In Labor
Friday, June 26 2009
More from the HCAN rally – this time about the prominence of labor. Honestly, I was surprised at how many of the folks there were from unions. I would say about 90% of the people were wearing t-shirts from one of the unions.
I knew HCAN was mostly organized labor, which is fine. Organized labor has a tremendous organizing apparatus, which they brought to bear on this rally. Without labor, there would have been a few hundred people milling about in an otherwise empty park, looking alone and hopeless. And I’m glad to be part of a coalition that includes so many working folks, since I’m dangerously close to being labeled an “elitist” myself.
But the unions’ leadership on this issues does create some tension for me. You probably can’t read the smaller sign in the picture below, but it says something like “Quality, Affordable UNTAXED Health Care For All”. There were lots of signs like this, plus home-made banners and t-shirts. Each of the union speakers mentioned the importance of keeping benefits untaxed, reason being that unions work very hard to get generous benefits as part of their contracts. It used to be easier to get good benefits than it was to get a comparable pay increase, though I understand this is no longer the case. No matter: unions still have a lot of interest in keeping health benefits untaxed.
The problem, of course, is that one of the best ways to pay for health care reform is to tax at least some benefits. The current tax-exemption amounts to a generous subsidy to those people fortunate enough to get benefits from their employer. It’s extra- ordinarily regressive, as tax policy goes; people like me don’t get anything from that subsidy. I pay $450 a month in COBRA premiums from my after-tax income, because my employer doesn’t think my job should have insurance anymore. So personally, I’m all for taxing health benefits -granted, because I’ve got nothing to lose.
Still, I think we would all – labor, white-collar, unemployed – be better off if fewer people got insurance through their employers, so long as there is a better way to get insurance. And that’s why the public plan option is so important, to give us that better option. And unions support the public plan option. But we still have to find a way to pay for the public plan, which to me means taxing benefits.
All this makes me a little bit worried for health reform. Despite their impressive showing today, unions are don’t have pull on Capitol Hill like they used to. And my concern is that if Congress decides that taxing benefits is necessary to pay for reform, organized labor will bail on the process – and sick people will lose an important ally. And then what?
The problem is that a lot of employers offer health benefits because they are not taxed, not sure they would offer them if they had to pay taxes.
But I’m not sure that’s necessarily a bad thing: if employers just facilitate the health insurance by selecting an insurance plan and the employees opt in or out that plan, and pay the premiums out of pocket, it would just make it fair for all of us. It changes the work dynamic a bit, and will need some salary negotiations, but really no big drawbacks.
Ileana – actually, it’s the other way around: health benefits aren’t taxed because lots of employers offer them. This has been, for the last five decades, our government’s way of sustaining a health care system. It worked for most people for a long time, but never particularly well for sick people – and there’s no intrinsic reason why employers should offer insurance.
And meanwhile, this hasn’t saved workers any money. Wages (adjusted for inflation) have been flat for many years; what looks like an increase has been eaten by rising health insurance costs. Businesses don’t actually pay those costs; they pass them on to their employees. They do, however, pay a lot of administrative costs for all the HR people it takes to make the system work. It ends up being a very inefficient and haphazard way of organizing the health care system.
A lot of the health reform proposals are aimed at making it easy for people without employer-sponsored health insurance to get insurance – guaranteed issue, community rating, the public plan option, etc. This will inevitable make it easier for employers to drop their health insurance plan – but again, there’s no reason why insurance should be through employers, except tradition. If you can get just as good insurance elsewhere, there’s no reason to tie insurance to a job. The trick has been figuring out where “elsewhere” is – and that’s what we need to do before we start taxing employer-based benefits.