The Wall Street Journal has a terrific piece today about how the recession is accelerating the fraying the post-World War II compact between workers and employers (which has, of course, been fraying for several decades now). Key nugget:
Two-thirds of big companies that cut health-care benefits don't plan to restore them to pre-recession levels, they recently told consulting firm Watson Wyatt. When the firm asked companies that have trimmed retirement benefits when they expect to restore them, fewer than half said they would do so within a year, and 8% said they didn't expect to ever.
Overall, the story really just affirms the president's central mantra on health care reform--that is, a rejection of the idea that the health care status quo on is stable (if less than ideal). In fact, as Obama has stressed, the status quo gets significantly worse every year. From the Journal story:
Employers that offer health insurance spend an average of $6,700 per employee on it this year, nearly twice as much as in 2001, according to consulting firm Hewitt Associates. ...
The percentage of employers offering health-care benefits is 60% this year, down from 63% in 2008 and 69% in 2000, according to the Kaiser Family Foundation.
In a survey by Hewitt last winter, 19% of large employers said they planned to move away from directly sponsoring health-care benefits over the next five years.
In the meantime, workers' share of health costs is headed up. For next year, 63% of employers that offer health coverage plan to increase employees' share of the expense, according to a survey of 1,500 employers by another consulting firm, Mercer.
For what it's worth, the pension portions of the piece are pretty interesting, too.
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COMMENTS (2)
Noam, Congratulations on figuring out the Healthcare Crisis. Anyone out in flyover land has known this for years. If only you could pass this on to the resident healtcare expert at TNR, perhaps Jon Cohn will get a clue.
But the numbers are a little deceptive and confusing on their own. Part of the trend away from offering benefits is driven by working couples which was relatively rare 20 years ago. What's happened is Mom or Dad works for the government and gets good benefits that cover the whole family, while the other parent works in the service industry and get's stiffed on the bennies. This is driving the costs up for the luxury plans as everybody subscribes, while slackers like Walma ... view full comment
Noam, Congratulations on figuring out the Healthcare Crisis. Anyone out in flyover land has known this for years. If only you could pass this on to the resident healtcare expert at TNR, perhaps Jon Cohn will get a clue.
But the numbers are a little deceptive and confusing on their own. Part of the trend away from offering benefits is driven by working couples which was relatively rare 20 years ago. What's happened is Mom or Dad works for the government and gets good benefits that cover the whole family, while the other parent works in the service industry and get's stiffed on the bennies. This is driving the costs up for the luxury plans as everybody subscribes, while slackers like Walmart and McDonald get by with nothing.
The second part of the equation is that healthcare benefits were designed in 1950's and don't make sense 50 years later. Yes corporations can take healthcare insurance off as a Tax Write-Off, but spending $ 6,000 to save $ 2,000 doesn't make any sense when you can save the whole $ 6,000 by sourcing to Mexico.
Lastly, it's this equation that lead to outsourcing and offshoring. Why give your security guard the same benefits as your VP when you can outsource to Wakenhut? Why have a Call Center Operator with Pension Obligations when you can send it to India.
Corporations are smart, dynamic organizations that adapt to conditions and solve problems. Health care is not their problem.
This is why I think the President made a mistake in taking on Health Care at the start of his term. The US Government is the largest purchaser of health care insurance. The President should have started his health care initiative with Negoitions with the Labor Unions. By forcing the US Governement Represented Employees to take the same cuts that US Business has forced upon their workers he gains support of the taxpayers and voters and creates a situation that requires a fix from the Private Sector, if they step up, or the government.
Clinton's plan, prescient as it was, required employers to offer indemnity, PPO, and managed care plans to employees, this at a time when managed care penetration was in the single digits. And amazing as it may seem today, after Clinton's plan failed passage, many, if not most, American blamed Clinton for the growth in managed care penetration (which quickly went above 50%) that followed. Does one see a patten here. Whatever plan is approved, Obama will be blamed (for increases in health insurance premiums paid by employees, whatever). The fundamental problem with US health care is that it is a tiered system, with different treatment for similarly situated folks, depending on age, employ ... view full comment
Clinton's plan, prescient as it was, required employers to offer indemnity, PPO, and managed care plans to employees, this at a time when managed care penetration was in the single digits. And amazing as it may seem today, after Clinton's plan failed passage, many, if not most, American blamed Clinton for the growth in managed care penetration (which quickly went above 50%) that followed. Does one see a patten here. Whatever plan is approved, Obama will be blamed (for increases in health insurance premiums paid by employees, whatever). The fundamental problem with US health care is that it is a tiered system, with different treatment for similarly situated folks, depending on age, employment, and other individual factors. As long as there are differences in treatment of similarly situated folks, health care "reform" is a loser for Obama, as it was for Clinton (even though Clinton's plan did even pass for goodness sakes).