Excerpt: "Is the dramatic slowdown in employer health-care costs good news? It all depends. If we and our families are in good health, or we're high earners who can afford good health coverage without big co-payments and deductibles, or if we own lots of shares in companies showing higher profits because they're trimming pay and benefits - or we're in all three categories - it's probably good."

Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)

The Wrong Way to Save Money on Health Care

By Robert Reich, Robert Reich's Blog

13 September 12

mployer outlays for workers' health insurance slowed from a 9 percent jump last year to less than half that - 4 percent - this year, according to a new survey from the Kaiser Foundation. Good news?

Our political class believes it is. The Obama administration attributes the drop to the new Affordable Care Act, which, among other things, gives states funding to review insurance rate increases.

Republicans agree it's good news but blame Obamacare for the fact that employer health-care costs continue to rise faster than inflation. "The new mandates contained in the health care law are significantly increasing the cost of insurance" says Wyoming senator Mike Enzi, top Republican on the Senate health committee.

But both sides ignore one big reason for the drop: Employers are shifting healthcare costs to their workers. (The survey shows workers contributing an average of $4,316 toward the cost of family health plans this year, up from $4,129 last year. Many are receiving little or no employer-provided coverage at all.)

Score another win for American corporations - whose profits continue to be robust despite the anemic recovery - and another loss for American workers.

Those profits aren't due to a surge in sales. Exports are down (Europeans, Japanese, and Chinese are all pulling in their belts) and American consumers don't have the dough to buy more.

The profits are largely due to lower corporate costs, especially when it comes to their payrolls. Employer-provided health and pension contributions are shrinking, and the real median wage continues to drop.

High unemployment has given companies more bargaining leverage over their workers, who have to accept lower real pay and benefits or risk losing their jobs.

When it comes to health insurance, employees increasingly have to choose between health-insurance policies with sky-high premiums or with sky-high co-payments and deductibles. And since they can't afford the former they're opting for the big co-payments and deductibles - or no insurance at all.

The result is fewer visits to the doctor and less use of other medical services.

This is a new trend, and it comes despite the Affordable Care Act (which hasn't been fully phased in). And it wouldn't be worrisome if we were seeing too much of doctors before, and using up medical resources we didn't need.

But it's worrisome if it means less preventive care, or health problems going untreated until they become chronic illnesses or crises.

Healthcare costs do have to be better controlled. They now claim 18 percent of our entire economy. But the best way to control them isn't by cutting back care. It's by wringing inefficiencies out of the system.

Our healthcare system wastes 30 cents of every dollar spent on health care, according to new calculations by the well-respected Institute of Medicine. Much of it is wasted on repeated tests, and a huge portion wasted on paperwork - between doctors and hospitals and specialists and insurers, to justify expenditures by one group to be paid by another.

A single-payer system would be far more efficient.

So back to my original question. Is the dramatic slowdown in employer health-care costs good news? It all depends. If we and our families are in good health, or we're high earners who can afford good health coverage without big co-payments and deductibles, or if we own lots of shares in companies showing higher profits because they're trimming pay and benefits - or we're in all three categories - it's probably good.

But if we're none of these, it might not be good news - especially if it means we're getting less care than would otherwise keep ourselves and our families healthy.

At the least, if we're concerned about the health and well-being of all Americans, we need to find out much more before we celebrate.

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+39 # dkonstruction 2012-09-13 09:13

Has anyone else experience a "dramatic slowdown in employer health-insuranc e costs. I've been at 3 jobs since 2006 and at each one when the contract was up the health insurer socked them with a big increase (which was at least in part then passed on to us employees). What planet are these folks on?

Also, a single-payer system is moe than just "more efficient." the other point is that health care should not be a commodity and a for-profit business...it shouldn't be a business at all (same goes for things like education). A single-payer system will remove the for-profit insurers from the system that immediately reduces costs by at least 20% (their profit).

Time to start rejecting the whole notion that "business" is the best way to run everything in this world.

+13 # BradFromSalem 2012-09-13 10:39

Dk,

No real objection to your point, except that based on observations it seems that using morality as a guiding principle in public policy usually obtains the best results.
The morality I am referring to is not steeped in any religious rules. So, just to be a little outlandish; I don't believe Mormons that have multiple wives within their church are immoral, but it is also within the purview of government to allow only one legal spouse for property issues.

