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.