Universal health care would be a boon to the free market
Robyn Blumner
Salt Lake Tribune
11/12/2007
Rudy Giuliani has been called ”Bush with brains” by those who fear that the former New York City mayor shares a penchant for unbridled executive power. But the Republican presidential primary frontrunner seems to have a screw loose when it comes to campaigning. His attack of Hillary Clinton’s health care proposal with the bugaboo of European-style ”socialized” medicine is not only full of factual holes, but it will surely bite him in the butt if he makes it to the general election.
Americans were taken in by health insurance industry foils Harry and Louise the first time Clinton offered this country decent health care reform, but they won’t be fooled again. If Giuliani wants to make this election a referendum on America’s health care system, he’s going to flame out faster than a hospital can dump an uninsured patient.
Polls regularly show that Americans are disgusted with the current state of affairs. In a 2007 CBS News/New York Times poll, nine in 10 respondents said the U.S. health care system needs fundamental changes and two-thirds said it was up to the federal government to guarantee that all Americans have health care coverage.
If the next president does nothing else but add this country to the pantheon of advanced nations that provide universal coverage, it will be a successful tenure, one that will be remembered fondly by generations to come, like that of FDR for Social Security and LBJ for Medicare.
But guaranteed health care will not only serve to relieve the anxieties of tens of millions of American families, it will also be a shot of adrenaline to our economy. Giuliani is so busy offering dissembled statistics on how lethal England’s health care system is to men with prostate cancer, he fails to see just how free-market-friendly universal coverage would be. (And as I was just in England, Mr. G., I can tell you that no one I asked would trade their national health service for America’s system.)
Economists and business leaders talk about a phenomenon called ”job lock,” when a person stays in a job primarily due to its attendant health benefits. Maybe they’re stuck because one of their children has a pre-existing condition that won’t be covered right away by a different insurer. Maybe it’s because they take expensive prescription drugs that may not be on the formulary of another employer’s plan.
Whatever the reason, this tethering of an employee to his job reduces job mobility by about 25 percent, says Brigitte Madrian, professor of public policy and corporate management at the Kennedy School of Government at Harvard University.
”The economic cost of job lock is that individuals do not move to jobs where they could be more productive,” Madrian says. ”Job change is part of the engine of economic growth.”
In a Business Week article earlier this year, Kelly Services Inc. chief executive Carl Camden echoed Madrian’s sentiments, saying that, increasingly, people ”don’t leave a job even though they’re unhappy and would be more productive somewhere else” because they feel they have to cling to their employer’s health coverage.
”Nobody worries when they leave one job to go to the next that their Social Security will be interrupted,” Camden told Business Week.
And then there is the entrepreneurial energy that would be unleashed if people felt free to leave their big company jobs in order to invest in their own ideas. A recent study conducted by Philip DeCicca, an assistant professor of economics at McMaster University in Hamilton, Ontario, suggests that there is pent-up entrepreneurialism in the U.S. that is being held back by the prohibitive cost and unavailability of individual health coverage.
DeCicca’s ”Health Insurance Availability and Entrepreneurship: Evidence from New Jersey” looked at the differing rates of self-employment among residents of New Jersey and Pennsylvania. New Jersey was of particular interest because in 1993 it established a program that guaranteed individuals access to renewable health insurance, with a community rating on premiums. The program allowed for a decoupling of employment and health coverage with rates based on a large group.
DeCicca found that New Jersey’s program increased self-employment among various populations ”by roughly 15 to 25 percent.”
Employer-sponsored health insurance is a historical accident that is now crippling American competitiveness. We’ve all heard by now that health care adds $1,500 to the cost of every General Motors car.
All this is to suggest that, from a macroeconomic perspective, universal coverage would not weaken the free market as Giuliani asserts, but rather bolster and energize just about every aspect of it.
And if you’re one of those employees stuck in a miserable job year after year for the health benefits, Giuliani has good new for you: At least you aren’t likely to die of prostate cancer.
—ROBYN BLUMNER can be reached by e-mail sent to blumner@sptimes.com.