Big business is standing in the way of health care reform.
The US health care system is a mess. Despite the fact that our health care spending per capita is higher than any other country in the world, 30 million US residents are uninsured, 137 million struggle to pay medical bills, and one in four say they or a family member have postponed treatment for a serious medical condition due to cost.
With health care costs already sky-high and growing all the time, single-payer health care — sometimes called “Medicare for All” — where the US government would pay for essential medical services, is no longer a fringe issue.
Single-payer legislation has been proposed both at the national level, like the recently introduced Medicare for All Act of 2021, and the state level, like California’s Guaranteed Health Care for All bill. Under such plans, premiums, deductibles, and out-of-pocket expenses would disappear, leading to enormous savings for both everyday Americans and employers. Currently, companies subsidize a large portion of eligible employees’ health insurance premiums: about $7,470 for single plans and $21,342 for family plans each year, according to the Kaiser Family Foundation.
The public, for its part, is largely on board, with 53 percent of US adults in favor of a Medicare for All program. The business world, on the other hand? Not so much.
Even with corporate America branding itself as sympathetic to progressive causes like Black Lives Matter and transgender rights, the Fortune 500 will hardly touch single-payer health care. Meanwhile, business organizations like the US Chamber of Commerce and American Benefits Council actively lobby against it.
So why wouldn’t they be in favor of a plan that could save them thousands of dollars per employee?
Many Companies Don’t Provide Health Care at All
Under the Affordable Care Act, companies with at least 50 full-time employees have to provide “minimum essential coverage” or face steep fines. This means businesses below that threshold don’t have to offer health care to their employees, nor must large companies provide health care for part-time employees, contractors (including gig workers), and other non-full-time workers. Looking at it purely from a numbers perspective — as large companies often do — there’s little incentive to change that.
Especially when it comes to low-wage sectors like retail and hospitality (think: Walmart, McDonald’s, Home Depot), employers “want to keep their wages down at all costs, and want their taxes low,” said Nelson Lichtenstein, a history professor at the University of California, Santa Barbara, who directs the school’s Center for the Study of Work, Labor and Democracy. “They don’t want to pay extra taxes to pay for health insurance, and they don’t want to be mandated to do it.”
Companies in traditionally high-paying industries, like tech or finance, have also found ways to work around employer mandates.
At some companies, “Their way of saving money is not so much, ‘Let’s cut back on health insurance’ or ‘Let’s force it onto the government,’ it’s ‘Let’s define half our workforce as non-employees’ [by hiring more contractors],” Lichtenstein said. “That’s a more efficient and effective way to save money, from their point of view.”
Indeed, a 2018 study found that about 20 percent of the workforce were contractors — a number that could exceed 50 percent of the workforce within a decade. At some companies, like Google, there are more contract workers than full-time employees.
According to William Hsiao, Ph.D., emeritus professor of economics at Harvard’s T.H. Chan School of Public Health and a leading global expert in universal health insurance, even employers who do provide insurance aren’t really on the hook for the costs.
“Employers are really not paying for the employees’ health insurance premiums. … Employees actually pay for it, by taking lower salaries,” Hsiao said, referencing research from Emmanuel Saez and Gabriel Zucman at the University of California, Berkeley. “When an employer hires somebody, he or she says, ‘What’s the total compensation I have to pay the person?’ So, if the health insurance takes up, let’s say, $12,000, they will offer the employee $12,000 less in wages.”
Smaller Companies Could Come Out on Top
There is one segment in the private sector where single-payer health care tends to draw support: small and medium businesses, or SMBs.
Dan Barlow, executive director of Business Leaders for Health Care Transformation, a coalition of business professionals in favor of moving away from employer-based health insurance, says small and midsize companies make up the majority of their membership.
“They’re the ones who can’t afford it at all right now. … They’re struggling to compete and retain employees when they can’t offer health insurance,” Barlow said. On the other hand, large companies “have a level of bargaining power where they can make the for-profit health insurance industry work for them.”
If implemented, a single-payer health care system would “suddenly level the playing field between the small local downtown business and some of these big corporate giants in terms of recruiting and retaining employees,” Barlow added. “Imagine your local hardware store competing with someone like Home Depot or Lowe’s.”
And depending on how a single-payer system would be financed, small businesses may not even see a big increase in taxes.
Sen. Bernie Sanders’s (I-VT) Medicare For All plan, for example, carved out exemptions for small and low-margin companies, Hsiao pointed out.
“[SMBs] may realize savings,” he said, while “high-end companies would pay out more” — making big businesses less inclined to support such a measure.
American Exceptionalism Has a Say
In the US, “we have this very arrogant, myopic view that we are the only ones who know how to do things correctly,” said Susan Rogers, MD, president of Physicians for a National Health Program.
And often, doing things “correctly” means leaving them up to the free market.
“The typical businessman really embraces the ideology of doing everything through the marketplace: The government should be kept small and out of the way,” Hsiao said.
Barlow often encounters this attitude when reaching out to large businesses.
“Sometimes, they just don’t trust the government to run the healthcare sector or to actually control the costs,” he said. “Being in business makes you cautious.”
And those in the business world who do support a single-payer system are “really going against the social norm,” Hsiao explained — as a result, they are unlikely to publicly endorse it. “None of us want to offend our friends.”
This can especially be the case at big companies, where major decisions are not made by a single person, but a collective: the board or the executive team.
