If This Keeps Up, Single-Payer Will Be Here Before You Know It

An article published last month on Remapping Debate points out what may become a trend among American employers:

Beginning next month, Sears and Darden — the latter of which owns several restaurant chains, including Olive Garden and Red Lobster — will cease to offer defined benefits in which the employer, as part of its compensation package, provides employees with a set of health insurance benefits and continues to offer those benefits even when the employer’s costs for insurance rises.  Instead, they will implement a defined contribution model, in which the companies will offer employees a fixed annual sum — like a voucher — that they can use to buy insurance for themselves and their families.

A voucher? Sound familiar?

Along with this monumental change comes what the writers of the article term a “large-scale marketing campaign,” designed, of course, to sell a very undesirable modification of “the multi-generational compact between management and labor.”

That marketing campaign, just like right-wingers selling their distasteful wares, purposely uses terms like “choice” and “empowerment,” as in, the good-hearted employers are merely offering their employees more choice among insurance plans and empowering them to take charge of their health care. Who could be against that?

Remapping Debate, though, is not sold:

According to numerous health care experts, economists, and even some in the consulting industry itself, however, that rhetoric belies the true motivation behind the shift: reducing the company’s exposure to ever-rising health insurance costs by shifting those costs directly onto employees, who will be forced to either pay more out of pocket for the same level of insurance or pay the same amount for less robust coverage.

An important point to make here is that this fixed contribution scheme is just the latest attempt to shift costs from employer to employee:

Several experts pointed out that benefits have already been significantly eroded in the group insurance market, as many employers have switched to “consumer-directed” health care models in which low premiums are coupled with very high deductibles and occasionally a health savings account. But [Kathleen] Stoll of Families USA said that the implementation of the fixed contribution model could greatly exacerbate that problem. When their contribution to health insurance is already limited to a fixed amount, Stoll said, employers will be more liable to make changes to that contribution. If the company has a bad year, for example, it may simply choose to freeze the contribution or even lower it in order to cut costs.

In my experience, the company doesn’t even have to have a bad year to cut costs. Profitable companies have been squeezing employees, when it comes to wages and benefits, including health care benefits. This is just another cost-shifting model and look out if it becomes popular:

According to Jacob Hacker, a professor of political science at Yale University and an expert on the American health care system, if the defined contribution health insurance model were to catch on, it would fit into a larger, historical context.

“The fundamental thing to recognize is that this is part and parcel of the more general risk shift,” Hacker said. “The reality is that health care, retirement, all of the fundamental sources of security are shifting from larger organizations like employers and the government onto individuals.”

This cost-shifting, though extremely problematic for workers in the short-term, may mean that in the long-term Americans will finally say goodbye to employment-based health insurance coverage altogether and demand a single-payer, Medicare-like system for all.

And the sooner the better.



  1. I hope you’re right about this, Duane, but I’m not convinced this trend will sway the public’s deep aversion to the idea of government healthcare. There are too many people getting rich from direct-to-consumer marketing of treatments, tests and drugs. Better a magic pill than to be told, “eat right, eat less, and get plenty of exercise”. Ugh. Plus, healthcare is something easily ignored – until you really need it, of course. Maybe what is needed is an effective advertising campaign to change the meme. That would be a challenge, but maybe not impossible. Lately, for example, I’ve been hearing some banker’s-association ads on the radio denigrating credit unions for not paying taxes like banks do, thus ignoring what should be obvious, that all such taxes must come out of profits from higher consumer costs. Message: the consumer will be manipulated, one way or the other. Madison avenue, are you listening?


  2. Sedate Me

     /  November 23, 2012

    Speaking as a person who was born with single-payer as a right of citizenship (Canadian), it sure as hell makes it easier for employers to provide health-care to employees. All employers have to worry about is offering drugs, dental, massage, private hospital rooms, etc…or not. Because the government has the rest covered (and at lower rates).


  3. Anonymous

     /  November 23, 2012

    Before Darden screwed his employees out of their defined-benefit plan, he clobbered them with a massive wage cut. This is from my own blog from Sunday, May 08, 2011

    Worst Pay Cuts in America

    Red Lobster is a U.S. chain of seafood restaurants, also operating in Canada and Japan. It is aimed at the mid-level casual dining segment of the market. It is owned by (Bill) Darden Restaurants in Orlando, Florida.

    In Joplin, Missouri, as presumably in the rest of the firm, this week the Red Lobster/Olive Garden company overnight slashed salary levels to below the Federal minimum wage rate.

    In the two cases I have heard about, admittedly a small survey, without warning or notice an 11-year veteran of the Olive Garden was cut from her roughly $14 dollar an hour job to a $5 dollar an hour job, and at the same time a 21-year veteran employee of Red Lobster was cut down from $17.50 to the same five dollar level, an incredible 71.3 percent pay cut!

    With no severance package, no transitional pay scales implemented, and no opportunity to benefit from their years of contributions to the state unemployment insurance system, the reward for longevity at these places was a big fat zero. Next week they must start over again at the same training wage rate as new hires.

    A layoff would have likely obligated the company to make the payments for qualified unemployment benefits as former Darden Restaurant employees, but it is a ‘cost center’ expense nonetheless that they can easily evade through this new poverty-wage-standard approved by our own public servants.

    Writing this on the weekend, I have been unable to contact the company directly, but I believe this “training wage” is now effective nationwide.


  4. Anonymous

     /  November 23, 2012

    Don’t know how that happened, but I post as Jane Reaction.


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