Thursday, September 27, 2007

single payer silver lining no more?

for the past few years, a lot of progressives have noted that universal health care is in the economic interests of many u.s. corporations. after all, under the current system employers bear the burden of paying most health care premiums. if the government starting picking up the tab instead, it would permit those corporations to externalize the cost (i.e. avoid paying for health care)

but that always raises the question why, if it really is in their interest, they haven't supported universal health care efforts so far. the usual answer is that the businessmen who run those big companies are culturally biased against a government-run entitlement, even if it is in their company's narrow self-interest to support it.

to progressives like me, this argument, while frustrating, comes with a silver lining: some day, we predict, people in the business world will wake up to reality and start lobbying for universal health care. as the cost of health care premiums continue to skyrocket--costs that are mostly borne by companies in this country--the incentive to throw their lobbying might behind a health care reform proposal will eventually become too great to ignore. exhibit A for this "silver lining" argument has always been the big three automakers. they were already crippled by huge health care liabilities. if anyone had an incentive to push for single-payer, they did.

but the resolution of this GM strike has got me wondering whether that common argument is still true. the new contract provides for the creation of a voluntary employee benefit association (VEBA), essentially handing off most of the company's health care liability onto an independent trust fund. GM will make a big lump sum payment to get the VEBA going. but after that, it would largely be self-financed based on the trust fund's investment earnings. ford and chrysler are expected to follow suit with their own VEBAs during their upcoming contract negotiations.

aside from that initial lump sum payment, VEBAs allow the companies to externalize their health care costs, just as government funded universal health care would. what this means is that the VEBA plan goes into effect, the big three would no longer have an incentive to lobby for universal health care. indeed, after making such a large up front investment in the VEBAs, they might even have a disincentive to supporting it--especially if the universal health care plan were funded by any new business taxes.