In the matter of Health Care, the moral answer to the question of how we should provide care is for us all to pool our resources and each person uses what they need for their Health Care. Except for the Ayn Rand devotees, the vast majority of people would agree on that premise. Our differences arise on how to make sure someone doesn't take more than they need. The Righties believe that a free market for both the buyer and seller makes for the most efficient model. That belief only works when the buyer has some leverage, which in the case of Health Care, the buyer does not have. Thus single payer, government run, comprehensive Health Care becomes the most efficient model. And the most efficient model is also the best business model.

+9 # dkonstruction 2012-09-13 12:21

Agreed, although i would argue that the "free market" is a complete myth and has never existed.

At the same time i'm not sure the moral argument is the most effective compared to first appealing to people's own self-interest which in the case of health care should be that you would get comprehensive coverage for life much cheaper than what it cost folks now if we went to a single payer system and eliminated the for-profit insurers.

And, if Romney had multiple wives and got elected (hoping not of course) it would be pretty cool to have a First Lady, Second Lady, Third Lady -- or would they alternate and if so how would that work exactly?

+9 # Eldon J. Bloedorn 2012-09-13 12:37

The Righties have been subjected to the Plutocrat, (Republican) slogan and vision for America since this country was founded: "keep 'm poor and stupid and we'll (the corporations) keep all the money. Any one old enough to remember J.Edgar Hoover? He published a book entitled "Masters of Deceit." I was astonished and amused when I read one particular paragraph and it stuck in my mind. J. Edgar Hoover "we need to be less mindful of teaching our youth math. and science as those teaching do cripple religion (Christiamity). " You know Edgar, whereever you presently are, please don't come back.

+10 # ewokky 2012-09-13 10:41

I agree. I have never understood the blanket believe that the market and competition will solve all issues. Healthcare costs is the perfect example. Say you need a heart bypass operation. Are you going to shop around for the best price? Or, are you going to shop around for who is the best Doctor and facility to perform the operation (or at least the best covered by your insurance)?

There are just some things where price competition is not the primary purchasing factor. In those cases the marketplace is not a good solution to controlling costs.

+3 # Eldon J. Bloedorn 2012-09-13 12:25

I have a wife in China. We were married last year on Christmas eve. We discussed her insurance coverage before she comes to America and before she can be eligible for Medicare as my wife. I said "Wen Li, what is the cost to insure you with government insurance while you are still in China." She said (based on currency conversion) approximately $600.00 I said, OK, we can do this. And each year we have to set up a budget for your insurance through the Chinese government.
She said, "we need make only one payment and that payment is for life. There are no other payments to make in any following year or years." A friend of mine said who heard about the Chinese insurance plan said, "that is a pretty good deal for its citizens considering that China is very capitalistic and unfortunately very often run by Plutocrat thugs."

+13 # BradFromSalem 2012-09-13 09:50

I just "love" how the enemies of entitlements believe that if you cut government expenditures in health care costs, the actual total spending on health care goes down. These enemies also believe that people can select their health insurance like ordering dim sum off a cart. These are just two misconceptions that the enemies of entitlements persist in.
Decreasing the amount paid by government only shifts the costs to the individual. As a nation we do not pay less and in fact we probably pay more due to the extra expenses involved with billing individuals. Of course, there is some savings from the premature deaths caused by persons inability to pay for medical care or other necessities, but lets not mention that because its a "scare tactic".
Ordering your Health care options successfully means you would first have to pay for all sorts of genetic and lifesyle tests to determine what diseases you are most probabale. On the other hand, Insurance companies will charge you extra for buying coverage for those very same maladies, for the very same reasons you are buying insurance for them. If this game was a zero sum game then its possible that outside of the additional testing for your likely disease profile costs are balanced. But there are always the exceptions, such as the non smoker that gets lung cancer. If that person elected no coverage, then his costs will skyrocket. Robert Reich is correct, single payer comprehensive Health Care is the most cost effective.

+13 # dkonstruction 2012-09-13 10:55

The dems needed to do a much better job of explaining the whole purpose of social insurance to combat idiots like Bachman who were running around saying people should only have to get coverage for the things they want and shouldn't be "forced" to buy insurance that covers everything -- like people know which illnesses they may get down the road...even with testing we would only learn which ones we are more likely to get which is the whole point of insurance right; protecting you from things that may but also may not happen

+6 # Eldon J. Bloedorn 2012-09-13 12:27

Keep in mind, Bachman is a member of the party of "mental illness."

