Single-Payer: Good for Business
by Morton Mintz
The Nation magazine, November
Business leaders complain endlessly that
the current system of private healthcare insurance based on employment
provides fewer and fewer people with less and less quality care
at higher and higher cost. Yet Corporate America turns its back
on a publicly financed system, which, by all indicators, the taxpayers
would willingly support.
Publicly financed but privately run healthcare
for all-including free choice of physicians would cost employers
far less in taxes than their costs for insurance. Universal coverage
could also work magic in less obvious ways. For example, employers
would no longer have to pay for medical care under workers' compensation,
which in 2002 cost them more than $38 billion. Auto-insurance
rates would fall for them-and everyone-if the carriers were no
longer liable for medical and hospital bills. You'd think that
in its own selfish interest, Corporate America would be fighting
to replace the existing system with universal health coverage.
Yet it doesn't lift a finger.
Meanwhile, under the Bush Administration
healthcare coverage steadily shrinks. In 2000, according to the
Census Bureau, 14 percent of Americans didn't have it; in 2003,
15.6 percent--45 million-did not. Actually, 85 million Americans
under age 65 were uninsured over varying periods during 2003-04,
up from 81.8 million in 2002-03, according to Families USA, the
consumer health organization. As more and more Americans become
uninsured, spending on healthcare soars. By 2001 it accounted
for 13.9 percent of US gross domestic product. (It constituted
a much smaller share of GDP in countries with universal healthcare,
such as Sweden, 8.7 percent; France, 9.5 percent; and Canada,
9.7 percent.) Average family premiums in 2005 are projected to
be $12,485, up $1,768 from 2004. The federal Centers for Medicare
& Medicaid Services expects healthcare outlays to rise from
$1.8 trillion in 2004 to $2.7 trillion in 2010, nearly a trillion-dollar
increase in six years. The forecast reflects annual increases
of 14 percent to 18 percent. David Walker, head of the Government
Accountability Office (GAO), the auditing arm of Congress, calls
A simple fact largely explains why spending
bloats while the ranks of the insured thin: Health insurance is
increasingly unaffordable. After rising 38 percent between 2000
and the last quarter of 2003, the costs of providing healthcare
to employees rose 11.2 percent between January and May of 2004,
according to the Kaiser Family Foundation's annual survey of 3,000
companies. "Close to 75 percent of 205 senior-level executives
surveyed [in May] by the Detroit Regional Chamber rank employee
health insurance as 'unaffordable' and 25 percent consider it
'very unaffordable," the Detroit News reported. The Kaiser
Family Foundation says that from 2001 to 2004 the proportion of
workers receiving health coverage on the job dropped from 65 percent
to 61 percent, a loss of 5 million jobs with health benefits.
"Double-digit increases in healthcare
costs are a drag on economic growth' says Henry Simmons, president
of the National Coalition on Health Care, an alliance of groups
working for healthcare reform. They "slow the rate of job
growth," "suppress wage increases for current workers,"
"undercut the viability of pension funds," "put
American firms at a steep disadvantage in world markets"
and produce "severe long-term budgetary problems" for
the federal and state governments,
Two unrelated but mutually reinforcing
reports coming out on a single day, August 19, validate the economic-drag
theory. First. was a study that found a "relationship between
job growth and health-care costs" in eighteen industries
between 2000 and 2003. It was done for the Kerry campaign by Sarah
Reber, assistant professor of policy studies at the University
of California, Los Angeles, and Laura Tyson, dean of the London
Business School and former head of President Clinton's Council
of Economic Advisers and National Economic Council. The evidence,
the authors write, "suggests that employers have reduced
hiring in response to rising health insurance premiums,"
and that rising premiums have led to a deterioration in the quality
of jobs. In industries where health-insurance benefits accounted
for a comparatively large share of total employee compensation,
job growth was slower than in industries where they accounted
for a smaller one. Thus, in the accommodation and food services
industry, "benefits constituted about 12 percent of total
compensation for workers... and jobs grew...by about 2.5 percent.
In manufacturing... the benefits share was 18.5 percent and job
losses topped 18 percent." [Emphasis in original.]
