Universal Healthcare Key to Virtual Workforce
In every era capitalist economies form systems to maximize efficiency. In past decades work had to be performed at a work site where processes took place that added value to physical materials. Retaining a healthy workforce over several years was necessary both to keep labor peace and also to maintain efficiency and quality through retention of company-trained employees in a generally uneducated workforce . Employees themselves sought the security of a job that lasted a lifetime.
Insurers could underwrite policies accurately and profitably, because it had the worker throughout his or her lifetime, collecting excess premiums in their youth and investing that money sufficiently enough to cover the expenses of current employees and fund the period of deficit premiums when that same worker became older. The typical retirement age was 65 and typical mortality was at age 69, so companies and insurers could profitably provide retiree medical benefits for a period of only 4 or 5 years in most cases. The country was young, riding the early phase of the two post-war baby booms, so the ratio of young workers with little healthcare spending overshadowed the premium deficits of older workers.
In the modern era almost all of this has changed. Increasingly, jobs in developed economies involve the processing of information, almost universally in electronic formats. The work can be done anywhere and almost everyone is educated enough to do it (your 14 year old is probably better at it than you are!). Career-long loyalty to an employer is a thing of the past, and employer loyalty to its workforce is similarly rare. The workforce is aging, making older high-healthcare-cost workers an increasingly large percentage of the total workforce, and insurers are becoming increasingly selective in whom they will insure, and increasingly creative in how they can carve-out higher-cost medical procedures. There simply are not enough young, healthy workers paying in excess premiums to cover the cost of older workers. In individual plans where there is no opportunity for an underwriter to spread risk, sick workers cannot get coverage from anywhere.
The only component of the turn-of-the-century economic model still in existence is the employer as health plan sponsor. Since group health plans are the only "guaranteed issue" vehicle left, i.e. the insurance carrier can't exclude an otherwise covered employee due to health issues, employees with health issues cling to corporate jobs as their only hope for health coverage. Employers can't legally terminate older workers in order to lower their healthcare costs, and insurance carriers won't extend individual coverage to workers with any significant health issues. The combination of these culpabilities results in an inertia that builds-in fixed costs for employers and robs employees of the ability to move rapidly through the economy to work assignments that they find favorable. Thus, lack of universal health coverage is the last, greatest inhibitor to the New Economy where all workforces are virtual and every knowledge worker works for themselves as an independent contractor free of corporate power and influence.
Think of what a powerful future this evokes for working people of all professions. It no longer would matter if you lost your job; you just take on additional work from your other customers (since you most likely work for multiple employers part-time rather than one all the time) and your health care would continue without regard to COBRA, health questionnaires, or eligibility for coverage. Imagine similarly a company that could assign work as-needed, where needed, with no long-term obligations to maintain a certain roster of people. Taxes would be higher to fund universal coverage, but carve-outs could be prohibited by law so benefits would be greater.
In this election year, for the first time in my adult life, I'm listening seriously to any candidate proposing universal healthcare. It is both a basic human right, and the one societal development with the potential to radically democratize corporate workplaces. It would free corporations of a huge and growing benefits predicament in the form of spiraling benefits costs, and the only losers would be insurance carriers. Having worked with these companies for several years as corporate health plan sponsors, I can tell you that alongside Big Oil and Big Tobacco, if there is an industry that deserves regulation its Big Insurance. Since the most expensive 2% of real estate worldwide is owned by the same companies that cap your kids braces at $1,500 per set or force your wife out of the hospital 24 hours after labor and delivery, if "The People in the Pyramid" become "The People in the Nice Office Park on the Outskirts of Town" so that everyone has access to healthcare, that'll do in my book.
Insurers could underwrite policies accurately and profitably, because it had the worker throughout his or her lifetime, collecting excess premiums in their youth and investing that money sufficiently enough to cover the expenses of current employees and fund the period of deficit premiums when that same worker became older. The typical retirement age was 65 and typical mortality was at age 69, so companies and insurers could profitably provide retiree medical benefits for a period of only 4 or 5 years in most cases. The country was young, riding the early phase of the two post-war baby booms, so the ratio of young workers with little healthcare spending overshadowed the premium deficits of older workers.
In the modern era almost all of this has changed. Increasingly, jobs in developed economies involve the processing of information, almost universally in electronic formats. The work can be done anywhere and almost everyone is educated enough to do it (your 14 year old is probably better at it than you are!). Career-long loyalty to an employer is a thing of the past, and employer loyalty to its workforce is similarly rare. The workforce is aging, making older high-healthcare-cost workers an increasingly large percentage of the total workforce, and insurers are becoming increasingly selective in whom they will insure, and increasingly creative in how they can carve-out higher-cost medical procedures. There simply are not enough young, healthy workers paying in excess premiums to cover the cost of older workers. In individual plans where there is no opportunity for an underwriter to spread risk, sick workers cannot get coverage from anywhere.
The only component of the turn-of-the-century economic model still in existence is the employer as health plan sponsor. Since group health plans are the only "guaranteed issue" vehicle left, i.e. the insurance carrier can't exclude an otherwise covered employee due to health issues, employees with health issues cling to corporate jobs as their only hope for health coverage. Employers can't legally terminate older workers in order to lower their healthcare costs, and insurance carriers won't extend individual coverage to workers with any significant health issues. The combination of these culpabilities results in an inertia that builds-in fixed costs for employers and robs employees of the ability to move rapidly through the economy to work assignments that they find favorable. Thus, lack of universal health coverage is the last, greatest inhibitor to the New Economy where all workforces are virtual and every knowledge worker works for themselves as an independent contractor free of corporate power and influence.
Think of what a powerful future this evokes for working people of all professions. It no longer would matter if you lost your job; you just take on additional work from your other customers (since you most likely work for multiple employers part-time rather than one all the time) and your health care would continue without regard to COBRA, health questionnaires, or eligibility for coverage. Imagine similarly a company that could assign work as-needed, where needed, with no long-term obligations to maintain a certain roster of people. Taxes would be higher to fund universal coverage, but carve-outs could be prohibited by law so benefits would be greater.
In this election year, for the first time in my adult life, I'm listening seriously to any candidate proposing universal healthcare. It is both a basic human right, and the one societal development with the potential to radically democratize corporate workplaces. It would free corporations of a huge and growing benefits predicament in the form of spiraling benefits costs, and the only losers would be insurance carriers. Having worked with these companies for several years as corporate health plan sponsors, I can tell you that alongside Big Oil and Big Tobacco, if there is an industry that deserves regulation its Big Insurance. Since the most expensive 2% of real estate worldwide is owned by the same companies that cap your kids braces at $1,500 per set or force your wife out of the hospital 24 hours after labor and delivery, if "The People in the Pyramid" become "The People in the Nice Office Park on the Outskirts of Town" so that everyone has access to healthcare, that'll do in my book.
Comments
My dad told me well before I even graduated high school that my benefit package would be more important than my salary, due to the fact that I'm "uninsurable." Even with good group coverage, insurance still is a battle... they are forever trying to get out of paying for something (subrogation, looking to find any loophole in continuation of coverage) or setting unreasonably low caps on care (i.e. $5,000 max benefit for prosthetics that start at $15,000 for a leg. An arm is $50K).
Thanks Mr. Jim for bringing attention to this important issue.