By Andy Cohen
There is an awful lot of misinformation being disseminated to the public about “Obamacare,” officially known as the Patient Protection and Affordable Care Act, mostly (exclusively?) by Republicans. It’s a shame, too, because although the law, passed in 2010, is not perfect, it’s far better than what we had before.
Employers too are getting into the act: Many “small businesses” (defined as those with fewer than 50 full time employees) are complaining that they will be forced to cut their employees hours to below 30 hours per week in order to avoid having to pay for health insurance for their workers. John Schnatter, CEO of Papa John’s Pizza, said last year that because Obamacare would increase the company’s costs—by a whopping 14 cents per pizza—franchisees might have to start cutting back on their employees’ hours.
Although there are some uncertainties with the law, most of the complaints are pure nonsense. Raising the price of a pizza by 14 cents is not exactly an undue burden that is going to drive consumers away, and Schnatter’s insistence that he’s going to have to drastically reduce his workforce over 14 cents is beyond ridiculous. This is not a business argument; it’s a political one.
Lately employers seem to love to complain about this country’s employer based health insurance system. It costs too much and it is hurting their bottom line, their ability to compete in the global marketplace. That may or may not be true—there are compelling arguments on both sides. But the simple truth is that the United States’ employer based health insurance system was created by the employers themselves.
Ironically, the credit (blame?) for the haphazard creation of our current and deeply flawed methodology of delivering healthcare to Americans belongs, in a way, to President Franklin D. Roosevelt. According to a report in the New England Journal of Medicine by Dr. David Blumenthal, FDR could have instituted universal healthcare at the depth of the Great Depression as a part of the legislation that created Social Security, but chose not to. Instead, It was the federal government’s treatment of health insurance in the tax code that in the 1940’s and 50’s codified health insurance as a part of an employer’s compensation package.
The wartime economy during World War II brought strict governmental controls over the prices of goods, services, and wages. With a limited labor pool and an inability to offer lucrative wages, employers began offering health benefits as a way to attract more workers. And since health insurance was not a taxable part of an employee’s salary, it made economic sense, too. The company saves money, the employees get free health care.
Soon after the war, the Supreme Court ruled that health insurance benefits are subject to collective bargaining, further cementing the system of employer provided insurance into the American economic mechanism.
This is the system we have, and it’s incredibly inefficient and has become exorbitantly expensive with no rules or controls in place to limit costs. More and more employers are looking to eliminate the expense of providing insurance to their workforce, leaving more and more people without access to coverage. To make matters worse, the for-profit insurance industry controls our health care, and profits are given a higher priority than the health and wellness of their customers. It is a health care system that has left 48 million Americans uninsured as of 2011.
7.1 million are in California—the largest number of uninsured people in the country, and the seventh largest as a percentage of the population. According to a Gallup survey, 44.6% of Americans got their health insurance from their employer, a figure that was down 1.6% than just a year prior. In California, 52% get insurance form their employer, with 22% of Californians still uninsured.
Meanwhile, health insurance premiums have skyrocketed with consumers getting less and less for their dollar. A Rand Corporation study found that the cost of providing healthcare to a typical family rose 57% between 1999 and 2009. Companies are passing more and more of those increasing costs on to their employees, but with the expense continuing to grow more are looking to eliminate health benefits packages altogether, meaning even more Americans will be forced to go without coverage.
Oftentimes it’s the insurance companies that decide the kind of treatment patients receive, and not their doctors. They had the power to decide whether to cover a patient at all.
It’s a bad situation, and it’s getting worse…..and we’re only scratching the surface here. Ironically, the hated Obamacare could actually provide an out for these businesses, with additional tax incentives to help offset the costs of providing coverage, or the option of paying a fine for not offering it, which many businesses might find more economical. The fines paid by businesses that don’t offer insurance will help to fund the health insurance subsidies that will allow many of their employees the ability to purchase it on their own.
Something had to be done, but nothing was getting done. The options were and are few. A national system of universal health care is not realistic at this time, so a compromise solution had to be found. In the coming weeks we’ll examine some of the good things that Obamacare does, and dive into some of the complaints about how the system will work. We’ll look at some of the deficiencies and how the Affordable Care Act might be improved in the future.
The Affordable Care Act, as it stands, is estimated to provide coverage to an additional 30 million Americans who currently are without it, either through the health insurance exchanges or through an expansion of Medicaid (Medi-Cal in California). That’s certainly better than the alternative being offered by opponents of the law, which is nothing.