Monday, April 19, 2004
Rent-seekers for Hillarycare
[Daniel Gross, "Capitalists for Hillarycare," Slate, 16 April 2004.]
Major corporations who once scoffed at socialized medicine in the U.S. are all of a sudden cozying up to the idea. Far from social activism, the motivation behind this emerging corporate movement has more to do with trying to orchestrate a massive bailout:
In the early 1990s, big business largely opposed Hillary Clinton's ill-conceived effort to establish a government-run universal health insurance plan. But over the past several years—and especially in the past year—large corporations, and the trade groups that speak for them, have been subtly changing their tune.
The first hint of change was Big Business's embrace of the Medicare prescription drug benefit. At the time, Moneybox noted that the Big Three auto companies, with their large unionized workforces and huge numbers of retired employees, would be among the largest beneficiaries of a greater government role in providing health care.
That interest in more government health care is spreading from automakers to other manufacturers. In December, a study released by two business establishment trade groups, the Manufacturers Alliance and the National Association of Manufacturers, found that when it came to structural costs—environmental compliance, taxes, and employee benefits—American companies pay more compared to many foreign competitors. Structural costs add 22.4 percent to the price of doing business in the United States—more than in Canada, Britain, or South Korea. The largest single structural cost borne by the American private sector is health care. The clear implication: Unless society (read: the government) does something to relieve manufacturers of their health-care burden, the sector will suffer further.
The health-reform meme is now colonizing another group of Fortune 500 companies—major hospital chains. This week, HCA, the nation's largest hospital company, unexpectedly lowered earnings estimates for the year by about 10 percent. The main reason: It had to set aside extra cash to deal with swelling numbers of uninsured patients who can't pay their bills.
HCA CEO Jack Bovender came close to calling for a single-payer system, though he still couldn't utter the phrase "socialized medicine." "Hospitals have become the ultimate safety net for health care services for the vast majority of America's more than 44 million uninsured," he said. "It is time for all sectors of society, both public and private, health care and non-health care, to participate in solving this societal issue, by providing affordable health insurance for all Americans and more equitably sharing this growing cost to society."
This is an excellent example of rent-seeking, where companies that ought to be engaging in competitive behavior to earn consumer dollars are instead devoting resources to lobbying the government for special treatment. If this trend continues, and it may very well do so, the movement should be called out for what it is and the companies forced to defend such a huge transfer of wealth into their pockets.
[Daniel Gross, "Capitalists for Hillarycare," Slate, 16 April 2004.]
Major corporations who once scoffed at socialized medicine in the U.S. are all of a sudden cozying up to the idea. Far from social activism, the motivation behind this emerging corporate movement has more to do with trying to orchestrate a massive bailout:
In the early 1990s, big business largely opposed Hillary Clinton's ill-conceived effort to establish a government-run universal health insurance plan. But over the past several years—and especially in the past year—large corporations, and the trade groups that speak for them, have been subtly changing their tune.
The first hint of change was Big Business's embrace of the Medicare prescription drug benefit. At the time, Moneybox noted that the Big Three auto companies, with their large unionized workforces and huge numbers of retired employees, would be among the largest beneficiaries of a greater government role in providing health care.
That interest in more government health care is spreading from automakers to other manufacturers. In December, a study released by two business establishment trade groups, the Manufacturers Alliance and the National Association of Manufacturers, found that when it came to structural costs—environmental compliance, taxes, and employee benefits—American companies pay more compared to many foreign competitors. Structural costs add 22.4 percent to the price of doing business in the United States—more than in Canada, Britain, or South Korea. The largest single structural cost borne by the American private sector is health care. The clear implication: Unless society (read: the government) does something to relieve manufacturers of their health-care burden, the sector will suffer further.
The health-reform meme is now colonizing another group of Fortune 500 companies—major hospital chains. This week, HCA, the nation's largest hospital company, unexpectedly lowered earnings estimates for the year by about 10 percent. The main reason: It had to set aside extra cash to deal with swelling numbers of uninsured patients who can't pay their bills.
HCA CEO Jack Bovender came close to calling for a single-payer system, though he still couldn't utter the phrase "socialized medicine." "Hospitals have become the ultimate safety net for health care services for the vast majority of America's more than 44 million uninsured," he said. "It is time for all sectors of society, both public and private, health care and non-health care, to participate in solving this societal issue, by providing affordable health insurance for all Americans and more equitably sharing this growing cost to society."
This is an excellent example of rent-seeking, where companies that ought to be engaging in competitive behavior to earn consumer dollars are instead devoting resources to lobbying the government for special treatment. If this trend continues, and it may very well do so, the movement should be called out for what it is and the companies forced to defend such a huge transfer of wealth into their pockets.
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