will count the calories we consume and burn, watch our heart rates and make sure we’re sleeping right. Our cars will know where the nearest highly rated restaurants on Yelp are or whether we’re getting sleepy behind the wheel. Per this vision, the Internet of Things will work for us, enhancing the safety and quality of our lives.

There are qualms, of course. For one thing, the Internet of Things is eminently hackable. (Do we really want Internet script-kiddies with the power to turn off our refrigerators, jack up our thermostats or verbally abuse our families through the baby monitor?) But that’s just surface distraction. There’s a much deeper problem with the Internet of Things: It won’t be deployed merely to work for us. It will also be deployed to control us.

Why? Because that’s how the next generation of insurance companies is going to turn a profit.

The Internet of Things is poised to become the most efficient tool ever invented for helping insurance companies figure out potential risks, adjust their premiums accordingly, and reward — or punish — us for straying beyond the bounds of properly prescribed behavior.

Your smoke alarm went off three times this month? Your home insurance provider is not going to like that. You typically drive 10 miles faster than the speed limit in residential areas? Expect to get a rap on the knuckles from Geico or State Farm. You stayed in all weekend sucking down beers? Your healthcare insurer will not be pleased.

That’s the future promised by ubiquitous connected devices — a future in which insurance companies know everything about our lives, and have extraordinary powers to use that information to influence how we live.

“Insurance is going to be the native business model for the Internet of Things,” said Tim O’Reilly, founder and CEO of O’Reilly Media at a conference in San Francisco last Thursday.

In other words, the real money to be made from the Internet of Thing won’t be coming from the sale of hardware devices. It will come from exploiting the data gathered by those devices. And if what O’Reilly is suggesting turns out to be correct, then the most avid consumers of that data will be insurance companies themselves.

* * *

That name of the insurance game is all about properly assessing risk. Are you a safe driver? A responsible homeowner? Do you take good care of your body? How long are you likely to live?

Want to buy auto insurance? First thing your provider will do is check to see how many speeding tickets and other traffic violations are on your record. Do you live in a flood zone or area prone to earthquakes? Your house insurance premiums will be more expensive (if coverage is available at all). And prior to the passage of the Affordable Care Act, preexisting health conditions meant you could just forget about getting any kind of reasonably priced health plan.

Whichever company assesses risk the most accurately and prices its coverage accordingly makes the most money. What the Internet of Things promises in that regard is access to a vastly expanded universe of data that can be applied to creating “risk profiles.” The Internet of Things will enable a new kind of redlining. Discriminating against your race or location will be replaced by discrimination tied to the data you generate.

This is already being implemented in auto coverage, through so-called pay-as-you-drive plans that monitor your vehicle usage though information transmitted directly back to your insurance provider by technology incorporated in your car. We’re going to see a lot more of this, for obvious reasons.

(And, to be fair, that’s not necessarily a bad thing — if the Internet of Things knows when you’re too inebriated to drive, for example.)

It’s easy to see how the same principles could also be applied to home insurance. Google, through Nest, will eventually have access to all kinds of information about what kind of homeowner you are, giving it a tremendous amount of power. It may choose to sell that information to home insurance companies, or could even decide to get in the insurance game directly itself. Like the music and publishing and hotel and taxi industries before it, the insurance industry may just be next on the list of “about-to-be-disrupted” business sectors.

But the most interesting, and potentially creepy, application of the Internet of Things is as it applies to healthcare: Insurance companies could start offering discounts to people who kept their calorie intake within prescribed limits or exercised each week along prescribed parameters. And they’ll know when you break the rules, because a condition of those discounts will be constant monitoring via fitness trackers.

There’s all kinds of nightmare scenarios to consider once you invite Hal into your kitchen.Sorry, Dave, you’ve hit your two-beer maximum, so I’m locking the refrigerator. No more fried chicken for you until you’ve ridden 20 miles on your bike. The Internet of Things will be a Panopticon that has been enabled to do more than just watch. (And if you really want to freak out, well, how about brain implants designed to treat psychiatric disorders?! The Internet of Things in your brain!)