+8 # dkonstruction 2012-09-13 12:59

Quoting Eldon J. Bloedorn:

Keep in mind, Bachman is a member of the party of "mental illness."

She's got great coverage in Congress so she can lose whatever is left (if anything) of her sanity and her care will be 100% covered.

+12 # Rain17 2012-09-13 09:58

I agree that single-payer is the way to go but it is likely not going to happen for a very long time in the US, if ever. The problem is that you have a significant number of people who believe that single-payer would lead to:

1) Higher taxes for a grossly inefficient, bureaucratic system staffed with rude, disrespectful, lazy government employees whose only mission in life is to infringe upon the sacred "doctor/patient relationship";

2) A program where the primary beneficiaries would be "those people", i.e., the "single unemployed black woman on welfare in the inner-city with five children", who would benefit at the expense of those "who work and pay the taxes";

3) A program that reward, enables, promotes the "irresponsible, pathological, and poor choices" of the people mentioned in the last category;

4) Long waiting times to see the doctor and not getting necessary procedures, while the people in the second category rush to the front of the line;

5) And, of course, "the denial of the right to pick and choose their own doctor".

You also have people who honestly believe that, were it not for buying cell phones and having cable TV, people could afford insurance. Then you have people who honestly believe that "you can go to the emergency room and not have to pay". They seemingly can't seem to grasp that the emergency room isn't free. So that is why single-payer is not likely to happen anytime soon in the US.

+1 # PGreen 2012-09-14 09:13

Let's not give up hope for Single-Payer! If the Affordable Care Act is not repealed, the possibility remains that Vermont (possibly another state) will apply for an exception allowing the creation of a single-payer system. A few congressional leaders such as Sanders continue to push for it. There is no guarantee that any Administration will grant such an exception to a state (Obama's record on healthcare is poor at best, as shown by his failure to allow even the discussion of a public option), considering the massive private opposition, but the chance of it happening is real. The likely success of a public option would be an extremely powerful argument to adopt it, and other states would likely follow suit.
One would think that reactionary Republicans, who claim to favor local authority over federal, would support this-- but of course they won't. (Their position is a pretense for eliminating regulations which support the public interest, not ones which increase private power.)

+10 # behumphrey 2012-09-13 10:07

Yes, we need a single payer system that guarantees university health care for all, not health insurance via companies raking in profits and giving us very little in return. University health care is a plank of the Green New Deal and there is one presidential candidate and one party running on the Green New Deal. And it isn't the Democrats and it isn't the Republicans.

+9 # Rain17 2012-09-13 10:27

And the Greens have no chance of winning the election. The US is not a proportional system like Israel, where even fringe parties can win a seat or two in the Knessett if they poll 2-3% of the vote.

+6 # dkonstruction 2012-09-13 14:06

Quoting Rain17:

And the Greens have no chance of winning the election. The US is not a proportional system like Israel, where even fringe parties can win a seat or two in the Knessett if they poll 2-3% of the vote.

True, but if in solidly democratic states the greens can get even a significant minority vote (in some cases even 5% would do it) they could begin to have real leverage over the democrats and begin to move them back in a more progressive direction...it' s the whole notion of strategic voting.

+1 # Rain17 2012-09-14 09:46

It doesn't work that way. They won't have "real leverage" because, if the Democrats were to adopt most of the Green platform, they'd probably lose 10-15% of their softest supporters.

+1 # dkonstruction 2012-09-14 11:14

Quoting Rain17:

It doesn't work that way. They won't have "real leverage" because, if the Democrats were to adopt most of the Green platform, they'd probably lose 10-15% of their softest supporters.

I disagree Rain17. I believe that if the dems were able to articulate a clear and progressive vision that included a platform that said if you make under $xxx a year that you should vote for us and this is why and then again are able to articulate an economic program that would truly benefit the vast majority of the american working and middle classes (not to mention the 45 million people in poverty) that they would gain and not lose broad based support. It has been there continuous drift to the right that has been the problem and why they have lost much of their old white working class support that was so critical for the new deal coalition.

+8 # Buddha 2012-09-13 10:14

A single-payer system would certainly be more efficient in terms of cutting out the "middle-man" for-profit HMO and for reducing the huge number of employees needed at PROVIDERS to do the whole paperchase getting reimbursements from all the different insurers. A good first step. But we should still consider owning our provider system too (yeah, I know, "Socialism").

