How RI's State Employee Unions And Everyone Else Would Be Helped By a More Rational Healthcare System
Carroll Andrew Morse
If there are any union folks still reading this site, let me use the Council 94 situation as the basis for explaining to you how conservatives would like to reform healthcare. Non-union folks might be interested in this too!
1. Instead of negotiating a plan and spending money with a health insurer, your employer would take the thousands of dollars currently spent per employee on health insurance, and give that money directly to the employees. In operational terms, every employee gets a multi-thousand dollar bump in their paycheck.
2. The employee can then use that money to buy an insurance plan directly from an insurance company. The laws would be changed so that people would be free to purchase insurance plans from any insurer in any state, and so that other government-created factors that artificially increase the price of non-employer health insurance would be removed.
2A. Most importantly, the tax-code would be changed so that individuals who purchase health insurance would get the same tax-break that companies who purchase health insurance for their employees currently get. Right now, businesses that buy health insurance for their employees are allowed to deduct that money from their corporate income tax calculations, but individuals who spend money directly from their paychecks on the exact same plans are not allowed to deduct from their personal income taxes.
(I'm not sure how the current employer tax-break works in the case where the state is the employer, but that only helps make my point: In the reformed system, the self-employed, the corporate-employed, and the state-employed will all be treated the same, which makes sense, as people's health needs don't fundamentally vary based on who their employer is.)
3. Finally, in this new system, a union like AFSCME could still use its negotiating prowess to go out and secure a preferred deal from a health insurance company for its members. AFSCME would bargain directly with the health insurers, choosing whatever health insurer in the country offered them the best deal, and not having to rely on the Governor to negotiate the details of its deal.
The night that Council 94 rejected the current contract offer, WJAR-TV (NBC 10) reporter Bill Rappleye interviewed state employee Sharon Moreno, who expressed a reasonable position about what she would like from the new contract...
Leave me where I am right now [in salary, but] don't touch my coverage.
The strength of the plan outlined above is not only that the state wouldn't have to touch health-coverage benefits during contract negotiations, but that the state would
not be able to touch health-coverage benefits during negotiations. Unions and employees would talk salary with their employers, and talk health coverage with their health insurers.
I know it's too late for this kind of plan to help with the current situation, but this is the system that makes the most economic sense, the most political sense, and that gives workers the most direct control over their futures. This is the kind of system we need to be looking at moving towards for everyone.
Wait wait wait. Your crazy plan would treat health insurance like auto insurance. And homeowners insurance. And boat insurance. And every other kind of insurance I can think of that I would never dream of making my employer supply.
How could a plan so crazy POSSIBLY work?
You've summed it up perfectly, but the key sticking point will be the tax treatment (btw this is not a business tax break but rather an individual tax break for one employed).
An employer has the option of giving an employee $13k in cash, from which the employee will pay about $5k in various taxes and the employer will pay another $1k on top of it.
Alternatively, an employer can just pay $13k for a family plan with no tax consequence and give it to the employee.
In the first case, the employer pays $14k out and the employee nets $8k. In the second case, employer pays $13k and gives a $13k product to the employee. Therefore, as long as health care is given preferential tax treatment, there is clear incentive to expand what the plans cover. And here we are 40+ years later.
The only tie in to employment is that in order for the individual to receive the tax breaks, they must get the product in lieu of cash from their employer. But it is always the individual receiving the lion's share of the preferential tax treatment. Expand that treatment to individual tax returns regardless of funding source and watch the markets at work.
Public employees would benefit the most from the suggested arrangement in that health care would stop being a drag on their wages and they could choose the product that is right for them. A woman calling into a Talk Show last night lamented the fact that she did not have options through her collective bargaining. This gives her the options she wants and allows her to save for future health expenses through tax savings she could not realize when handed a benefit rich package.
Imagine the release from captivity that would be experienced by civil servants. Now their future is based not only on what their current contract states, but also what every future elected administration and bargaining group agrees to until they die. And if they push back too hard, they are vilified in the community.