According to one observer, the healthcare industry may even be required to start incentivizing specific behaviors through technology by provisions built into the Affordable Care Act. “Outrage over NSA spying on Americans is nothing compared to how people may react to the upcoming collision with wearable computing, medical privacy and new insurance rule,” wrote Seattle Times technology correspondent Brier Dudley.

Not everyone wants to have a little computer on the wrist or head keeping track of what a wearer does around the clock. But I wonder if they won’t have much choice in the future, under new insurance laws that invite companies to scrutinize and monitor their employees’ health and fitness…

The Affordable Care Act now lets employers charge employees different health-insurance rates, based on whether they exercise, eat healthful foods and other “wellness” choices they make outside of work.

Employees (and insured family members) who don’t submit to the screening and participate in wellness programs face steep penalties; they may have to pay up to 30 percent more for their share of health-insurance costs. The law calls this a “reward” for participation. Flip it around and it’s a penalty for not authorizing your employer to manage and monitor how you live outside of work.

Dudley isn’t the only person who has noticed a potential connection between “wellness programs,” the ACA and fitness trackers. For fitness trackers to work most effectively, they will need incentives.  It’s not hard at all  to imagine a future in which your employer tells you your healthcare insurance is contingent in participating in a “wellness” program that requires active monitoring.

Of course, healthier lifestyles should be everyone’s goal. But what level of micromanaging are we willing to endure in exchange for insurance security? The prospect of an Internet of Things-enabled insurance future raises all kinds of thorny questions. For example, the Affordable Care Act is supposed to end the practice of healthcare insurers’ discriminating against people with preexisting conditions. But wouldn’t mandatory wellness programs be a kind of discrimination against people with unhealthy lifestyles?

In every realm of insurance, how long will it be before discounts offered for “good” behavior are matched by price hikes that penalize “bad” behavior? Liberals scream bloody murder when conservatives try to make welfare programs contingent on drug-testing. How different will it be when we run the risk of higher health insurance premiums because we ate too many potato chips?

There also obvious class implications. The rich will be able to afford gold-plated insurance plans that come free of prying eyes, while the poor will only be able to afford insurance plans that come equipped with onerous behavior modification shackles.

The connected society is coming. In a best-case scenario, perhaps, as a society, we’ll be able to draw lines between what is acceptable surveillance and what isn’t. But before we can do that, we need to constantly be asking an important question every time we hear about what the Internet of Things will do for us. What’s in it for them?

 

Cut-Throat Capitalism: Welcome To the Gig Economy

Economist Gerald Friedman warns that the much-hyped gig economy is a road to ruin for workers.

Photo Credit: Shutterstock.com

The media are all abuzz with the changing nature of work. Exciting words like “creativity” and “adaptability” get thrown around, specifically in connection to the shift away from steady, full-time employment to a gig economy of freelancers and short-term contracts. Proponents of the gig economy, from the New York Times‘ Thomas Friedman to bright-eyed TED pundits, tout it as a welcome escape from the prison of the standard workweek and the strictures of corporate America. Working on a project-to-project basis will set you free, they tell us. Wired magazine has called it “the force that could save the American worker.”

But when you’re actually stuck in it, the gig economy looks quite different.

Consider the New York Freelancer’s Union: According to a report in the New York Times, 29 percent of the union’s New York City members earn less than $25,000 a year, and in 2010, 12 percent of members nationally received some type of public assistance. Turns out that life with no health benefits, vacation pay or retirement plan is not a rosy picture.

Writing for Fast Company, Sarah Kessler, who went undercover to hustle for work in the gig economy, put it this way:

“For one month, I became the ‘micro-entrepreneur’ touted by companies like TaskRabbit, Postmates, and Airbnb. Instead of the labor revolution I had been promised, all I found was hard work, low pay, and a system that puts workers at a disadvantage.”

What’s really going on is the desire of businesses to chop wages and benefit costs while also limiting their vulnerability to lawsuits, which can happen when salaried employees are mistreated. The burden of economic risk is shifted even further onto workers, who lose the security and protections of the New-Deal-era social insurance programs that were created when long-term employment was the norm.

I caught up with Gerald Friedman, who teaches economics at the University of Massachusetts at Amherst and has written about the gig economy, to find out how this trend happened and what it means to workers and our increasingly unequal society.

Lynn Parramore: How did the shift away from full-time employment to the gig economy come about? What forces drove the change?

