The Shark in the Free Care Pool

August 6, 2004 2:52 PM

The Freeloader Registry. When an employer pays low wages and doesn't provide health care benefits, its employees often end up getting free care through state and federal programs. How much does this cost you, and which companies benefit from the practice? A new Massachusetts state law will provide detailed information about top corporate welchers. (This follows recent discussion of the topic in the context of Wal-Mart.) Via Good Jobs First.
posted by alms (21 comments total)

Good for Massachusetts. More people should realize that we're already paying for everyone's health care, just not very efficiently. (And businesses need to realize that if we're going to have an employer-based system, and some employers don't pay for it, those that offer it are essentially subsidizing the ones that don't.)

Also interesting: a Business Week article claiming that CostCo's practices (paying workers more, offering health benefits) make it more profitable. They attract better workers, harder-working, more dedicated, have less employee turnover, and therefore, less training costs.

And finally, Wal-Mart says that the crisis "requires a national solution".
posted by gramcracker at 3:54 PM on August 6, 2004

From the other direction, what sympathy should you get if you go into Wal-Mart, pay for one pair of shoes, but expect to get two pairs of shoes for the price of one?

The original purpose of Social Security was as a federal retirement system for individuals who worked at what are now called minimum wage jobs. Part of their wages were to be set aside to provide them minimum retirement, whether or not they wanted it, so instead of sending them to "the county poor house", they would have some small resource for themselves.

The original purpose of Medicaid was much the same thing, to provide health care for lowest-tier workers and their families.

What hasn't changed in the equation is the belief by economists that corporations that hire enormous numbers of people are unable to provide the vast amounts of money needed for retirement and health care. For this reason, Social Security and Medicaid still flourish, though strong doubts exist as to their long term viability.

Health care is just the current hot potato. Truthfully, I cannot condemn anyone, government, business, or insurance companies, for not wanting to take on the open ended responsibility of paying for double-digit increases in health care every year.

Even if business tripled the minimum wage it pays, employees couldn't get health coverage on their own, even in group plans. "Company health plans" have just died because of the cost. Insurance underwriters insist on huge principal (premiums) from anyone. And finally government is terribly frustrated at stemming the tide of inflation.

The eventual outcome without socialization is straightforward: a "rationing" of medical procedure for the people least able to afford medical care. But neither cruel nor irrational. A listing is made of medical procedures, with the most effective and least expensive at the head of the list, and the least effective and most expensive on the bottom. By prohibiting the bottom half dozen terribly expensive *and* ineffective treatments, vast resources are freed up for treatment and prevention.

Though there are numerous problems in the health care system, this is the fastest and easiest way to stabilize costs, while the other problems are being resolved.
posted by kablam at 3:58 PM on August 6, 2004

Anything that helps the public see what a fucking parasite WalMart is can't be a bad thing.

gramcracker, I remember that article, it mentioned that investors preferred WalMart because they didn't spend so much to keep their employees happy which means they profit more but have more turnover.

I never hear about job openings at CostCo because its a great place to work. WalMart sucks and it sucks doubly because they foist their expenses on the places where the stores are even though they brought in nearly $300 BILLION in 2003. The biggest company on the planet can't afford to provide health care for their employees? Yuh!
posted by fenriq at 4:33 PM on August 6, 2004

So, they plan to list all businesses, yes?

How many single owner mom and pop stores are there in Mass? This list will tell us shortly.
posted by shepd at 4:34 PM on August 6, 2004

Read the link, shepd, and you might have caught that they're only talking about companies with 50 or more employees.

I'd be interested to see this done nationally so we can know for sure which companies are suckling at the free teat of local government and passing on the savings to their stockholders.
posted by fenriq at 5:09 PM on August 6, 2004

I heard a story on NPR the other day about some people out in California are concerned about WalMart's incursions there because of the impact upon state health care costs.

One solution would be Federal legislation requiring businesses with more than say 50 employees to provide a certain minimum level of health benefits to all employees.
posted by caddis at 5:35 PM on August 6, 2004

caddis: that's what SB 2 does in California, more or less.
posted by gramcracker at 5:36 PM on August 6, 2004

Fenriq, you're unfairly disregarding shepd's point, which is that the mom-and-pop retailers with whom (among others) WalMart competes and (sometimes) drives out of business also rarely offer fringe benefits to their employees.