I'm no Union guy and have little sympathy for their "plight", but there is something immoral and unAmerican about forcing anyone to depend on future bureaucrats (both elected and appointed) for their future subsistence. The suggested reforms begin to break that dependency in ways that are beneficial to the public employee and the public entity paying them.
Breaking my long term ban on posting here... just to remind folks, the Tiverton Teachers (NEA Tiverton) proposed HSA's and Justin thought they were too expensive.
More proof this blog doesn't care about solutions, just rhetoric.
Patrick "I don't understand basic math" Crowley also doesn't understand the English language.
What Andrew is proposing is not an HSA, to be administered by the State / municipality.
Rather, he is suggesting the State completely divorce itself from the hassles, costs, administration and minutia of being involved in employee's healthcare, period.
Employees would receive a raise equal to what we are currently spending on healthcare and then the EMPLOYEE would decide how they want to spend it, be it on health care or otherwise.
The reason this simple, straight forward and rational plan will never be accepted is that it ignores the most basic issue associated with our Unions, which is that Union members do NOT want to make INDIVIDUAL decisions and choices, which this plan would require.
Not only do Union members NOT want to make individual choices & decisions, but they are simply incapable of such feats. That is precisely why they are members of Unions.
They "demand" to be cared for and led. As life-long dependents on the public-tit, what Andrew is suggesting is nothing short of horrifying to a Union member.
Anything that erodes the nanny-state will be fought tooth & nail by the Unions. But it is an idea that is worth pushing and implement, Union whining be damned.
For the record: Pat Crowley is not "banned" from Anchor Rising, inasmuch as he is not forbidden from posting. (Indeed, I think we're pretty unanimous in believing that the more he talks and writes, the more he helps our side.)
And to clarify the record, my main objection to the Tiverton teachers' proposal was that nobody put it into context of the rest of the negotiations. Where, for example, did the union come up with the town's contribution to the HSAs?
His comment above is the usual propaganda from Crowley. As I've suggested: keep up the good work, Pat!
As opposed to coming up with a new way of paying for outrageous health care premiums both parties should be diligently working on cutting health care providers, insurance companies, and drug companies record breaking profits at the expense of policy holders - both individuals and employers.
Tom,
Supply & demand. Basic economic principals that are foreign to the Unions and their Entitlement-minded members.
As long as those creating the Demand are being artificially subsidized, the price of what is being demanded will remain artificially high.
And those who don't receive the subsidy will bear the burden of those that do.
And to be clear, those that receive the subsidies are primarily Union hacks.
When a Union hack pays little to nothing in healthcare premiums (do you know anyone like that?), what incentive do they have to care about and react to the high cost of healthcare?
Some day, post bankruptcy, Union members will get a harsh lesson in the Free Market.
By the way, I hope you are lobbying to get you Pension fund to divest from any of those big, bad profit making "health care providers, insurance companies, and drug companies."
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Wait wait wait. Your crazy plan would treat health insurance like auto insurance. And homeowners insurance. And boat insurance. And every other kind of insurance I can think of that I would never dream of making my employer supply.
How could a plan so crazy POSSIBLY work?
Posted by: Greg at July 30, 2008 1:12 PMYou've summed it up perfectly, but the key sticking point will be the tax treatment (btw this is not a business tax break but rather an individual tax break for one employed).
An employer has the option of giving an employee $13k in cash, from which the employee will pay about $5k in various taxes and the employer will pay another $1k on top of it.
Alternatively, an employer can just pay $13k for a family plan with no tax consequence and give it to the employee.
In the first case, the employer pays $14k out and the employee nets $8k. In the second case, employer pays $13k and gives a $13k product to the employee. Therefore, as long as health care is given preferential tax treatment, there is clear incentive to expand what the plans cover. And here we are 40+ years later.