Gerald Friedman: Growing use of contingent workers (in “gigs”) came when capitalists sought to respond to gains by labor through the early 1970s, and in response to the victories capital won in the rise of the neoliberal era. Because contingent workers were usually not covered by union contracts or other legal safeguards, employers hired them to regain leverage over workers lost when unionized workers gained protection against unjust dismissal, and courts extended these protections to non-union workers under the “implicit contract” doctrine.

Similarly, the rising cost of benefits due to rising healthcare costs and government protection of retirement benefits (under the 1974 ERISA statute) raised the cost of full-time employment; employers sought to evade these costs by hiring more contingent workers.

In the early- and mid-20th century, employers created careers and job-ladders to lock valuable workers into particular jobs. Job-lock reduced the danger that low unemployment would lead to competition for workers, wage inflation, and would undermine their control over their workers. (The other side of job-lock, as Richard Freeman among others noted, was the organization of labor unions among workers who could not “exit” from no-longer-agreeable employments, and therefore, engage in collective action to improve conditions.)  Reduced market regulation, the opening of markets to international competition, and a shift in macro-economic policy focus from full-employment to price-stability all reduced the danger that workers would quit to gain higher wages or better jobs.

Instead of using job-lock to protect themselves from labor-market competition, employers rely on repressive macroeconomic conditions, relatively high unemployment, and therefore, do not need to offer job ladders, careers, or benefits to attract and to hold workers.

LP: We hear a lot of buzz from trendwatchers on a new wave of “microentrepreneurs,” “minibusinesses,” and empowered freelancers who are changing the nature of work. Why do people find this vision so intoxicating?

GF: Talk of “microentrepreneurs” presents a favorable view of the rise of the gig economy, one consistent with liberal values of individualism and opportunity, even while ignoring the oppression and poverty-wages many find in the gig economy.

There are certainly some who enjoy the uncertainty of irregular employment. When unemployment rates fell to levels traditionally associated with full employment in the late-1990s, however, we saw how workers really feel about gig jobs: they rejected them and the contingent economy contracted.

Given a choice, workers choose careers and jobs, not freelance gigs.

LP:  The reality of the gig economy often seems to be a system that puts workers at a disadvantage. From your research, how do you see the gig economy playing out in people’s lives?

The gig economy is associated with low wages, repression, insecurity, and chronic stress and anxiety.  Freelance workers fear to complain about working conditions, fear to ask for higher pay, and fear to reject any conditions imposed by prospective employers.  By removing any social protection, the gig economy returns us to the most oppressive type of cut-throat and hierarchical capitalism, a social order where the power to hire and fire has been restored to employers, giving them once again unfettered control over the workplace.

LP: How can we create jobs that are flexible and adaptable, but also give workers some security and decent benefits?

GF: We should not romanticize the situation of organization workers on careers and with job ladders. While providing more security and protection than the gig economy, this was a type of contract established by capitalists to enhance their power over workers. Instead, we should seek to enhance worker security and independence outside of work through systems of income security (enhanced unemployment insurance and guaranteed income and universal health insurance), by establishing worker-controlled guilds to regulate access to gig work through hiring halls and hiring lists, and by extending legal protections to workers’ civil rights and health and safety while doing freelance and gig work.

LP: To what extent do you see the gig economy impacting growing economic inequality?

The gig economy has been a giant vehicle transferring income from workers to capitalists. Gig work has become a vehicle not only to drive down wages but to eliminate employment-related benefits (including health insurance as well as retirement pensions and government social security). By undermining labor unions and promoting individualist competition among workers, gig work drives down wages and reduces the possibilities for effective working-class political action.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of “Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.” She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet’s New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

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Job-Based Benefits and American Inequality

Across this full history, the overblown promise of private coverage pushed public programs to the categorical margins. As a result, working Americans enjoy less security—in international or historical terms—against the risks of retirement or illness. The private welfare state, in this sense, is a little like a private school or a private jet—not just a different way of delivering the goods, but a reliable and deliberate mechanism for sustaining inequality.
By Colin Gordon
March 27, 2014

Workers at a California Walmart protest poor health care coverage
(OUR Walmart/Flickr)

This series is adapted from Growing Apart: A Political History of American Inequality, a resource developed for the Project on Inequality and the Common Good at the Institute for Policy Studies and inequality.org. It is presented in nine parts. The introduction laid out the basic dimensions of American inequality and examined some of the usual explanatory suspects. The political explanation for American inequality is developed through chapters looking in turn at labor relations, the minimum wage and labor standards, job-based benefits, social policy, taxes, financialization, executive pay, and macroeconomic policy. Previous installments in this series can be found here.

