© 2008 Delmar Cengage Learning. Chapter 13 Employers and Health Care: A Sick Business Cathy Jo Martin

© 2008 Delmar Cengage Learning. 2 The Central Paradox of Private Welfare Provision Private firms seek to maximize efficiency, while welfare schemes seek to ameliorate the conditions of the least fortunate –And, therefore, least “efficient” Employer-sponsored welfare benefits thus effectively subsidize the “inefficient”

© 2008 Delmar Cengage Learning. 3 “Welfare Capitalism”: Cause and Effect of the Failure of National Health Insurance

© 2008 Delmar Cengage Learning. 4 “Welfare Capitalism” and NHI Private health benefits serve to plug holes left by incomplete system of public benefits

© 2008 Delmar Cengage Learning. 5 “Welfare Capitalism” and NHI At the same time: –Rise of private system prompted the development of a vast array of vested interests –Have served to stymie attempts to expand coverage nationally

© 2008 Delmar Cengage Learning. 6 “Patchwork” nature of benefit schemes has imposed inflationary pressures on health care system as a whole

© 2008 Delmar Cengage Learning. 7 A Patchwork Knit with Inflation Business initially placed faith in managed care as panacea to rising health care costs As market matured, big employers lost leverage over plans to negotiate discounts –Costs continued to rise

© 2008 Delmar Cengage Learning. 8 A Patchwork Knit with Inflation Many firms stopped offering coverage The hospital visits of the uninsured, in turn, feeds back into the system in the form of inflation

© 2008 Delmar Cengage Learning. 9 Local business-state coalitions have formed to bring about lower health care costs, with limited success

© 2008 Delmar Cengage Learning. 10 Coming Together: Coalitions for Cost Control In some cases –Business banded together in attempt to squeeze productivity gains through quality controls, leverage lower prices

© 2008 Delmar Cengage Learning. 11 Coming Together: Coalitions for Cost Control In others: –State government organizations leaned on local businesses to unite in the name of lower health care costs

© 2008 Delmar Cengage Learning. 12 Coming Together: Coalitions for Cost Control As in the case of managed care: –Most such schemes led to cost shifting, and not cost reduction, causing continued increases in overall health care costs

© 2008 Delmar Cengage Learning. 13 With equally limited success, big business has lobbied for national health care reform

© 2008 Delmar Cengage Learning. 14 Employers and National Reform Many representatives of big business initially supported Clinton reform plan Incremental nature of plan led firms to calculate just how much they stood to gain or lose relative to other companies –Support soon evaporated

© 2008 Delmar Cengage Learning. 15 Employers and National Reform National Chamber of Commerce blasted by conservative Republicans for initial position on reform

© 2008 Delmar Cengage Learning. 16 Employers and National Reform Post-Clinton reforms: –Businesses have continued to be divided when it comes to reform –Have formed a series of national coalitions in attempts to address the issue

© 2008 Delmar Cengage Learning. 17 Chapter 13 Summary Paradox lies at the heart of private employer-based welfare provision Development of “welfare capitalism” –Kept (public) national health insurance from emerging –While also serving as an effect of the lack of a public safety net

© 2008 Delmar Cengage Learning. 18 Chapter 13 Summary Employers have tried many cost- containment schemes –Changing the health care landscape in the process

© 2008 Delmar Cengage Learning. 19 Chapter 13 Summary Local coalitions have enjoyed some success in reforming health care in the community –Though such groups have failed at the national level Business community has attempted to push reform through national legislation –With little success