Health-Care Reform And Detroit: How We Got Here
In a great piece looking at what new health-care legislation could mean to the fortunes of our city and region, John Austin of The New Republic peers back 50 years to remind us just how industrial powerhouses in places like Detroit got in this mess with "legacy costs"...
As the Brookings Metro report on the economy of the Great Lakes region: The Vital Center described, the health care system we just replaced was largely created after World War II when employers began to offer health benefits as a job inducement chasing scarce labor. The United Auto Workers President Walter Reuther, among others, pushed then for national health insurance, or “socialized medicine,” as it was called at the time. Rather than go along with “socialized” anything, the big employers, led by the sectors with unionized workers in the Great Lakes--steel, automakers--negotiated the deal to provide employer-sponsored health care. The “pattern was cut” and copied across America, creating our unique American health care system.
Fast forward 50+ years to today and you know the story. Legacy health care costs cripple many of our older companies. GM before its bankruptcy was jokingly but accurately called a benefits company with a small car business attached.
This, I think, is as good a homegrown illustration as I've seen recently of how future generations wind up paying dearly for the myopic phobias and silliness (not to mention greed) of the past. It's also a point worth remembering next time some Wall Street analyst tries to blame your dad's or my great-uncle's retirement package for why the Detroit 3 aren't moving SUVs in Tokyo.
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Gasp, you mean to tell me that it was short-sighted, profits-now free market capitalists in opposition to socialized medicine that initiated the ill-fated benefits for life after 20 years? You can't be serious.
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Indeed. Time to cue Capt. Renault from Casablanca...
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So glad that the helathcare bill passed!
Pensions are the next big ticket item eating up companies' HR budgets. These funds are not directly contributing to making the company or their products/services any better. Let's work on getting rid of pensions and improve Social Security to make it sustainable and the only "pension" people need.
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It's not true that the automakers rejected national health care. What were they supposed to do, unilaterally impose it on the entire nation?
(Let me guess - Wall Street has been clamoring for national health care for decades, right??)
John Dingell, the US Representative from SE Michigan typically accused of being the Big 3's lapdog by so many, has introduced a national health insurance bill into the House EVERY YEAR HE HAS BEEN IN OFFICE. His father before him did likewise from the same position. Yes, that's right - for 77 CONSECUTIVE YEARS a Rep. close to the auto industry has formally introduced a national health care bill in the House. Universal heath care was one thing Reuther's UAW and the automakers agreed upon. It never took hold. When Clinton proposed a plan GM and the others were right there behind it but it was killed in its crib - it barely passed this year!
The automakers have LONG been aware that lack of universal health care put them at a competitive disadvantage but they had no way to force the issue at the national level. These last couple of years have made painfully obvious the disdain the rest of the nation has for the auto sector and its home region. Trying to pin the health care problem on the automakers is just a continuation of that public brow-beating, and the most false accusation of all!
And then they wonder why there are so many anti-government groups in Michigan...maybe it isn't so much anti-government as it is frustration and anger with the BS Michiganders endure, and the deprivations imposed, at the hands and pens of those at the NATIONAL and FEDERAL levels.
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So, are you denying the historic accuracy of the facts, or that decision shouldn't be held against them?
Michiganders should be pissed at the big three. When they pulled the plants out of Flint, a town they really did owe some loyalty to, they had been enjoying record profits. When the plants moved and labor decreased by staggering amounts, did the cost of cars go down? No quite the opposite. When they outsourced everything they could, and quality and consumer confidence began to suffer, sales went down and down and down.
They took jobs from Americans at a time when they were making more money than ever. Yeah, michigan should be angry at the feds - for allowing the pull outs in the first place.This article only points out the stupid short-sighted money grubbing decisions often made by unregulated, unrestrained capitalists. Deny all you want, but the pattern of corporate health benefits was initiated partly with the auto industry. Of course it doesn't account for the unrestricted sins of the insurance industry and the costs of pharma rising at 300% that of inflation. Those only reflect the corporate greed in those industries, not the auto industry.
