Would National Health Insurance Help GM?

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Conventional wisdom in this country has it that American businesses are uncompetitive partly because they have to spend so much on health insurance for their workers. Here’s a common variation, from Dean Bakopoulos:

[W]e must implement a system that guarantees universal healthcare. American industry — from National Steel to Starbucks — would benefit from having the burden of health insurance lifted off its back. Why else would GM be aggressively investing in nationalized-healthcare Canada while U.S. plants shut down?

Why indeed? I certainly don’t know. But I’m not convinced that the conventional wisdom is entirely right. At least let’s hash it out. There’s reason to think that national healthcare wouldn’t necessarily make American businesses more competitive.

Say each year GM paid each worker $40,000 and spent $5,000 per worker on health insurance. That’s a major drag, right? Well, look. Say national health insurance is then created, some system that doesn’t rely on employers. Depending on how it’s financed, GM could still be on the hook for that $5,000, so long as total worker compensation doesn’t change—which it shouldn’t, so long as it’s set by the market. Maybe companies will now pay that $5,000 in wage form, to attract the same caliber workers (or because unions demand it). Or maybe the new system will be financed by payroll taxes or individual mandates, in which case the company might have to pay each worker $45,000 to cover the cost. But total compensation wouldn’t change.

Alternatively, those companies that are currently paying nothing for health insurance can help share the load with companies like GM. But then you’re just taking from one company to help out another—American businesses overall don’t necessarily become more competitive. There are probably ways to redistribute the load that make sense, and that’s why we have policy wonks, but the point is there’s nothing prima facie business-friendly about this.

In reality, of course, things would look far more complicated. The current tax system makes things complex. And some health insurance systems are more efficient than others. National health insurance might be cheaper, on aggregate, than our current system, in which case everyone would be paying less, and businesses obviously become more competitive. But what if the new system was more expensive—given that 45 million new people would need to be covered? GM’s fortunes would depend largely on how the system was financed and how good it was at controlling costs. European companies are more competitive on this front presumably because Europe rations its health care and so spends less (with similar, if not better health outcomes). If we could do that, it wouldn’t matter quite as much how health care was delivered—cutting costs is where the benefits to business would lie, primarily.

There’s another aspect here. Right now, when insurance premiums go up each year, GM usually has to cover the increase, which goes up faster than wages do, unless it wants to shift some of the cost onto workers—a move that usually causes a big stir and is somewhat hard to do. But if GM was paying its workers entirely in wages, and the government handling health insurance, then GM might be able to get away with avoiding the “necessary” wage increases whenever there was a premium hike. In that case, GM would save money and become more profitable by giving its employees a pay cut—who get, say, a payroll tax increase or premium hike from the government, but not enough of a corresponding wage increase from GM to cover it. But who knows.

I certainly think a national health insurance system is necessary in this country, one not tied to employment. It would help workers move from job to job more easily while remaining insured, and would guarantee that everyone had insurance. It’s fair, moral, decent, etc. And it would likely be progressive, which the current tax deductions for employer-backed insurance certainly aren’t. And so on. In theory reform could even help control costs, although I’m not as orthodox about that particular faith as some. But would it be a boon for American businesses? It really depends.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate