Is Health Insurance the Cause of High Unemployment?
My speculation: The high and rising cost of health insurance, combined with health insurance fairness norms, is a major reason why employment is recovering so slowly. If I’m right, we’ve got a serious problem with no easy solution. As always, though, we should start with the low-hanging fruit: Don’t mandate coverage, don’t punish firms for trying to control costs, and above all, don’t amplify workers’ dysfunctional beliefs about fairness with demagoguery. Sigh.
I think this is a serious idea. There is something to it.
National health care expenditures after all are taking up more and more of the GDP
Spending on iPads is taking up more and more of the GDP, too.
Mandatory benefits result in lower take-home pay and increased compensation costs. Health coverage is not yet mandatory but will be for large firms in 2014. To the extent wages cannot be lowered enough to compensate for mandatory benefits, low-skilled workers will be priced out of the labor market.
Anything that causes uncertainty is going to slow recovery. The unanticipated consequences of health care legislation probably make many business owners nervous.
The best case scenario I can see for the future is very mediocre to poor coverage for most people. They will simply have to cut back on things that have been covered in the past to keep the system afloat.
Wow. John Goodman came up with a great argument for junking the employer-based system and going to a tax-supported one.
Lack of health insurance is a barrier to care. Lack of care is an impediment to worker productivity and to success at school. So, if employers cannot afford to provide health coverage, we should have even more uninsured. Over the long run, won’t that create even worse financial burdens as the economy goes even deeper into a hole?
If health care costs are out of reach for employers, why not remove the cost as currently structured entirely. That way a company could pay based on how well it is doing rather than just because it is in business. A new, or struggling company, could still have healthy employees but not bear the cost burden in the same way. And, like many companies in places such as Canada, they could still invest in programs dealing with wellness, absenteeism, etc. We might actually end up with healthier students learning better and healthier workers being more productive.
And, before anyone attacks me (like I see on the Wall Street Journal forums) I will stipulate that I am generally liberal, work for a small, struggling company, I am an American who has lived in Canada and I have worked in the health care sector and managed a health plan for Fortune 50 company.