+9 # BradFromSalem 2012-09-13 11:19

Buddha,

Its way more than just cutting out the middle-person.

Comprehensive Health Care would integrate record keeping, eliminate one insurance plan for medical, another for dental, a third for eye care, a fourth for medical care resulting from a car accident; and I am sure there are others. It should also put all of any individuals health data into a single (secure) format with universal data standards, consistent terminology and available to health care providers quickly and reliably so decisions can optimize outcomes. Duplicate and defensive procedures can be minimized, probably with improved outcomes. These are just the iceberg tip of a modern comprehensive health care system in which the only qualification to participate is that you are breathing.

+20 # redrider 2012-09-13 11:10

What we have is sick care. My wife is a palliative care nurse at a major cancer center. Before that she was a hospice nurse. What she can attest to is that patients with only a few days left to live are still being treated with radiation and drugs that cost up to $20,000 per month. Interesting that insurance companies don't seem to mind paying for the costs. They must profit from it. Why else would they cover third and fourth level protocols that have a 2-4 % chance of working. Even if they do work, life expectancy is about two to three more weeks and the patient is subjected to unimaginable side effects. Do you think patient with inoperable tumors that actually grow out of their faces, breasts, and vaginas with brain or bone involvement want to have their hopes dashed and the terrible side effects of vomiting blood, uncontrollable diarrhea and incontinence, not to mention the pain by the promise of experimental drugs? There are things worse than death. So what's the benefit to burden? For the most part the benefits go to the drug and insurance companies who make billions while the patients; our mothers and fathers, brothers and sisters suffer side effects that you wouldn't wish on your worst enemy. Why does this happen? Because it can. No one is asking if this kind of poisoning of the human body should be allowed.

+16 # redrider 2012-09-13 11:13

I won't even discuss the oncologists who seem to be incapable of discussing the patients real prognosis and the side effects of their treatments. Most of our health care dollars are spent on the last six months of life. No matter what we do, these patients are going to die anyway and in misery. We don't treat our dying with compassion and don't consider the person or their personal circumstances. We don't ask questions. We see a tumor and prescribe treatment no matter the cost to the patient or to us who are paying the bills. Should our sick care system transform into actual health care, the drug companies wouldn't be able to pay dividends and their wealthy shareholders wouldn't like that. So keeping terminally ill people alive a few days longer with futile chemotherapy's is big business. To the health care system, hospice represents failure which is why by the time patients enroll in hospice they are dead in week or less. Oh, and there is no real profit in hospice which is one big reason it's not addressed. Finally, two things: we are a culture who wants what it wants when it wants and has an unnatural fear of death. As a kid in high school in drivers ed I saw a movie called, "Mechanized Death". It was absolutely gruesome. But that didn't compare what is going on in sick care.

+5 # dkonstruction 2012-09-13 12:27

redrider, you raise a critical question: if we don't have the money to do everything and thus have to make choices do we want to choose to spend 1/3 of our total health care dollars on the last 90 days of life if that means that we cannot at the same time cover basic care for all children or preventative care for all? in a rational country with rational leaders this would be the adult conversation we would be having (along with the fact that another 1/3 is spent on care for things that are completely preventable but are due to "behavior" and "lifestyle" i.e., smoking, junk food (or nutrition more broadly), etc. Unfortunately we seem to live in a country run by spoiled children that are incapable of having the serious grown up conversation we need to have.

-1 # mgwmgw 2012-09-13 11:27

Given that the health insurance provided by employers covers less and less of medical costs, I have imagined for years a business of selling secondary insurance to employed people, similar to medi-gap, which covers the difference. Has anyone else thought about this? If a person routinely buys gap insurance, they can then compare jobs in terms of both salary and the actual cost of covering their health care. Do people think this would influence the market in a good way without having to outbid the rich people who buy the government?

While I agree that much of the care in the last months of life is not worth the cost when viewed in retrospect, is there a reasonable way to change that pattern as the decisions are made? What will Accountable Care Organizations (ACOs) do about this?

+4 # reiverpacific 2012-09-13 16:13

Quoting mgwmgw:

Given that the health insurance provided by employers covers less and less of medical costs, I have imagined for years a business of selling secondary insurance to employed people, similar to medi-gap, which covers the difference. Has anyone else thought about this? If a person routinely buys gap insurance, they can then compare jobs in terms of both salary and the actual cost of covering their health care. Do people think this would influence the market in a good way without having to outbid the rich people who buy the government?

