Single Payer For The Village Wonks

Even if I agreed with this column from Ezra Klein, and I do not, what is the point of writing a column NOW urging that employer health insurance costs be taxed? It has as much chance of passage as single payer. And even if it was a good time, do you find this convincing?

[H]ealth-care coverage is not a benefit. It's a wage deduction. When premium costs go up, wages go down. When premium costs go down, wages go up. Yet workers don't know that.

(Emphasis supplied.) They "don't know it" because it is not true. Health care coverage is indeed a benefit and it is ridiculous to state it is not. Should it be? Probably not. But that is like arguing that a pension or vacation time is not a benefit. Obviously both are. Whether it should be a tax-subsidized benefit is another question and I think there is a good argument that it should not be, IF we were starting a system from scratch. But we are not. More . . .

The employer-employee relationship has been built and negotiated within the system that has existed for decades. It is naive and wrong to pretend that any reduction in health care benefits will go dollar for dollar in wages. Yet that is precisely what Ezra does. He writes "when premium costs go down, wages go up." Ezra does not know that. You know why? Because there has never been a recent period where wages have gone down. Indeed, that is the central premise of Ezra's column - that the rise in health care costs threatens to bankrupt the country (also silly hogwash.)

In any event, this is ivory tower stuff. The chances of removing the tax deductibility of employer based health insurance in this bill is slim to none. Hell, I seriously doubt the excise tax is gonna survive. And a good thing too. Because we do not live in ivory towers. The employer-employee relationship exists in the real world, with real world bargaining expectations and power.

A reduction in health care benefits will not translate into a dollar for dollar increase in wages. Employees will lose money with such a reform. Now is certainly not the time to add even more burdens to the struggling workers of America.

Speaking for me only

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    Ezra shows his stoopid in this line: (5.00 / 1) (#6)
    by scribe on Tue Dec 08, 2009 at 01:09:18 PM EST
    When premium costs go up, wages go down. When premium costs go down, wages go up. Yet workers don't know that.

    First, premium costs never go down.  

    Second, extracting out the effect of inflation, wages have not gone up for many, many years.

    Third, the canny employer never tells its workers when it achieves some premium savings, and it guards the wage distribution inside the company more closely than it does just about anything else.  So workers usually have no frickin' idea whether their employer has (a) cut their wages (as a measure of poductivty, i.e., relative to cost per unit of widgets produced), (b) cut their benefits or (c) just plain pocketed the difference.   What workers know is what their paycheck brings and that they wind up with larger co-pays and more miserly benefits every year.

    The idea that an employer, faced with the choice of either (a) maintaining that balance of wages plus benefits by bumping one up when another goes down or (b) pocketing the difference when one goes down, would choose anything other than (b) is a fairy tale for children.

    But, hey, that's how an inside the Beltway pundit like Ezra makes his gelt:  telling fairy tales in forms which adults will swallow and selling that storytelling ability to the highest bidder.

    Its a damn good thing... (5.00 / 3) (#18)
    by pluege on Tue Dec 08, 2009 at 02:36:29 PM EST
    that people in the United States without jobs don't get sick.

    Klein column (none / 0) (#1)
    by hankster on Tue Dec 08, 2009 at 12:52:22 PM EST
    Whether it's a benefit or wage deduction, employees SHOULD know the total cost of their insurance.  It might help them really realize the "benefit" of a Public Option  

    Something tells me (none / 0) (#2)
    by jbindc on Tue Dec 08, 2009 at 12:57:06 PM EST
    Poor Ezra has never had to worry about such things as health care, and really shows his ignorance by claiming it's not a benefit.  If that's the case, why does every company (who offers it) tell you about their benefits package when you interview?  A package that contains health insurance, as well as vacation, retirement benefits, etc.?

    Benefit vs. deduction (none / 0) (#3)
    by Molly Pitcher on Tue Dec 08, 2009 at 12:57:54 PM EST
    My family's insurance costs were both benefit and wage deduction: the employee got free basic medical insurance.  But the part that was an IRS deduction was a true deduction from wages to cover the rest of us. So the employee is forking over the cost of insuring his dependents; the employer is paying for only the one person's benefit (which is a relatively small amount).

    But you got a BIG wage increase (none / 0) (#5)
    by MO Blue on Tue Dec 08, 2009 at 01:05:05 PM EST
    right? :-)

    What a great idea :-) (none / 0) (#4)
    by MO Blue on Tue Dec 08, 2009 at 01:03:52 PM EST
    Charge 2 to 3 times what other countries pay for health care and then tax people for the privilege of grossly overpaying for a service.

    Should the Dems be stupid enough to implement this insane idea, be prepared to see Republicans in power for decades to come.

    Just a caveat... (none / 0) (#16)
    by TeresaInSnow2 on Tue Dec 08, 2009 at 01:47:55 PM EST
    The implied notion in your statement that other countries are getting exactly what we're getting for far less money may be false.