The post is accurate. Stop apologizing for corporate elite greed.
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I'm denying this interpretation of historical fact. It's grossly revisionist.
Reuther did not like accepting coverage provisions from the employers but did so because that was the only way is was going to be available to employees. At the time medical benefits were first negotiated between the unions and the industrialists the costs were negligible. Health insurance costs were not much of an issue at all until they started skyrocketing in the late 1960s. Meanwhile every attempt to pass some type of national health care coverage was politically defeated and not by the industrialists. The typical opponents were the conservatives and concerned groups like the American Medical Assn and the insurance sector. Reuther was well aware of the political difficulties of achieving national health insurance, especially during the nation's post-WWII lurch to the right and red scare era, and avoided using the loaded word 'socialized' which even today the harpies toss around, playing on its potential hand-grenade political power.
Even in the 1940s, when costs were still negligible, the companies resisted health care and pension bargaining. What really caused their standardized inclusion in agreements was the United Mine Workers effort in 1946-47 followed by the Supreme Court's 1949 decision in the Inland Steel case made failure to bargain over such fringe benefits an unfair labor practice.
As far as outsourcing in the US auto industry - that is a direct result of the introduction of imports from lower cost manufacturing nations, almost all of which have some type of government based instead of employer based health care for their citizens. It speaks volumes about US greed and stupidity that the US is the only major industrial power that has consistently kicked its manufacturing sector to the curb in recent years while allowing other 'new economy' sectors to parasitically pick its bones.
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Darrell,
Your total inability to think critically and instead resorting to buzz words like greed to explain economic phenomena continues to astound me. Talk about myopic phobias and silliness.
Yes, you are right about employers offering health insurance benefits in lieu of supporting socialized health insurnance. HOWEVA, this was not due to unrestrained capitalistic greed but rather the result of government intervention in the labor market:
"The current system of employer-provided health insurance traces back to domestic policy during the World War II era. Due to government policy, inflation grew both before and during WWII. As a "remedy," caps on wage increases were imposed by the government. In response, employers began to offer their employees health insurance to soften the blow and attract quality workers.
The federal government did not consider an increase in health benefits a violation of these wage controls, and in 1943 the IRS ruled that health benefits were tax exempt for workers. After the wage caps were abolished, health insurance benefits became seen as the norm and were not eliminated. For instance, by the early 1960s, General Motors was paying 100% of the healthcare bills for their employees (retirees included).
So, anyone who claims that the high costs of health insurance originated in the "free market" is either severely mistaken or lying."
This was taken from "The Health Insurance Market is Not Free" by Anton Batey (http://mises.org/daily/3727).
It's funny that those greedy capitalists that we frequently rail against here were actually competing for employees by bidding up wages, in this case with health insurance benefits. Had the government not intervened in the market place, corporations could have bid up the real wages of workers who could then have purchased their own insurance, rather than creating the third-party payment system that has persisted to this day.
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The comments weren't about capitalists, they were about greedy capitalists. There is a difference and everyone but apologists know that difference.
When 'greed 'is the appropriate term, it is not a buzz word. shall I use 'miserliness' instead? Does it suit your delicate sensiblities better? Stop using that old political trick to skirt the issue. -
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You clearly missed my point. The health insurance market isn't in the mess it is in (and the mess it will continue to be in) due to capitalists, greedy or otherwise. The market has been heavily distorted by government intervention. People like you and Darrell see that and say greed is the culprit! I'm pretty sure almost all corporate executives doing their job are greedy, in that their mission is to best maximize shareholder wealth.
This wasn't a case of "greed" getting out of control, the health care situation in the United States was created by the turmoil of corporatist-government intervention in the marketplace. Had a truly free market in health insurance existed, the U.S. would have the best, cheapest health care in the world, and the government wouldn't be driving itself off a fiscal cliff.
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@The_Conservative_Lie:
Thanks for getting it.
@flytiger23: You have no point.