This picture was reinforced by a New York
Times article based on "government data, industry surveys
and interviews with employers big and small." It said:
A relentless rise in the cost of employee
health insurance has become a significant factor in the employment
slump, as the labor market adds only a trickle of new jobs each
month despite nearly three years of uninterrupted economic growth
.... employers big and small... remain reluctant to hire full-time
employees because health insurance, which now costs the nation's
employers an average of about $3,000 a year for each worker, has
become one of the fastest-growing costs .... Health premiums are
sapping corporate balance sheets even more than the rising cost
Reacting to rising expenditures on insurance,
corporate managements cut back on employee health benefits, triggering
worker unrest. Consider the five-month strike against supermarket
chains in Southern California-the longest in the industry's history.
It left about 60,000 union workers jobless, and it seriously hurt
the owners as well. The central issue-in a state where half of
all personal bankruptcies are related to medical bills-was the
demand by Safeway, Kroger and Albertsons that members of the United
Food and Commercial Workers (UFCW) union pay much more for health
benefits. The settlement, reached last February, sent a grim message
to grocery workers everywhere.
The strike "would not have occurred
if we had a system of universal healthcare coverage," Greg
Denier, assistant to the international president of the UFCW,
told me. "All of our strikes in the past decade have occurred
because of the absence of universal healthcare." Moreover,
universal health coverage would have narrowed the wide gap in
operating costs between the unionized chains and nonunion competitors,
particularly 800-pound gorilla Wal-Mart. Unlike the chains, the
world's biggest retailer charges so much for miserly health insurance
that more than 60 percent of its poorly paid employees (averaging
$8 an hour) don't buy it. Denier saw the strike as a symptom of
"the slow-motion collapse of the employment-based healthcare
Lawyer Harry Burton represented Safeway
and Giant Food in subsequent negotiations with the UFCW in the
Washington, DC, region. Speaking "as an individual,"
he essentially agreed with Denier. Universal health insurance
would have "a profound effect" not just on the supermarket
industry but "on nearly all collective bargaining,"
he told me. Nonunion companies "virtually never" provide
healthcare of the same quality as that provided by unionized competitors,
thus creating "a vast disparity in costs." That's why
a tax-supported national system would result in "a leveling
of the playing field." I asked Burton what explains the resistance
or indifference of employers to universal health insurance. "Very
frequently it's ideology," he replied.
Business leaders worship marketplace ideology
"almost like religion," says Raymond Werntz, who for
nearly thirty years ran healthcare programs for Whitman Corporation,
a Chicago-based multinational holding company. "It's emotional."
In 1999 Werntz became the first president of the Consumer Health
Education Council in Washington, a program of the Employee Benefit
Research Institute, a nonprofit, nonpartisan group. He saw it
as his mission to try to persuade employers to face the "huge,
huge" issue of the uninsured because, he told me, "business
has to be involved with the solution." The problem that emerged
was its "unwillingness to even think about a solution."
Last year, after funding ran out, a disappointed Werntz became
the council's last and only president.
Publicly financed universal health insurance
comes in different forms. For Americans, however, none should
hold more interest than single-payer. It's "one and the same
thing" as Medicare for everybody, Werntz told me. Does the
Corporate America that's happy with Medicare understand this?
I asked. "It's a dialogue that hasn't happened yet,"
he replied. "My life for four years was trying to get business
people in a room with single-payer people. I couldn't do it."
CEOs of large corporations see it as something "that smacks
of socialism," Werntz said, and therefore as "heresy."
Somehow, they don't see Medicare as heresy.
Yet it's largely why the tax-financed share of US health spending
is "the highest in the world," according to Drs. Steffie
Woolhandler and David Himmeistein, associate professors at Harvard
Medical School and founders of Physicians for a National Health
Program. Writing in the July/August 2002 issue of Health Affairs,
they put the share at 59.8 percent. No wonder: Federal tax revenues
pay for Medicare, Medicaid and the medical-care systems for the
military, the Veterans Administration, federal employees and Congress;
income-, sales- and property-tax revenues buy coverage for state
and local public employees. Taxation also hugely subsidizes health
insurance while benefiting mostly "the affluent' the authors
In 1991 the GAO made a stark finding regarding
singlepayer's benefits: "If the universal coverage and single-payer
features of the Canadian system [had been] applied in the United
States" in that year, "the savings in administrative
costs"-$66.9 billion "would have been more than enough
to finance insurance coverage for the millions of Americans who
are currently uninsured," the GAO said in a report. The $3
billion left over "would be enough... to permit a reduction,
or possibly even the elimination, of copayments and deductibles."