American inequality is driven not just by the uneven distribution of wages, but also by the uneven distribution of job-based benefits. More than any other country, the United States relies on private employment and private bargaining to deliver basic social benefits—including health coverage, retirement security, and paid leave. The results—on any basic measure of economic security—have been dismal.

Reliance on private benefits made some sense in a mid-century economy organized around lifetime “family wage” employment in large and stable firms. But even under these circumstances, benefits bypassed many workers. Their coverage was always uncertain (loss of a job meant loss of benefits) and often capricious (consider the health and pension plans that routinely evaporate in corporate restructuring). Good benefits followed good jobs, widening the gap between low-wage workers and everyone else. The expectation of private coverage undercut public programs—which were often structured as ways of supplementing job-based plans or mopping up around their edges. And, across the last generation, the logic of delivering social policy via private employment unraveled with the economy on which it was based.

A Short History of Job-Based Benefits
The growth of job-based benefits proceeded fitfully in the first half of the twentieth century; given widespread anxieties about competitive disadvantage, only a few firms in select industries were willing to experiment at first, and it took the parallel emergence of public social programs to shape the kinds of benefits we’re familiar with today. Consider the trajectory of health insurance. Aside from a few union and cooperative experiments in the 1930s, insurance against illness (or wages lost due to illness) was relatively rare. All of this changed in the 1940s, when the combination of a stark labor shortage and inflation-anxious wage controls pressed employers to experiment with non-wage benefits—including job-based health insurance. The federal government encouraged this with the Revenue Act of 1942, exempting employer contributions to their health plans from payroll and income taxes.

Although seen as bearing little consequence at the time, this innovation came to dominate the logic and politics of American health care. In the early postwar years, labor, employers, insurers, and medical interests—each for their own reasons—championed job-based benefits as a source of general security and an alternative to public insurance. Through postwar bargaining, coverage under job-based plans broadened to spouses and dependents, and to a wider range of costs and services. Public programs, meanwhile, confined their attention to those too old, too young, or too categorically disadvantaged to rely on job-based coverage.

The reach of job-based health care plateaued at about seventy percent of the population in the early 1970s. After that, the pretension that employment-based benefits might serve as a surrogate for a national program was punctured by rising costs, declining coverage, and the steady erosion of benefits. The financing of health care was transformed as variations on health maintenance organizations and “managed care” displaced the older fee-for-service model. Employers chafed at the burden of health coverage and sought to redistribute the costs: some looked to political solutions that might spread the burden to their competitors or to other sectors of the economy, and others simply shuffled that burden onto the backs of their workers—or abandoned health care benefits altogether. In health care reform debates, the idea of subsidizing or mandating job-based coverage was gradually displaced by innovations in individual coverage—such as high-deductible plans, or the “individual mandate” embedded in the Affordable Care Act.

Steady losses in employer-sponsored coverage have been partially backfilled by public programs, but the categorical reach of these programs (children, the very poor) varies widely by state. In this sense, the unevenness of private coverage is magnified by uneven public coverage.  The same states that have dug in against collective bargaining (and hence the extension of job-based health care) have also sustained the sparest public programs. Here the divide between North and South is especially pronounced.  In Minnesota, for example, almost 70 percent are covered by job-based health plans, and adults (without dependent children) qualify for Medicaid when their incomes dip below 200 percent of the federal poverty threshold. In Mississippi, by contrast, barely half (54 percent) claim job-based coverage, and childless adults do not qualify for Medicaid until their incomes dip to a thin fraction (16 percent) of the federal poverty threshold.