Although, really, it's not so much a defense of Wal-Mart's own practices, since CostCo and the big supermarket chain do manage to offer benefits, as it is a critique of the "big box bad, Mom-and-Pop good" meme.
posted by MattD at 6:14 PM on August 6, 2004

Ah, I hadn't seen it that way. Its a good point too.
posted by fenriq at 6:19 PM on August 6, 2004

I think a Federal solution would work better than SB 2 mainly for the reason that if one state does it and others do not it makes that state a less attractive place for business. If the business were WalMart many Californians, both liberal and conservatives, would be happy to do without them. However, if this prevents manufacturers from moving in and providing jobs, or encourages their movement to say Utah, then it hurst California overall. A Federal law imposes the burden upon all business locations. I see the issue as being no different than the minimum wage, except that now the minimum wage includes a health benefit.
posted by caddis at 6:20 PM on August 6, 2004

kablam, you recognize it's a problem, but don't see why it's a problem? Why is it too expensive for employers to provide health care for their employees?

And rationing healthcare happens already, every time an HMO denies coverage or approval for a procedure.

We have to have national health care--it'd be cheaper for everyone concerned, and we wouldn't have 40+ million people going without, straining local hospitals/emergency rooms even more than they were already.

And we need to do lists like this nationally--except there's not enough server space to list them all.
posted by amberglow at 6:21 PM on August 6, 2004

Most claims that "employers can't afford it" are bogus. Large businesses, can afford it if they're worth their salt. Businesses have had to battle against regulations for centuries, and the succesful, highly-profitable ones are the ones that manage to survive regulation. The weak businesses are the ones that kick and scream and avoid their social contract. If we're talking dog-eat-dog economics here, then make employee health plans mandatory and let the businesses that "can't afford" them fail - let survival of the fittest apply to the other side of the equation for once.

Except those businesses won't fail. Belts will have to be tightened, the CEO's Lear Jet might have to miss out on it's yearly paint job, shareholders might see a couple of percent lower dividend, but stable, worthy companies will survive.
posted by Jimbob at 7:04 PM on August 6, 2004

fenriq: Their gross *revenue* was around 300 Billion. Their *gross profit* was around 60 Billion. Their *net profit* was around 9.2 Billion. So, if Wal-Mart spends its entire net profit on health care for its 1 Million employees, that works out to about $9,200 per person, per year.
"Well, that's reasonable for health care", you might say, except that every penny of that money is already owed to someone else. Namely the people who invested in Wal-Mart in the first place, so it could hire those 1 Million people; on the assumption that they would be paid interest on those loans, also known as dividends on the stock they purchased.
In other words, Wal-Mart can't afford it. No corporation that employs lots of low-wage employees can afford it--low wage employees just don't raise the kind of income that can support those benefits. Salaried employees are supposed to be that profitable--which is why they often have company health care.

amberglow: I disagree. There is a difference between good rationing and bad rationing. People who can afford good health care should be allowed to pay for that good health care. But people who cannot afford good health care should only be denied *frivolous* health care--that is, health care that is *both* ridiculously expensive and doesn't work.

Right now, in the closest thing to National Health Care that the US has, stupid health care is taking place. For example, on the public dole, you can't get a tooth filled--it has to be pulled--because pulling is faster and cheaper.
One of the reasons for this is that Counties still subsidize health care that doesn't work, but is intolerably expensive.
For example, they will pay half a million dollars *trying* to care for extremely premature infants with almost no chance to survive. Were they to use that money to pay for prenatal care for *hundreds* of poor women, there would almost never *be* such radically premature infants.

Forcing everybody on a National Health Care system just pushes everybody into a rotten level of care. With *less* government in the system, things do get better. Right now, doctors are leaving HMOs to set up pay-as-you-go clinics: no insurance, no government, no paperwork, and at *half* the price. You pay by cash, check, or credit card at the time service is rendered. People love it.

The trick for caring for the poor is not integration, it is specialization. Tailoring the service to serve the greatest number at the least cost. For example, back to teeth.

Teeth are the gateway to health--if a person's teeth are ill cared for, the person's overall health suffers. So with a population of people prone to dental problems, it may sound silly, but you can fend off many problems in a few years by emphasizing dental care. Even overdoing it with dental propaganda and free toothpase and toothbrushes is *very* cost effective--but only for the poor.

Their other problems are often just peripherally medical, such as violent crime, addiction to alcohol, drugs and gambling, and most of all *ignorance* about health care. But these are not problems found as much in the middle classes or the wealthy. They have their own problems.