Early this year, a comprehensive study
published in the International Journal of Health Services reached
this stunning conclusion: "The United States wastes more
on health-care bureaucracy than it would cost to provide health
care to all its uninsured." The authors, Woolhandler, Hinimelstein
and Dr. Sidney Wolfe, director of Public Citizen's Health Research
Group, went on to write: "Administrative expenses will consume
at least $399.4 billion of a total health expenditure of $1,660.5
billion in 2003. Streamlining administrative overhead to Canadian
levels would save approximately $286 billion in 2002, $6,940 for
each of the 41.2 million Americans who were uninsured as of 2001.
This is substantially more than would be needed to provide full
Canada has had a single-payer system for
more than thirty years. (Australia, Denmark, Finland, Iceland,
Sweden and Taiwan also have one.) American executives who have
run Canadian subsidiaries see it as a business boon. Take General
In 2003 its costs of building a midsize
car in Canada were $1,400 less than building the identical car
in the United States (the comparable figures for DaimlerChrysler
and Ford were $1,300 and $1,200). Such savings are no mystery.
Canadian companies pay far less in taxes for health coverage for
everyone than the premiums they would pay under the US system
to provide their employees with comparable benefits.
Highly placed Canadian business executives
affirm that singlepayer nurtures free enterprise. A. Charles Baillie,
while chairman and CEO of Toronto Dominion Bank, one of Canada's
six largest, hailed it in 1999 as "an economic asset, not
a burden." He told the Vancouver Board of Trade, "In
an era of globalization, we need every competitive and comparative
advantage we have. And the fundamentals of our health care system
are one of those advantages." He added: "The fact is,
the free market... cannot work in the context of universal health
care. While health care could be purchased like any other form
of insurance... the risk and resource equation will always be
such that, in some cases, demand will not be matched by supply.
In other words, some people will always be left out." (A
recent report by the World Bank ranked welfare states like Denmark,
Finland and Sweden high in international competitiveness. An author
of the study said, "Social protection is good for business,
it takes the burden off of businesses for health care costs.")
In 2002, top executives of the Big Three
automakers' Canadian units joined Basil (Buzz) Hargrove, president
of the Canadian Auto Workers (CAW) union, in signing a "Joint
Letter on Publicly Funded Health Care." At a press conference
with Hargrove, Michael Grimldi, president and general manager
of GM Canada and a GM vice president, called single-payer "a
strategic advantage for Canada." The joint letter, also signed
by Ford's and DaimlerChrysler's presidents and CEOs, Alain
Batty and Ed Brust, said that while providing
"essential and affordable healthcare services for all,"
single-payer "significantly reduces total labour costs...
compared to the cost of equivalent private insurance services
purchased by US-based automakers" and "has been an important
ingredient" in the success of Canada's "most important
export industry." The Toronto Star explained how the CAW
used "credible corporate data" to quantify "the
competitive advantage that [single-payer] provides to the Canadian
auto industry. The union compared the hourly labour costs of vehicle
assembly in Canada and the United States. The Canadian rate, including
wages, benefits and payroll taxes, was $29.90 per hour. The American
rate was $45.60. (All figures are in US dollars.) Healthcare accounted
for more than a quarter of the difference. It saved Canadian employers
$4 per hour per worker." Monthly health-coverage costs for
Canadian employers average about $50, mostly for items such as
eyeglasses and orthopedic shoes; health-insurance costs for US
employers average $552, the Washington Post has reported.
The rising cost of health benefits is
the biggest issue on our plate that we can't solve," Ford
CEO William Clay Ford told a 2003 conference of Michigan business
executives. "Healthcare is out of control-it's a system that's
broken." Last year the company spent $3.2 billion on healthcare
for 560,000 employees and their dependents and surviving spouses,
or more than six times net profits of $495 million. William Ford
urged a national solution and assigned vice chairman Allan Gilmour
to craft a proposal. Early this year Gilmour told fellow industry
executives that high healthcare costs have "created a competitive
gap that's driving investment decisions away from the US."
He told a subsequent investment conference, "We're going
to have to have a national solution," only to add, "That
national solution does not mean, necessarily, national healthcare."
Why not? He didn't say.