    For instance, the new mammogram standard that was a sign of rationing and woman-hating in this country?  It IS the standard in all of the European countries I looked at....France, Sweden, others. Canada too. Britain actually only pays for mammogram every THREE years after age 50.  I'd link, but I have no time.  Google will prove this.

    I believe in healthcare reform in this country, but the thinking that we should be able to provide the standard of care we're accustomed to in this country for near cost that other countries have is probably not reality.


    Who in their right mind (none / 0) (#7)
    by Zorba on Tue Dec 08, 2009 at 01:11:10 PM EST
    would think that wages would go up if benefits go down?  Oh, right- that would be Ezra.  Sure, in a perfect world, maybe health insurance benefits should have been taxed as wages (although I agree with MO Blue about us grossly overpaying for health care).  In a perfect world, maybe we shouldn't be able to deduct our mortgage interest payments from our taxes, either.  Neither is going to happen, and now is not the time.  

    In a perfect world, (5.00 / 1) (#8)
    by MO Blue on Tue Dec 08, 2009 at 01:15:57 PM EST
    taxes would have provided universal affordable health care like in other civilized countries.

    This way you get to pay higher taxes for overpriced insurance that may or may not provide actual health care.


    I totally agree, (none / 0) (#9)
    by Zorba on Tue Dec 08, 2009 at 01:23:23 PM EST
    MO Blue.  What a shame that our lawmakers are in the pockets of the health insurance industry and Big Pharma.  And what a shame that those opposed to universal health care have managed to frighten so many Americans with disinformation and outright lies.

    BTW, I think Ezra forgot a small detail. (none / 0) (#10)
    by MO Blue on Tue Dec 08, 2009 at 01:30:38 PM EST
    IIRC, Obama did promise not to raise taxes on the middle class. I think everyone would consider implementing this proposal raising taxes on the middle class. Would fall into the same category as Bush I's "Read my lips" with the same results.

    He broke that promise... (5.00 / 1) (#12)
    by kdog on Tue Dec 08, 2009 at 01:33:30 PM EST
    months ago...the media critics might make more hay out of it than the previous middle/working/lower class tax increase, but its rather inconsequential at this point.

    Premiums go down? (none / 0) (#11)
    by kdog on Tue Dec 08, 2009 at 01:31:08 PM EST
    In what universe do premiums go down?

    I don't know if its a benefit or a wage deduction honestly, kinda a little of both.  It's a benefit to get in on the employer health plan, which is cheaper than if you tried to buy on your own, but at my outfit the workers pay a portion via wage deduction...and every year I've been working here the premiums  have gone up, and our dedcution right along with it...the years there is no raise it sure feels like a wage decrease.

    Beat me to it (none / 0) (#13)
    by ruffian on Tue Dec 08, 2009 at 01:40:47 PM EST
    Amazing how Ezra can blow any credibility he has left right out of the water.

    It is both for me too - I pay for half of my premium, and amazingly enough it has never gone down.

    Would I get a bigger raise if the employer's half of my premium was not going up? Maybe that is what he is trying to suggest.


    In a true free market.. (none / 0) (#14)
    by kdog on Tue Dec 08, 2009 at 01:43:48 PM EST
    we probably would get that raise if premiums went down by act of god...then again, in a true free market it wouldn't take an act of god for premiums to go down.

    Point being a free market has never existed...all we know is rigged markets.  Maybe there is no other kind outside of textbooks and my pipe dreams.


    When premium costs go down, wages go up. (none / 0) (#15)
    by ruffian on Tue Dec 08, 2009 at 01:47:27 PM EST
    Well, that is certainly a law of nature of which I was heretofore ignorant. /snark

    Even assuming for a minute the insane notion that premiums go down, it is by no means assured that companies pass on that savings to their employees. In fact I bet it has never happened in the history of employment.

    I would bet that Ezra also believes this one:
    Tax cuts result in higher revenue.

    Now, now , easy on Ezra. (none / 0) (#17)
    by Radix on Tue Dec 08, 2009 at 01:56:04 PM EST
    If he doesn't make nice, no one will invite him to the Veal Pen games. Since he doesn't have a Red nose, Santa wont need him either.

    Um what he's arguing here (none / 0) (#19)
    by Socraticsilence on Tue Dec 08, 2009 at 04:59:16 PM EST
    is a widely held belief among Healthcare Economists- namely that many employers give healthcare in lieu of salary increases- that Coverage is in effect an alternate form of compensation-- the best example of this would be Auto Unions giving way on salary when health care costs have increased in order to maintain the same level of coverage- its an oversimplification yes but not completely incorrect- its hard not to view coverage (especially given the variations in said coverage) as a output in the same way a salary is.