U.S. ‘Free Enterprise’ Employer-Based Health Insurance System Is ‘Coming Apart at the Seams’

The health-insurance mega-corps could solve the crisis tomorrow – all they would have to do is insure everyone


In the upside-down world of the tea party GOP, the individual mandate — a solution to the health insurance crisis that was created by an ultra right-wing think tank that requires all working Americans to be covered by private health insurance — is “socialism.”

That’s right. In the topsy-turvy minds of Fox-watchers, Dittoheads and teavangelical neo-Confederates, a system that would create as many as 50 million new customers for giant private health-insurance corporations is not capitalism on steroids, it is the stuff of godless communism.

In the United States in which we collectively pay for socialist public schools and universities; socialist public hospitals; socialist fire, police and emergency services; socialist highway, airport and seaport construction — as well as socialist pensions (Social Security) and socialist health-care coverage for seniors (Medicare)

In reality, the “socialist” approach to health-care coverage is a single-payer system — which also happens to be the system deployed by most industrialized democracies in the world, including all our major competitors in Europe and Asia. These countries do not require their automakers, software companies, real-estate developers and the rest to pay for their employees’ insurance — which means that the owners of those companies aren’t forced to inflate the price of their goods and services to cover the cost of their employees’ insurance. That cost is born by the citizens of the country, collectively.

That is socialism. It is similar to the “socialist” systems we have in the United States in which we collectively pay for socialist public schools and universities; socialist public hospitals; socialist fire, police and emergency services; socialist highway, airport and seaport construction as well as socialist pensions (Social Security) and socialist health-care coverage for seniors (Medicare).

For three years, tea party Republicans have promised that they will repeal the Affordable Care Act and replace it, ostensibly with a “free enterprise” solution. The fallacy here — the upside-down absurdity in this argument — is that the system we have now is a “free enterprise” system, and, as this new study from the National Institute for Health Care Reform [PDF] shows, it is collapsing before our eyes:

Between 2007 and 2010, the share of children and working-age adults in the United States with employer-sponsored health insurance dropped 10 percentage points from 63.6 percent to 53.5 percent, according to a new national study by the Center for Studying Health System Change (HSC). The key factor driving the sharp decline was the enormous loss of employment during the Great Recession, which officially started in December 2007 and ended in June 2009. The proportion of the population younger than 65 with no workers in the family spiked 10 percentage points between 2007 and 2010, from 21.6 percent to 31.6 percent. The decline in employer coverage disproportionately affected young adults, people with a high school education or less, and people employed in small firms.

Even when employment rebounds to pre-recession levels, a return to previous levels of employer-sponsored health insurance is unlikely. Well before the start of the recession, a steady decline of employer health coverage was underway with fewer firms offering coverage and fewer workers taking up coverage—likely because of rising health care costs.

Paul Krugman:

What this says is that the system that has provided workable insurance coverage to many (but not enough) Americans is coming apart at the seams. And this in turn means that if health reform goes down, we’re going to be looking at a wave of misery spreading across the land.

Kevin Drum:

Most Americans simply have no clue how bizarre it is that we rely on employers to provide health insurance for most people. We’ve all grown up in this sytem, so it seems completely normal. But it’s not. It happened through a weird combination of historical accidents, and it makes no sense. Why should an airplane manufacturer also be in the healthcare business? Why should you lose your health insurance if you get laid off? Why should your choice of doctor be limited by your employer’s choice of insurance carrier? (And why should it change whenever your employer decides to change carriers?) Why should your boss be allowed to dock your paycheck if you don’t get the medical “counseling” he deems necessary? (Yes, this is real. And it’s rapidly making its way to a corporation near you.)

It. Makes. No. Sense.

There is a key point here that is never brought out by the corporate media, opinionists on the left or, certainly, by Republicans: If the health-insurance corporations have caused the crisis in their industry and, if they wanted to , they could fix it tomorrow. All they would have to do is cover everyone. That is what real capitalists would do. They would see the 50 million uninsured people in this country, not as a massive pool of bad risk, but as a potential market, ripe for the picking.

As the chart above shows, for years now, health-insurance corporations have been sloughing off their risk by systematically denying coverage to certain groups, either by their own corporate regulation — i.e, the uniquely American status of having a preexisting condition — or by charging so much for premiums that part-time workers, minimum-wage earners, the self-employed and others are priced out of the market.

In creating this pool of 30 to 50 million uninsured Americans, the insurance corporations have essentially socialized the risk in their industry. When the uninsured require health care, they generally receive it in emergency rooms, which are the most expensive health-care venues of all. Since most of them cannot afford $700 a month and more for insurance premiums, it follows that they also can’t afford the thousands of dollars in charges that are routinely racked up during emergency treatment.

When the uninsured default on their hospital bills, those costs are paid by local taxpayers. And that, too, is socialism.

The Affordable Care Act is not socialism, but it is a solution. On the other hand, what is the tea-party Republican solution to this crisis? Where is the alternative “free enterprise” system to Obamaneycare they have promised for three years?


  • ErnestPayne
    March 20, 2012 - 5:25 am | Permalink

    Good luck trying to convince Americans that somebody else came up with a better, more affordable, health care system. With americans believing that they are “exceptional”, “chosen by god”, and “the greatest nation in the world” there can be no good outcome for them.

  • Proteios
    March 20, 2012 - 9:37 am | Permalink

    To the prior comment, Mr. Payne.
    Your blanket statement on Americans suggests you havent a clue. Millions have fought for a single payer plan since before Clinton rolled it out. We voted Democrats in office to do just that…and end the wars. They really haven’t accomplished either. They get a “sort of…eventually” on the wars, but they failed on the healthcare. They had the majority and the means and proved that like the other party, they are owned by the wealthy who like things just the way they are. Welcome to reality and FU for countering all our hard work and protests to get some positive social changes with pathetic cliches about Americans.

  • Davison
    March 20, 2012 - 4:14 pm | Permalink

    @ Proteios
    Unfortunately, until you and your like-minded fellow citizens can affect that change on a national, govenmental level, all your protesting is just flag waving with no real results, like most of the 60’s.
    The attitude EP is talking about is real, and ingrained into the beliefs of most US citizens from birth – loud and proud and righter than everyone else – and this belief is exported out of the country and around the world with with all of your (US) newscasts, movies and music.
    Individually, people may realize the folly and self-defeating nature of this mentality, but when it comes time to make a group decision herd mentality and fear rears their ugly heads and prevents actual, scary change from happening – because change means admitting the old way is wrong, and that runs counter to being a nation that only does things right.

  • Jim
    March 20, 2012 - 4:27 pm | Permalink

    Your blanket statement on Americans suggests you havent a clue

    Yes, he does have a clue. His statement that Americans (USA) == With americans believing that they are “exceptional”, “chosen by god”, and “the greatest nation in the world == is absolutely true. Tens of millions in this country have that exact attitude.

    You may have “fought” for single payer. But there haven’t been enough “fighting” for it. Until you elect politicians who aren’t owned by the rich corporations, bankers etc you will never get it.

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