After Jack Smith, president and general
manager of GM Canada, became president and CEO of the parent company,
an ad in the New York Times placed by single-payer advocates in
1994 quoted him as saying, "I personally favor single-payer."
Now, however, GM "does not support" it, spokesperson
Doris Powers told me. Because? "Much has changed in health
care since Smith... made statements about universal, single-payer
healthcare." What's changed? She didn't say.
A General Motors that hugs single-payer
in Canada would seem to have compelling reasons to hug it here.
GM covers healthcare costs for 1.1 million Americans. Last year's
bill was $4.8 billion-$I billion more than earnings. In its third-quarter
report the company reduced its 2004 earnings forecast because
rising US healthcare costs were hurting profits. GM'S projected
costs for providing healthcare benefits to current and future
retirees is $63 billion, a burden immensely heavier than is carried
by competitors based in universal-coverage countries, the New
York Times reported in September. Yet, as the Detroit Free Press
has noted, GM "has set aside less than $10 billion for that
In 2001 GM was reeling from a prescription-drug
bill up to 22 percent above 2000's $1.1 billion. "Prescription
drugs are the fastest-growing part of GM'S health-care costs,
accounting for more than 25 percent of its total medical spending
last year," Newsweek reported. GM was "seeing red"
because in 2000 it had spent $52 million just for Prilosec, a
brand-name ulcer medicine. "That is millions more than GM
executives believe they should have spent' the magazine said.
"They blame much of the extra cost on savvy marketing by
Prilosec's maker AstraZeneca." GM is fighting back with an
"aggressive plan to curb drug spending," Newsweek continued.
"Point man" James Cubbin "has been taking his case
to senior executives at some of the nation's largest drug makers,
But Newsweek-and Powers-missed an embarrassing
part of the story. AstraZeneca chairman Percy Barnevik joined
GM's board in 1996, while Smith was GM's chairman. Pfizer executive
vice president Karen Katen followed in 1997, and the noses of
both of these price-gouging drug companies are still in GM's tent.
Surprise: The pharmaceutical houses "aren't backing down,"
Newsweek said. Rather than going hat in hand to pharmaceutical
executives, Canada uses single-payer's price controls to cap drug
prices. In two other universal-coverage countries, Australia and
New Zealand, pharmacies charge 20 per- cent to 30 percent less
than in Canada, the Wall Street Journal reported in July.
Unlike GM and Ford, DaimlerChrysler supports
single-payer. "A lot of people think a single-payer system
is better," vice president Thomas Hadrych told the Washington
Post. Since 1990 Chrysler-and DaimlerChrysler after the merger-has
regularly endorsed it, in a letter appended to its contracts with
the United Automobile Workers.
No matter how urgently needed, no matter
how commonsensical, no matter how much bottom lines would be fattened,
single-payer or other fundamental healthcare reforms stall unless
backed by the business organizations that govern the government.
The Clinton Administration learned this to its sorrow after proposing
its complex, comprehensive plan.
Business organizations "effectively
killed the bill:' Walter Maher, former vice president for public
policy of DaimlerChrysler, wrote last year in the American Journal
of Public Health. The bill aroused formidable opposition from
businesses such as fast-food chains like McDonald's. It mostly
hired young people, worked them less than full time, paid them
little and provided scant if any health coverage. Of the PepsiCo
chains' hourly employees, a survey indicated, 71 percent were
covered by someone else's health insurance. If that someone was
a parent employed by, say, an automaker facing global competition,
the manufacturer was effectively subsidizing chains that had no
such competition. Free-riding defeated a primary goal of the bill,
which was to spread healthcare costs throughout the economy by
letting no employers escape paying their fair share.
The bill received a big boost when the
US Chamber of Commerce and the National Association of Manufacturers
(NAM) let pragmatism trump ideology and endorsed it. And the mighty
Business Roundtable (BRT), an association of 150 CEOs of the country's
biggest corporations, with multi-trillion-dollar revenues, was
"at least prepared not to oppose" the mandate, Maher
said in the article.