While I agree that much of the care in the last months of life is not worth the cost when viewed in retrospect, is there a reasonable way to change that pattern as the decisions are made? What will Accountable Care Organizations (ACOs) do about this?

Respectfully, you must be kiddin'!
Consider; if you are employed and can barely pay your bills, in business but holding on by your fingertips, are constantly living in fear of being laid-off or have been out work for any length of time, how the Hell can "gap insurance" or "COBRA" even come into the equation?
That is almost as ludicrous as the various "Voucher" schemes so beloved by the out-of-touch or wantonly face-turning-fr om-reality Rethugs. I truly wonder at this marvel of illogical calculation.
The ONLY way to "Outbid the rich people" is government administered UNIVERSAL SINGLE-PAYER, that's how they do it elsewhere.

+5 # reiverpacific 2012-09-13 11:30

US healthcare or as it should be called "The National Lottery"like a version of Powerball for big insurance and pharma.
No wonder so many Latinos and others are leaving in record numbers, not just because of diminishing opportunity; -there might be problems at home but they can go to the doctor and dentist without fear and probably get better care too, which is why I will be leaving for Europe in the fullness of time -and maybe sooner if by some freak of fate or vote-rigging Twit is selected. If you think it's bad now----!!
But they'll never get it I'm afraid, as long as lobbyists have such free access, revolving-door to the power-brokers and greed-mongers.

+3 # redrider 2012-09-13 13:15

dkonstruction makes a good point. I would follow up with the last 90 days of care is where the majority of sick care dollars go. That's because the care is the most invasive. And as I said before, the end result is the same. You can't stop death. I seem to remember learning that.

Better the last 90 days of a persons life are spent in hospice care all comfy and cozy in your own bed with living angels of mercy than in a hospital. Ask anyone, where would you rather die: At home or in a hospital? Too bad there's no money in it.

Take the money out of the equation. No one asks, "Just because we can, does it mean that we should?"

+4 # JetpackAngel 2012-09-13 13:35

We need all the help we can get. And while the 'preexisting conditions' thing is no longer a factor and that is wonderful, really it is, can it also be made to cover preexisting bills?

Last year my blood sugar bottomed out and despite my refusal, my employer called me an ambulance anyway; apparently they decided I was out-of-it enough to need one. All I needed was some quiet time in a chair with peanut butter crackers, and instead I was diagnosed with a big ol' hell-if-I-know and a bill I'm /still/ paying off. My 'insurance' is a joke. Seriously, the only thing it seems to be good for is prescription assistance. The only way I can afford it at all is to pay a deductible so high that it doesn't really do me any good unless I started getting hit by a car about once a month. (And of course I have no dental, which is what I need the most.)

A coworker of mine had a daughter with a host of physical ailments. She passed recently, during her second reconstructive surgery on her lower intestine, and my coworker is still paying off the bill from her FIRST surgery, somewhere in the tens- or even hundreds-of-tho usands of dollars range. He's going to be paying it off for the rest of his life.

We have enough problems as it is without the elites milking us for every penny we've got. When will there be a solution for us?

+1 # Rain17 2012-09-14 09:59

Your employer probably called an ambulance for liability reasons. If they didn't call an ambulance, and if you had died or experienced a significant injury that immediate medical care could have prevented, they would possibly be liable.

+7 # BicParker 2012-09-13 16:35

$4,316 toward the cost of family health plans this year, up from $4,129 last year

When I hear complaints about this I want to scream! Do you know what it costs for ONE self-employed person??? I had to drop Kaiser HMO when they wanted $1000 a month. Then try with even a slight preexisting condition to get something else on your own. $600 a mo with big deductible and everything you have not covered!!!

WAKE UP!! We need AFFORDABLE insurance/healt h care-remove the middle man profit!!!!

+3 # Rick Levy 2012-09-13 21:31

One of the worst consequences of job loss is loss of insurance Premiums may be expensive under employer health plans, but they're often downright prohibitive under individual coverage.

Employees should not have to depend on healthcare insurance from their employers. Period. The real solution is of course a single payer plan or medicare for all. These are how civilized countries do it. It's time for America to get on board.

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