Cutting off Your Nose to Spite Your Face…Is Not Covered By Most Health Insurance Plans

Hey! Hey you! Business guy! Tired of burdensome federal regulations and meddling bureaucrats? Tired of getting undersold by cheap foreign competitors? Looking for a way to cut costs to compete with the developing world? Have I got a deal for YOU!

Hey! Hey you! Stockholder! Interested in some higher rates of return? More dividends? You’d better listen in too…

You’re gonna love this! Whaddaya say we cut your health care costs by 40% or so? How’s that for starters? Sound ok?

Great! Let’s go ahead and set up a public health insurance option.

Whoa, whoa whoa…slow down! No, this isn’t a matter of the guv’mint taking over or spending money we don’t have or any such thing. It’s about making American business more competitive and offering better health care for lower costs!

Hey, where are you going? Come back!

–
Ok. Snark snark snark. Let’s get serious.

This afternoon, I was reflecting on my (imminent) coming ascension to fatherhood. I was thinking about how grateful I am that my wife and I are becoming parents while I’m still in graduate school. It’s ideal! While I have an almost unlimited amount of work to do (see here), I can do it on my own schedule. That means that when the baby arrives, I can shift my work around and be there to share as many special moments as I’d like—so long as I find a way to get my work done at other times. In essence, having a child during a grad-school summer is like being on extended paternity leave. I’ll be in my house: writing and changing diapers while my wife is recovering and the baby is cooing. This kind of flexibility is exceedingly rare in the USA. I’m a lucky man and I know it. I love it.

Anyway, this got me thinking about my wife. She works at a DC firm with a competitive maternity leave policy. She’ll be able to stay home for the baby’s first months while still getting paid. This is just. It’s the way the world should be. No one doubts that. Still…it’s costing her employers a lot of money to maintain this. If we decided to have a handful of babies over the next few years (note to prospective grandparents: this is a VERY hypothetical situation. VERY.), her firm would be on the hook to pay for more and more maternity leave. In tight economic times, this kind of cost makes it harder for American businesses to compete.

What if maternity leave were a publicly-subsidized good? What if companies didn’t have to pay for it? Wouldn’t that help them be more competitive in the global marketplace? Seems intuitive. Seems like pro-business lobbies would be clamoring to let the government deal with that mess, right? (h/t to Matt Miller, whose Tyranny of Dead Ideas first got me thinking this way.)

Why are business leaders so determined to hold onto their spiraling health care costs? Maybe it’s because of these two supposedly true dead ideas conservative convictions:

Conservative certainty #1: Unions cost companies tons of money by forcing them to provide comprehensive health care coverage.

Conservative certainty #2: Government institutions should stay out of health coverage.

Credit: Kaiser Family Foundation

But see, our government already spends around the same amount of public dollars (percentage-of-GDP-wise) on health care than most industrialized nations. Our piecemeal public programs don’t work anywhere near as efficiently as most others. If we streamlined this public spending, we’d do much better. Take a look at the chart to the right. Remember, the chart shows percentage of GDP. Since we have a much larger GDP than any other country, we spend many, many more public resources on health care than anyone else. Think about that. The UK’s public option (the NHS) costs less than our private system. By far.

The Washington Post‘s Ezra Klein put it like this [brackets added]:

Everyone in Washington claims to want the same thing lately: a “serious conversation” about health-care costs. So let’s have one.

Republicans have a plan that has been tried repeatedly but that has never worked [approximately our current system]. Democrats have a plan that might work in theory [the Affordable Care Act/"Obamacare"], but it is untested at the scale they’ll need for it to work in practice. And both parties are too scared to talk about the only plan that has worked [the public option].

You’ve probably heard this before—not on Fox News, of course—but despite spending much more, Americans don’t get better care than citizens being treated by public health care systems. Other industrialized nations beat us…and spend less…without hamstringing their nation’s businesses.

Profit margins aren’t always benign. Privatization of our health care system isn’t full-throatedly beneficial for everyone involved (including companies that have to go shopping for health care plans). For example: our health care system puts companies in benefits arms races with their competitors. If Company A provides better health care to their employees (union or not) than Company B, Company A is going to get better talent (so long as their salaries are equal).

Not only does the public option run efficiently by directly cutting companies’ responsibility for health care costs, but it also makes it possible for them to cut their HR departments. It’s a win-win-win (patients-businesses-fiscal hawks).

So if any of you can corral the fleeing businessman/stockholder from my snarky intro, hand them this post. Can American firms really afford to keep paying for increasingly expensive health care? Can you?