Want Health Care? Want Fries with That?

The launch of our new section, Jobs for Change, gives me an excuse to write about one of the constant background pressures in our health care system.  It’s called “job lock.”  Simply put, people stay in jobs that offer them good (or at least familiar) benefits, even when their employment conditions are bad, their prospects for advancement are minimal, and their motivation and productivity has evaporated.  As you can imagine, that goes double in this economy.  It shouldn’t have to be this way.

This is also my excuse to post one of my favorite videos from 2008.  It’s in support of the Wyden-Bennett “Healthy Americans Act,” but it would work just as well to support single-payer or the public plan option.  It’s also freakin’ funny.

Unfortunately, the effect on the economy isn’t quite as funny.  There’s no real way to quantify the effects, but economists estimate job lock because of health benefits reduces employment fluidity by up to 25%, and employment fluidity is part of the entrepreneurial spirit that revs our economic engine.  It’s always risky to leave your job, particularly to start a small business, but the ties between employment and health insurance and the completely unaffordable prices of the private insurance market create the very real possibility that even if the business succeeds, a medical catastrophe while uninsured or underinsured could spell financial ruin for the owner.

The worst part is that the U.S. health care system doesn’t work this way on purpose.  It’s basically a historical accident.  During World War II, the federal government temporarily instituted wage controls, meaning that businesses couldn’t compete for the best workers by offering better salaries.  They were free, however, to offer fringe benefits like health insurance.  After the wage controls were removed, benefits still gave businesses a leg up in attracting workers, so they kept doing it.  Unions, particularly the UAW, began pressing for health benefits to be included in new contracts, and that caught on even among low union density industries.  Pretty soon, expectation set in that your benefits came with your job.  Once Harry Truman’s plan for National Health Insurance was thwarted by the American Medical Association, that’s all she wrote.

Of course, it was one thing to make insurance based on employment in the 1940s and 1950s, when health care cost a fraction of what it does now.  It might still work if our insurance plans cost 4-8% of our income, as they are in Japan and Switzerland.  But the average cost of an individual family plan (about $12,000) costs a full 25% of the median household income ($48,000).

That’s an unsustainable and unnecessary situation.