Government Health Insurance: An Offer Businesses Should Refuse


Executives at many large corporations want the government to take on a greater role providing health coverage and controlling costs, according to a new Kaiser Family Foundation survey.

That seems to indicate big business is sympathetic to the core of the Democrats’ healthcare agenda, including the idea of a public option or a single-payer, Medicare-for-All-style system.

They should be careful what they wish for. Business leaders won’t like a greater role for government in the provision of health benefits once they take stock of the tradeoffs inherent in such a system—including higher taxes, lower productivity, and worse benefits for their employees.

Kaiser interviewed representatives from more than 300 companies with more than 5,000 employees. The questions were rather leading. For example, 96% agreed that employer costs for health benefits were “excessive.”

Who wouldn’t want to pay less for health care? Kaiser might as well have asked the executives whether they thought they deserved a pay raise.

Another question asked, “In the next 5-10 years, is there a point at which you believe (a) the cost of providing health benefits to your employees would be unsustainable and that (b) there would therefore need to be a greater role for government in providing coverage and containing costs?”

Nearly nine in 10 agreed with the first part of the question. It wasn’t hard for 85% to make the “suggested” jump to government intervention. The poll also asked about three potential government actions to correct “market failures.” Three in four supported limits on surprise medical bills—something that’s more or less already enshrined in federal law. Seventy-two percent supported allowing the federal government to negotiate prescription drug prices or set limits on price increases. Seventy-eight percent supported government caps on hospital prices in markets with limited competition.

No mention was made of the potential trade-offs associated with those price controls. Would employers really support price caps on prescription drugs if it meant fewer effective therapies and cures in the future? What about if price controls on hospital services led to longer waits and reduced access to care?

Kaiser also asked, “Do you think a greater role for government in providing coverage and containing costs would be better for (a) your business and (b) your employees?” More than eight in ten said, “Yes,” in each instance.

And why wouldn’t they? Any business leader would love to cut expenses. So when asked, in effect, if the government should ratchet down an entire line item from their budget, of course they say, “Yes.”

Another question was missing from the survey that ordinary workers might have liked to know the answer to: “Would you give employees wage increases to offset the savings you envision receiving from government?” Even if employers did hike pay, workers might not necessarily make out better, given that employer-sponsored health benefits are untaxed compensation—unlike wages.

But there’s no such thing as a free lunch. Large corporations like the ones surveyed would pay much of the bill for an expanded role for government in health care.

Indeed, President Biden has made no secret of his desire to raise corporate taxes. He’s already proposed a hike of seven percentage points, to 28%, to pay for his American Jobs Plan. A bill in the Senate that would implement a public option would increase annual payroll taxes for the average family by $2,500, according to an analysis by the Hoover Institution.

Then there’s the matter of how a greater role for government will affect the quality of our health care. In many countries with state-run health plans, like Canada and the United Kingdom, millions of people languish on wait lists. And patients don’t have access to the most advanced drugs because the government balks at the price tag.

Just 47% of medicines launched between 2011 and 2020 are available in Canada. British patients have access to just 60% of those medicines. In the United States, 86% of those medicines are available.

Business leaders will see a drop-off in productivity if their charges are forced to wait for care or don’t have access to cutting-edge treatments. A classic 2004 Harvard Business Review article found that “presenteeism”—showing up for work when feeling ill—costs workers one-third of their productivity. Some researchers put the cost of presenteeism at over $234 billion a year.

In other words, the business executives who want a greater role for government may be trading higher taxes for a less productive workforce. Unfortunately, Kaiser didn’t ask them if that was a deal they were interested in taking.

Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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