I'm for single-payer health care. You're ranting about how and why you think the current ineffective and costly privatized system we have now grew into the monster it is. That's like me saying, I'm for vegetarianism and you going on about the history of how "corporatist-government intervention" helped make steak more expensive. Your total inability to figure out the topic at hand astounds me.
MY point was that our nation had a chance to embrace the idea of "socialized medicine," that it was promoted by union leadership, and greedy reactionary industrialists (among other greedy capitalists) chose not to pursue the smart course. Now, those same manufacturers whine that union "legacy costs" hamper their ability to compete.
@anounceofaction: Thanks for at least addressing my real premise. I respect that you disagree (although I don't get the veiled sympathy for the right-wing seditionist types). However, back during all those decades when we used to believe that "what's good for General Motors is what's good for America," where were the Big 3 when it came to pushing government-backed health care?
I'm born and raised here, like many others. Had plenty of family in the auto industry. And I never recall the Big 3 making "socialized medicine" a priority. Sure, they complain now that their profit margins make the current system untenable, but I have a hard time seeing where they were on the issue for the past 60, 70 years.
Thanks for responding.
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I'm pretty sure that the greedy reactionary industrialists would not have been saddled with all the union legacy costs had it not been for the wage controls and tax loopholes in the labor and insurance markets. It's important to realize the history of WHY we have ended up in the mess we are in, which you have no grasp of and dismiss as ranting. This wasn't a pick your poison situation, of sky high union legacy costs 50 years later or socialized medicine. We could have just let the market operate effectively.
Socialized medicine would not have enabled the auto companies to be more competitive when they have exorbitant taxes to pay to support bloated socialism. See the billions in writeoffs by companies now in the wake of Obamacare. I'm not sure if you've ever looked at the future of Medicare, Medicaid, and Social Security, but the unfunded liabilities is in the TRILLIONS.
In the end, its a pretty high price to pay to lose our freedom in the short term for health care providers and patients to exchange services and payment voluntarily. Even worse, it is not sustainable and the most vulnerable among us will be hurt the most when the system eventually comes crashing down like a house of cards (see Greece, California).
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Not an expert in this field, but as the health care system has evolved over time in the country it has become a rat's nest of both government and market failures. No health care system has accomplished simultaneously all three objectives of universal access, high quality, and low cost. The system in this country has staggering inefficiencies. I read an excellent article by Charles Kroncke and Ronald F. White, "The Modern Health Care Maze: Development and Effects of the Four Party System," The Independent Review v14, n1 Summer 2009, pp. 45-70. Supporting flytiger23's argument, the market system has not really been tried in this country. I'm skeptical that the price system can work all that well in health care since the person who often demands the services is the physician and not the patient. Are you in a position to tell your physician, a licensed professional, that you don't need an MRI, it's just too expensive? How do you know if your physician or other health care provider is following a best practice? It's called information asymmetry.
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Good luck doctor shopping while clutching your chest during a heart attack.
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well, that would be an er visit... not a doctor shopping trip.
Hey, by the way, has rush made good on his promise yet? You know the one to move to costa rica?
He really should you know. Costa rica has a better medical system than ours already and their life expectancy is longer than ours.
Did I mention they have socialized medicine in costa rica?
- <a href="http://twitter.com/TheDetroitHouse" target="_blank" class="beforetweet">TheDetroitHouse</a> After a year of learning, observing and understanding, TIME says goodbye to Detroit. Podcast: All Good Things... http://shar.es/0V3I7 - 2 years ago
- <a href="http://twitter.com/TheDetroitHouse" target="_blank" class="beforetweet">TheDetroitHouse</a> Our Donation to Detroit http://shar.es/0FX2T - 2 years ago
- <a href="http://twitter.com/TheDetroitHouse" target="_blank" class="beforetweet">TheDetroitHouse</a> Read Kristy Erdodi's "How Detroit Became My Sexy City" http://bit.ly/9zG13z - 2 years ago
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