As with health care, the private pension system grew sporadically, shaped by an uneasy relationship with public programs. Many larger employers experimented with pensions in the early twentieth century as a means oensuring worker loyalty, and of easing workers into retirement as their productivity waned. By the early 1930s, about 15 percent of workers were eligible for private pensions. But most of these plans were crudely designed. Service and good behavior requirements meant that only about 5 percent of retirees were actually drawing benefits. And underfunding meant that most plans slid into bankruptcy when the Great Depression hit.

All of this changed in the 1930s and 1940s, when the combination of depression and war recast private and public views of retirement security. Central to the widespread adoption of private pensions in the United States was the fact that the public program—the old age provisions of the Social Security Act—came first. Employers proceeded on the assumption that Social Security would suffice for most workers, while serving as a foundation for more generous private plans aimed at higher earners. In this respect, the public program served as a hidden subsidy for private pensions—and effectively pushed their coverage up the income ladder.

Like health care, private pensions, which served as a way of increasing compensation without running afoul of wage and price controls, were reinvented during the war. They won federal blessing in the Revenue Act of 1942, whose antidiscrimination provisions pressed employers to extend their plans—many of which were little more than tax shelters for management—to most employees. And they became a staple of a staple of postwar bargaining, reaching 40 percent of private sector workers by 1960. Social Security remained meager enough to encourage “supplemental” private plans; those private plans, in turn, acted as a powerful argument against the expansion of public coverage.

Pension coverage grew modestly through the end of the twentieth century, aided—after 1974—by the Employment Retirement Income Security Act (which established accounting and fiduciary standards) and the Pension Benefit Guaranty Corporation (which ensured the payment of benefits under most defined-benefit plans when the sponsoring firms went under). But, while pension coverage has not slipped as precipitously as health coverage over the last generation, retirement security has, like health security, been eroded by the changing form of coverage—as traditional “defined benefit” plans are displaced by riskier “defined contribution” plans.

Job-Based Benefits and American Inequality
As a system of general social provision, the uniquely American reliance on job-based benefits has always fallen short of providing real security. Such benefits have historically flowed to two groups of workers: those already well placed in the labor market (management, high earners), and those with the organizational clout to win health and retirement plans at the bargaining table.

As union density has plummeted, however, coverage of middle- and low-wage workers has fallen steeply. Meanwhile, many workers—including those in low-wage or part-time jobs, in entire sectors in which such benefits were rare, or in firms too small to qualify for group insurance—have never been covered. Job-based health insurance, having never reached more than about seventy percent of the workforce, has now slipped back to about 60 percent. Private pensions grew slowly to reach about half of the labor force, but have stuck there. As the terms of private employment have eroded, so too has the “family wage” security that once flowed from those jobs.

Since 1979, pension and health care coverage has fallen for almost all workers, and the losses are starkest for the most vulnerable [see graphic below]. Black and Hispanic workers (men especially), low-wage workers, and those with only a high-school education began this era with lower rates of coverage, and they have lost coverage at a faster rate than others. The rate of health care coverage declines markedly as you descend the wage ladder, and has fallen most dramatically over the last thirty years for the lowest-wage workers: by 2010, only about a quarter of workers in the bottom quintile were covered by job-based health insurance.

While the reach of private pensions has declined less dramatically, and actually inches up for some women, coverage remains sparse—and is getting sparser—for low-wage workers. The share of workers offered a pension, and the rate at which workers participate, both decline with income. While about seventy percent of upper-income earners have a pension, barely a quarter of lower-income workers claim the same security. Not surprisingly, the income gap in participation rates is even starker.

And even these numbers understate the damage, because the quality and security of that coverage has also collapsed. As pension coverage has slipped, defined-contribution plans—which expose workers to investment risks (the poor performance of invested contributions) and longevity risks (the possibility of running out of money in retirement)—have largely displaced traditional defined-benefit plans. The importance of this shift is profound: by virtually any measure (age, income, race, gender, educational attainment, marital status), 401(k)-style defined-contribution plans provide uneven security, and widen background income inequalities.

This steady erosion of retirement security reflects the declining bargaining power of workers, and the effort of employers to evade the market, regulatory, and actuarial risk of defined-benefit plans. What evolved, in the middle years of twentieth century, as an effort to broaden the reach of private pensions as a complement to Social Security, is now moving in very nearly the opposite direction. In 1983, just under a third of American families were at risk of being unable to sustain their pre-retirement standard of living into retirement; by 2009, that had swollen to over half. The rate of poverty among older households is about nine times greater for those without the income of a defined-benefit plan—a gap that has grown markedly in recent years.