But insurers and other businesses that
profited from preserving the healthcare status quo exerted fierce
counterpressures. The Chamber "suddenly reversed course and
totally rejected the Clinton Plan:' Maher wrote. The NAM abruptly
withdrew its endorsement six weeks after granting it. At the BRT
several politically powerful members, including the CEOs of eight
major and a few lesser pharmaceutical manufacturers, and of a
dozen insurers and healthcare providers, opposed the bill. It
got only a single vote - Chrysler', Maher told me. "It's
definitely fair to say that CEOs are very reluctant to take unpopular
positions against their colleagues in the BRT," he added.
"If a huge majority of them are staunch conservatives who
have no interest in health reform, or in using the government
to control costs, or to expand coverage, or even to moderate health
costs using regulatory tools, it'll be a rare CEO who will want
to take on his CEO buddies. That's absolutely true."
Today, BRT executive director Patricia
Hanahan Engman contends that "public financing cannot provide
the same level of quality doctors, hospitals and prescription
drugs generated by the competition inherent in the private market."
She should tell that to GM president and CEO G. Richard Wagoner
Jr. Judged by sixteen top health indicators, he said in June,
the United States ranks twelfth among thirteen industrialized
countries. "It will be a cold day in hell when the BRT leads
the charge for universal health coverage in the United States,"
Maher told me.
If the Democrats win the White House arid
take control of Congress, John Kerry could pass his employer-based
healthcare plan, which calls for expanding coverage to nearly
95 percent of Americans, including all children, and for a federal
insurance pool that would pay 75 percent of "catastrophic"
illness bills. Crucial elements might survive even if the GOP
continues to control the House-mainly because of forceful backing
from pragmatic business leaders. For example, the Chamber of Commerce
signed on early to Kerry's pool idea, calling it "a seed
for bipartisan reform." In late October the New York Times
reported that the Chamber was acclaiming the idea as "a worthy
concept, an excellent use of federal tax dollars:' while some
Senate Republicans are pushing it, and "lawmakers and lobbyists
say that regardless of who wins the presidential election, Congress
will soon take up the idea." To be sure, Kerry's scheme may
face attacks by the usual suspects and the lawmakers they buy.
One influential critic, the National Business Group on Health,
has more than 200 members, including at least a dozen drug and
medical-device manufacturers plus three dozen healthcare providers
and insurers. A Wal-Mart vice president sits on its board.
Advocating universal health coverage while
the GOP controls the White House and Congress would be "tilting
at windmills," DaimlerChrysler's Dennis Fitzgibbons told
me. Maher said any industry subject to government regulation "has
got to be concerned about irritating the regulator:' meaning the
Bush Administration. A single-payer reform proposal, by seeking
to eliminate the insurance industry, he warned
in his article, would make it and many
other businesses "instant and unnecessary opponents."
He recommends other forms of tax-financed universal health coverage
that would use the industry. An example would be a system in which
employer! employee payroll taxes would finance coverage for the
working population, with employees offered several choices of
health plans, as the Federal Employees Health Benefits Plan does.
A Medicare equivalent would provide for the elderly and nonworking
"I don't believe [single-payer] will
be achievable in my lifetime," says Ron Pollack, executive
director of Families USA. Ideologues "will never support
it." Industries heavily invested in the present system "will
spend every last dollar to stop it." He recognizes that on
"a blank slate:' employer-based coverage "absolutely"
makes no sense. But "in terms of political feasibility,".
trying to dismantle the present system would make matters "much
worse:' he told me. "The most important thing is the achievement
of affordable, high-quality health coverage for everybody."
To him, the crucial question is: "At what point are we willing
to say that there's a higher principle in truly moving toward
universal coverage than in knocking our heads against a stone
wall, in absolute frustration about a methodology [single-payer]
that is not going to be achievable in our lifetime?"
Surely in a Republican Washington the
prospects for publicly financed universal health insurance are
remote. But Washington isn't everywhere. Deborah Richter, a Vermont
physician, believes it could still be enacted in every state.
As president of Vermont Health Care for All, she's been campaigning
to that end in her own state for five years, with impressive results
[see sidebar, page 20]. Universal access to affordable, high-quality
healthcare should be conceived "as a public good, as are
roads, education, and police and fire protection," she says.
Making it "a practical issue works. Trying to win support
for it by making it a moral issue never works." By resisting
the merger of practicality with morality that universal health
care embodies, Corporate America is blowing a supreme opportunity
to do well by doing good. Enlightened self-interest this is not.
Morton Mintz is a former Washington Post
reporter and a former chair of the Fund for Investigative Journalism.