The only tie in to employment is that in order for the individual to receive the tax breaks, they must get the product in lieu of cash from their employer. But it is always the individual receiving the lion's share of the preferential tax treatment. Expand that treatment to individual tax returns regardless of funding source and watch the markets at work.
Public employees would benefit the most from the suggested arrangement in that health care would stop being a drag on their wages and they could choose the product that is right for them. A woman calling into a Talk Show last night lamented the fact that she did not have options through her collective bargaining. This gives her the options she wants and allows her to save for future health expenses through tax savings she could not realize when handed a benefit rich package.
Imagine the release from captivity that would be experienced by civil servants. Now their future is based not only on what their current contract states, but also what every future elected administration and bargaining group agrees to until they die. And if they push back too hard, they are vilified in the community.
I'm no Union guy and have little sympathy for their "plight", but there is something immoral and unAmerican about forcing anyone to depend on future bureaucrats (both elected and appointed) for their future subsistence. The suggested reforms begin to break that dependency in ways that are beneficial to the public employee and the public entity paying them.
Posted by: Roland at July 30, 2008 2:36 PMBreaking my long term ban on posting here... just to remind folks, the Tiverton Teachers (NEA Tiverton) proposed HSA's and Justin thought they were too expensive.
More proof this blog doesn't care about solutions, just rhetoric.
Posted by: Pat Crowley at July 30, 2008 10:31 PMPatrick "I don't understand basic math" Crowley also doesn't understand the English language.
What Andrew is proposing is not an HSA, to be administered by the State / municipality.
Rather, he is suggesting the State completely divorce itself from the hassles, costs, administration and minutia of being involved in employee's healthcare, period.
Employees would receive a raise equal to what we are currently spending on healthcare and then the EMPLOYEE would decide how they want to spend it, be it on health care or otherwise.
The reason this simple, straight forward and rational plan will never be accepted is that it ignores the most basic issue associated with our Unions, which is that Union members do NOT want to make INDIVIDUAL decisions and choices, which this plan would require.
Not only do Union members NOT want to make individual choices & decisions, but they are simply incapable of such feats. That is precisely why they are members of Unions.
They "demand" to be cared for and led. As life-long dependents on the public-tit, what Andrew is suggesting is nothing short of horrifying to a Union member.
Anything that erodes the nanny-state will be fought tooth & nail by the Unions. But it is an idea that is worth pushing and implement, Union whining be damned.
Posted by: George Elbow at July 30, 2008 11:02 PMFor the record: Pat Crowley is not "banned" from Anchor Rising, inasmuch as he is not forbidden from posting. (Indeed, I think we're pretty unanimous in believing that the more he talks and writes, the more he helps our side.)
And to clarify the record, my main objection to the Tiverton teachers' proposal was that nobody put it into context of the rest of the negotiations. Where, for example, did the union come up with the town's contribution to the HSAs?
His comment above is the usual propaganda from Crowley. As I've suggested: keep up the good work, Pat!
Posted by: Justin Katz at July 30, 2008 11:06 PMAs opposed to coming up with a new way of paying for outrageous health care premiums both parties should be diligently working on cutting health care providers, insurance companies, and drug companies record breaking profits at the expense of policy holders - both individuals and employers.
Posted by: Tom Kenney at July 31, 2008 11:04 AMTom,
Supply & demand. Basic economic principals that are foreign to the Unions and their Entitlement-minded members.
As long as those creating the Demand are being artificially subsidized, the price of what is being demanded will remain artificially high.
And those who don't receive the subsidy will bear the burden of those that do.
And to be clear, those that receive the subsidies are primarily Union hacks.
When a Union hack pays little to nothing in healthcare premiums (do you know anyone like that?), what incentive do they have to care about and react to the high cost of healthcare?
Some day, post bankruptcy, Union members will get a harsh lesson in the Free Market.
By the way, I hope you are lobbying to get you Pension fund to divest from any of those big, bad profit making "health care providers, insurance companies, and drug companies."
Posted by: George Elbow at July 31, 2008 8:25 PM