“The challenge with these larger businesses is, you’re not only going to have to convince the CEO, but the CFO, their policy director, maybe their board of directors, maybe certain shareholders… The list of people who have decision-making responsibilities in these organizations is just so vast,” Barlow said. “And that’s almost by design. Businesses try to stay safe by not making any kind of big moves.”
On the occasion that he is able to persuade someone at a large company of the value of a single-payer health care system, Barlow said he still struggles to earn the whole executive team’s support.
More Money, More Power for Workers
Some companies fear that a single-payer health care system would give workers more power in the labor market, experts say.
“What makes corporations even more hostile [to single-payer] than higher taxes is regulations which give their workers a certain kind of rights, independent of managerial authority,” Lichtenstein said.
Without the fear of losing health care, some employees might be more likely to switch jobs.
“Companies like to have their own benefits, because it generates employee loyalty,” Lichtenstein added.
A single-payer system could also increase wages. With employers no longer contributing to employee health plans, workers might demand companies add the equivalent amount to their base salary.
Even just 10-15 percent of workers pushing for a raise “would create a ripple effect throughout the whole labor market,” Hsiao said. “The newspapers would write it up and educate people. Labor unions would make demands. It may take a year or two, but wages for most people would go up.”
Barlow agreed, adding that companies may even have to sweeten other benefits like 401(k) matching, more vacation days, and longer parental leaves in order to differentiate themselves from their competitors and stand out to job seekers.
A New York Times analysis from 2020 largely corroborated the theory that Medicare for All would raise wages, although it would be much more probable in a competitive labor market where “an employer that tries to undercut the prevailing market rate risks losing workers to competitors,” and could vary significantly across industries.
Some opponents of single-payer health care, however, dismiss the idea that it would financially benefit workers.
Alex Brill — CEO of an economic policy consulting firm and a former staff member of the House Committee on Ways and Means and the White House Council of Economic Advisers — authored an article for the US Chamber of Commerce that argued, “Even if gross wages do rise for workers, after-tax wages will generally increase significantly less.” Brill also wrote that “because Medicare cost sharing does not cover as much as most private insurance, workers could be left with high out-of-pocket costs or the need to purchase supplemental insurance.”
With no united consensus on how to fund a single-payer system and what it would specifically cover, however, it’s impossible to tell for sure. While most plans have proposed raising taxes on corporations and the wealthy, they have varied in how they approach middle-class tax increases.
Sanders floated the idea of “a 4% income-based premium paid by employees, exempting the first $29,000 in income for a family of four,” which could be offset by health care cost savings, depending on how much they previously paid for health care. Sen. Elizabeth Warren (D-MA) suggested adding a tax on any additional take-home pay that someone might earn as a result of a single-payer system. Rep. Pramila Jayapal (D-WA) has offered few details on how her 2021 bill would be financed. When she introduced a similar bill in 2019, she explained that “most bills don’t have [a financing plan] when they’re introduced; that comes later in the process.”
Given that previous single-payer proposals were controversial even among Democrats, though, Jayapal’s bill likely won’t gain much traction in congress — at least for now.
Fix for an Unsustainable System?
Although big business hasn’t yet widely embraced a single-payer system, there are signs the tide may turn. Barlow said there are a handful of large employers involved in Business Leaders for Health Care Transformation, including Postmates and progressive stalwarts Ben & Jerry’s.
“Larger businesses may work out hacks to bring down costs for a few years, but that only works until it stops working,” he said.
But he thinks the benefits of single-payer health care would be long-lasting.
“Employees are going to be healthier and happier. They’re going to be more productive at work. They’re not going to have as many sick days… the list goes on,” Barlow added.
And although there’s a general fear among employers that any money saved on employee health plans would be outweighed by additional taxes, Barlow thinks many — but not all — businesses would come out on top.
“The costs are just so high it’s out of control,” Barlow said. “Sometimes you can sit down with them and say, ‘Okay, this proposal has 8 percent of payroll going toward Medicare for All. And right now, you’re paying 12 percent of payroll to a health insurance company.’ You can actually exhibit real savings.”
“The average business would probably benefit because they’d be paying a relatively stable, known amount of taxes rather than unstable, rising amounts of money for health benefits,” added Steffie Woolhandler, MD, co-founder of Physicians for a National Health Plan.
Again, however, this would depend on how exactly a single-payer health system would be funded, as well as how much the company was paying in health care costs beforehand. Sanders proposed “imposing a 7.5 percent income-based premium paid by employers, exempting the first $2 million in payroll,” while Warren’s plan called for employers to pay roughly the same amount of money they had been spending on healthcare plans to the government.
Even if big businesses don’t get on board, however, change may come regardless. Hsiao went so far as to predict that single-payer health care will be the top issue in the 2028 election. And this may be driven in large part by healthcare providers themselves, who are fed up with the bureaucracy and inequity of the current profit-driven system.
“I’m hopeful of the future in health care,” said Carmen Comsti, lead regulatory policy specialist at National Nurses United, a nurse’s union that cosponsored the Guaranteed Health Care for All bill in California, which Comsti helped write. “We know that it’s an uphill fight, but we think that the moment is now.”
After all, the current system isn’t sustainable.
“One of the things that I learned in medical school during my parasitology course is that a good parasite never destroys its host,” Rogers said. “And what is happening in this country is that the wealthiest of people are living off the poorest of people, and they’re destroying the host. And that can’t continue. It just can’t.”
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