In the case of health care, insecurity and inequality are driven by a combination of declining coverage, declining plan quality, and rising costs. As coverage has slipped, the out-of-pocket costs (premiums, co-payments, deductibles) for enrolled workers have continued to climb at a rate that easily outpaces earnings or inflation. From 1999 to 2013, the average annual premium for single coverage more than doubled (from just about $2,200 to just under $5,900); and the average annual premium for family coverage nearly tripled (from about $5,800 to about $16,400).

This cost crunch has led to declining rates of job-based insurance, as employers retreat from offering coverage and employees hesitate to assume the costs (especially for family plans) even when its offered. When coverage is available, it tends to squeeze wages. Employers’ health costs have risen from less than one-half of one percent of wages in 1948 to nearly ten percent today. The absence of stable health coverage dramatically increases economic insecurity, including income volatility and risk of bankruptcy (accounting for one-half to two-thirds of all personal bankruptcies prior to the recession). The inequality that flows from job-based health coverage is partially—but only partially—addressed by the Affordable Care Act (ACA), whose long-term impact on rates of uninsurance, relationship to job-based plans and other public programs, and ability to rein in costs are still uncertain.

The effect of this reliance on job-based benefits is suggested in the graphic below, which sketches wages and total compensation (wages plus benefits) for workers earning at the 20th percentile (annual wage of about $40,000 in 2013) and at the 80th percentile (about $120,000 in 2013). Each element of non-wage compensation (paid leave, pensions, health care) reflects both the cost to the employer (as a percentage of payroll or as an actual cost), and the likelihood that a worker in that wage cohort has access to the benefit. Since high-wage workers enjoy both more generous benefits and higher rates of coverage, private benefits widen the gap. The low-wage worker claims about $6,500 in non-wage compensation (a bump of about 15 percent on basic wages); the high-wage worker claims over $26,000 (a bump of over 20 percent).

Job-Based Benefits in International Perspective
An international perspective puts these patterns—and the exceptional U.S. trajectory—in sharp relief. The United States notoriously spends more on health and gets less in return than any of its peers. We spend as much in public dollars as most of our OECD peers, and then spend as much again in private dollars—for a per capita cost, a health spending share of GDP, and an out-of-pocket burden that are all roughly double the OECD average. None of this largesse is reflected in health outcomes, on which the United States ranks at or near the bottom on most peer rankings [see graphic below]. A narrower comparison with Canada—a country with similar demographics and political structure—is especially instructive. Since 1960, Canadian health spending has grown more slowly—as a share of the economy or on a per capita basis—while offering universal coverage and higher scores on all key health outcome metrics.

While the diversity of pension systems across the OECD makes direct comparison difficult, it is clear that the uneven coverage and risk of the private pension system in the United States undermines the relative security of the retirement system. Compared to its peers, the American system does relatively little to either pool retirement risk, or to offset that risk with robust public coverage. On the Mercer Global Pension Index, the United States ranks in the middle of the pack of twenty nations, but falls to fifteenth place on adequacy (benefits and benefit design) and fourteenth on integrity (regulation and governance). On the standard OECD measures—the rate at which pension systems replace the incomes of workers, and the accumulation of pension wealth—the United States ranks near the back of the pack [click here for graphic].

International comparison only underscores the dismal historical record of American job-based benefits. In the first generation after World War II, private benefits fell unevenly across the economy, and either discouraged public alternatives or limited their reach. Since then, private coverage has sagged and public programs have picked up only some of the slack. Across this full history, the overblown promise of private coverage pushed public programs to the categorical margins. As a result, working Americans enjoy less security—in international or historical terms—against the risks of retirement or illness. The private welfare state, in this sense, is a little like a private school or a private jet—not just a different way of delivering the goods, but a reliable and deliberate mechanism for sustaining inequality.


Colin Gordon is a professor of history at the University of Iowa. He writes widely on the history of American public policy and is the author, most recently, of Growing Apart: A Political History of American Inequality.

Posted by Portside on April 2, 2014