But *smart*, rationed (previously defined) health care is efficient enough to address these seemingly peripheral problems as "para-medical" ones--but ones *nobody* would usually pay for, and certainly wouldn't be available for treatment as "medical" problems by some bureaucrat, be they in an HMO, or in the government.
posted by kablam at 7:18 PM on August 6, 2004

... There is a difference between good rationing and bad rationing. People who can afford good health care should be allowed to pay for that good health care. But people who cannot afford good health care should only be denied *frivolous* health care--that is, health care that is *both* ridiculously expensive and doesn't work. ...
But people are being denied non-frivolous, needed health care now, and the people that can afford to go out-of-plan and pay themselves do so already. Do you really think millionaires go without a treatment if their hmo says no? We already have a multi-tiered, rationed system in place, and more and more people are falling out of the lower tier of coverage (hmo, and other employer-paid plans) into the no-coverage tier of emergency rooms and no dental care. Don't those millions of people deserve anything? Most of them are working, and contributing to our society. It's a sin, and we deserve better--What if we treated education the way we treated healthcare? What would that mean for our society? Just as educated people are good for the country, healthy people are good for the country.
posted by amberglow at 7:27 PM on August 6, 2004

oh, and those "para-medical" things are covered in the higher-tiers of our existing system--even the worst hmo has some sort of token mental-health coverage, or addiction-treatment options.
posted by amberglow at 7:29 PM on August 6, 2004

kablam, health care costs are a tax deductible expense and thus paid out of gross profits not net profits. Your assumption that the money is already owed to somebody else is similarly false. It is not "owed" it is the owner's (shareholder's) profit; it is optional. I still agree that with their current model they can not "afford" it as their current business model assumes low labor costs per dollar of sales, perhaps the lowest in the industry. Paying for more insurance would raise those costs, change their model and may well result in them having less employees. We can then argue as to whether it is better to provide more jobs having no health benefits or to provide less jobs but those jobs having health benefits.
posted by caddis at 7:48 PM on August 6, 2004

The thing is, Healthcare costs are skyrocketing (outstripping inflation by far) for businesses that do provide it, and you get less for your buck. The company I work for used to be self insured, now we have HMO's and the employees pay 20% of the premiums. There have been companies that have dropped health insurance for retirees because it costs too much, and I am sure my company is probably thinking of that too. First thing that needs to be fixed is the increasing costs of healthcare. I have not done any research on the matter, so I don't know if it can be done or not.

The model for a state health care system that I have been tossing about in my mind lately is one where the state provides a minimum care for everyone. Then companies (or individuals) can buy insurance to increase the quality of care for their employees. Kind of like how supplemental insurance for Medicare works now. It works well for my parents who are quite happy with their coverage.
posted by Eekacat at 9:09 PM on August 6, 2004

The model for a state health care system that I have been tossing about in my mind lately is one where the state provides a minimum care for everyone.
That sounds good, for a start--we're even moving towards that, i think, with all the children's programs for poor families some states have now, and that Kerry's calling for.
posted by amberglow at 9:22 PM on August 6, 2004

When an employer pays low wages and doesn't provide health care benefits, its employees often end up getting free care through state and federal programs.

They do? How do you sign up for this free care? I have benefits where I work now, but for quite a while I was a low-wage and freelance guy, and I sure could have used one of these "state and federal programs." What, like welfare? Getting treated for trauma in an emergency room because they have to take you? Clinics with sliding scales?
posted by bingo at 7:58 PM on August 7, 2004

Side note: WalMart is running an ad (presumably nationwide) in which one of their employees tells how his WalMart provided insurance benefits paid for open heart or cancer surgery (I'm sorry I can't remember which) for his toddler son at the Mayo Clinic. Unless the ad is a stunning piece of fiction, some employees of the Satan of Arkansas have coverage, and family coverage at that. What does it take to get that kind of benefit? What's preventing (beyond the obvious answer) the extention of that kind of coverage to all employees?

Side note: a friend of mine hasn't worked in 2 years after a layoff and a series of illnesses which have sapped her ability to look for work. She applied for medical assistance (in Pennsylvania) and was told that since she wasn't disabled, a senior citizen, a child or the parent of a child (under 21) she was SOL unless she was working 100 hours a month. Talk about slipping all the way through the cracks...
posted by Dreama at 10:37 PM on August 7, 2004

1 Million employees, that works out to about $9,200 per person, per year.

Walmart would have a lot less than 1 million employees if they weren't sidestepping full time regulations requiring a higher level of benifts. Yes people would be unemployed but you'd also have less people working two or three 15-20 hour a week jobs. The total volume of work work would still need to be done.
posted by Mitheral at 3:36 PM on August 9, 2004