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© 2008 Delmar Cengage Learning.
Chapter 13
Employers and Health Care:
A Sick Business
Cathy Jo Martin
© 2008 Delmar Cengage Learning.
2
The Central Paradox of Private Welfare Provision
• Private firms seek to maximize efficiency, while welfare schemes seek to ameliorate the conditions of the least fortunate– And, therefore, least “efficient”
• Employer-sponsored welfare benefits thus effectively subsidize the “inefficient”
© 2008 Delmar Cengage Learning.
3
“Welfare Capitalism”: Cause and Effect of the Failure of National
Health Insurance
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“Welfare Capitalism” and NHI
• Private health benefits serve to plug holes left by incomplete system of public benefits
© 2008 Delmar Cengage Learning.
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“Welfare Capitalism” and NHI
• At the same time:– Rise of private system prompted the
development of a vast array of vested interests– Have served to stymie attempts to expand
coverage nationally
© 2008 Delmar Cengage Learning.
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“Patchwork” nature of benefit schemes has imposed inflationary
pressures on health care system as a whole
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A Patchwork Knit with Inflation
• Business initially placed faith in managed care as panacea to rising health care costs
• As market matured, big employers lost leverage over plans to negotiate discounts– Costs continued to rise
© 2008 Delmar Cengage Learning.
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A Patchwork Knit with Inflation
• Many firms stopped offering coverage
• The hospital visits of the uninsured, in turn, feeds back into the system in the form of inflation
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Local business-state coalitions have formed to bring about lower health
care costs, with limited success
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Coming Together: Coalitions for Cost Control
• In some cases– Business banded together in attempt to
squeeze productivity gains through quality controls, leverage lower prices
© 2008 Delmar Cengage Learning.
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Coming Together: Coalitions for Cost Control
• In others:– State government organizations leaned on
local businesses to unite in the name of lower health care costs
© 2008 Delmar Cengage Learning.
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Coming Together: Coalitions for Cost Control
• As in the case of managed care:– Most such schemes led to cost shifting, and
not cost reduction, causing continued increases in overall health care costs
© 2008 Delmar Cengage Learning.
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With equally limited success, big business has lobbied for national
health care reform
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Employers and National Reform
• Many representatives of big business initially supported Clinton reform plan
• Incremental nature of plan led firms to calculate just how much they stood to gain or lose relative to other companies– Support soon evaporated
© 2008 Delmar Cengage Learning.
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Employers and National Reform
• National Chamber of Commerce blasted by conservative Republicans for initial position on reform
© 2008 Delmar Cengage Learning.
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Employers and National Reform
• Post-Clinton reforms:– Businesses have continued to be divided when
it comes to reform– Have formed a series of national coalitions in
attempts to address the issue
© 2008 Delmar Cengage Learning.
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Chapter 13 Summary
• Paradox lies at the heart of private employer-based welfare provision
• Development of “welfare capitalism”– Kept (public) national health insurance from
emerging– While also serving as an effect of the lack of a
public safety net
© 2008 Delmar Cengage Learning.
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Chapter 13 Summary
• Employers have tried many cost-containment schemes– Changing the health care landscape in the
process
© 2008 Delmar Cengage Learning.
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Chapter 13 Summary
• Local coalitions have enjoyed some success in reforming health care in the community– Though such groups have failed at the national
level
• Business community has attempted to push reform through national legislation– With little success
