Monday, November 26, 2012
Pincers in Pittsburgh
I winced when I read about the Community College of Allegheny County telling its adjuncts that it would cap their hours in order to avoid penalties under the Affordable Care Act. The commentary over the next few days was predictable: conservatives saying “I told you so,” and everyone else saying that this is just another example of evil administrators running a college like a business.
I think there’s a more useful way to read the story.
The original IHE article noted -- though nearly all commenters ignored -- that the state of Pennsylvania cut CCAC’s appropriation by about ten percent from last year to this year; in dollar terms, the cut was over two million dollars. According to a story on Marketplace last week, the cost of the additional benefits would have been about six million. Between the two, that’s an eight million dollar pincer movement in a single year, out of a total state appropriation of twenty-three. That’s a catastrophic shift, and it’s unreasonable to assume that the college leadership could have swallowed it if they had just tried harder.
That said, though, it’s also true that people need health insurance.
I don’t know anyone personally at CCAC, so I can’t comment on them as people. But I get their dilemma. An enormous unfunded mandate hits at the exact same time that an already-lean budget gets cut even more. There’s nothing pretty about that.
The real issues, for me, are twofold. First, you can’t just keep dumping mandates on colleges while simultaneously cutting their appropriations. The math doesn’t work. That should be obvious, even though few people bother to connect those dots.
Secondly, though, the entire system of tying health insurance to employment is broken. That’s where the energy should be focused.
Nobody ever designed the system of employer-provided health care. It was an accidental outgrowth of wartime wage and price controls; since employers were legally forbidden to compete on salary, they chose instead to compete on benefits. By the time Truman got around to proposing national health insurance, there was enough employer-provided insurance out there that it didn’t seem necessary.
The system kinda, sorta worked for a brief time, when full-time employment was the norm and the economy was growing rapidly. But Baumol’s cost disease is insidious, and as it combined with a slowdown of overall growth and the weird economics of private health care, what had been a fairly ancillary cost quickly became a major one.
Now, health insurance is a serious cost, and its rate of inflation is far beyond most of the rest of the economy. Employers have responded by trying to minimize the cost, whether by overworking salaried employees -- thereby amortizing each premium over more output -- or by creating second tiers of employees who don’t get insurance through work. There’s a reason that Manpower is the largest private employer in the United States.
It’s easy to scream at CCAC for failing to conjure an ongoing eight million dollars a year. But I haven’t seen anybody seriously propose how it would.
No. The better answer isn’t indignation at people who can’t invent money. It’s decoupling health insurance from employment altogether. It’s single-payer insurance, funded by progressive taxes.
Freed from having to maintain a bright line between “part-time” and “full-time,” employers would be able to make more thoughtful accommodations for life/work balance. Pro-rating salaries would be much easier, too, with health insurance out of the picture. (That’s why Canadian colleges are able to be much more progressive on these issues than their American counterparts.) Better still, people would be able to start their own businesses without fear of losing insurance, which is a major issue now. (At my last college, several staffers told me that they stayed on the job because their husbands, who had their own businesses, needed the insurance. That drove up costs for the college, but it made sense individually.)
The tragedy of CCAC is that it isn’t a morality play at all. Everyone involved is doing exactly what their incentives are telling them to do. The tragedy is that the incentives clash, and create a horrible no-win situation. If you want health insurance for everybody -- which I do -- then you have to pay attention to how to make it fiscally sustainable. Blaming the college for trying to survive a vicious pincer movement misses the point. The point is that it shouldn’t have to.
After reading "How American Healthcare Killed my Father" and John Cochrane's "After the ACA: Freeing the Market for Health Care," I'm increasingly convinced that the way we use health insurance is more of a problem than a solution, and we'd be better off moving to a system in which insurance is only there for genuinely catastrophic events. But instead we have an insurance system that distorts pricing and payments while not actually covering anybody. Innumerable businesses and institutions get caught in the crossfire.
I think that one of the primary reasons why there are so many part-time positions in academe is due to this health-insurance problem. If we could somehow decouple medical insurance from employment, this would get an enormous monkey off the backs of college and university managements, and I think that there would be a sudden burst of full-time hiring. In addition, it would produce a sudden boost in the American economy in general.
Corporate managements tend to be very Republican in their orientation, where they picture the world as being a free-enterprise hypercompetitive environment reminiscent of an Ayn Rand novel, one that involves just a few bold innovators with the rest of us being parasitic takers. But if we could persuade them that it is in their own economic interests to lobby for a single-payer medical insurance system, we might actually get such a system.
I heard Ben Carson speak and he clearly and smartly explained jseliger's comment of catastrophic insurance. It actually made sense.
Corollary: You also can't keep dumping mandates on private businesses while simultaneously increasing their taxes.
Same result, no full-time entry level jobs anywhere.
Single-payer health insurance might work if it really was insurance, of jseliger's catastrophic sort above. The killer problem is that we converted from true insurance to full health cost coverage, with tons of freebies, which is just impossibly expensive. You'll never collect enough in taxes to provide that to everyone.
You can't pursue policies for limiting economic growth and expanding government benefits at the same time, something will crash. What is crashing so far is employment prospects for the young.
And yet, somehow, some way, countries that do have single payer insurance manage to have functioning economies complete with a private sector. Taxes happen, it's true, but the economy is already paying for coverage - as DD points out, it's about making the incentives work in as many places as possible. There are private businesses that do well up here in Canada. We seem to have somewhat fewer Epic Tax Loopholes that give high earning corporations 'get out of taxes free' cards.
Does everything work Panacea-perfect? Nope. Does it work pretty well? Yup. The argument that you kill the economy with taxes just simply isn't supported by the past 60 years of global data. The world is more complex than that.
Of course, this assumes the exchanges work out as intended, although results will probably vary substantially from state to state.
Uh . . . no? Because the private businesses aren't a closed system like the colleges? If the combination of mandates and taxes produces a more efficient, effective economy as a whole, businesses can trivially pay more taxes. It's not like anyone is suggesting that we should revert to 1900 per-capita taxation in real dollar terms. Why would we? Extensive real-world experience shows that we can sustain a far higher standard of living with the current social contract.
Thanks for confirming once again, though, that conservatives both pine for a poorer America and aren't capable of basic mathematics. That's important information for the American polity, and you should be commended for so regularly providing it.