Sunday, May 01, 2005

Will on Health Care Costs

Today, George Will informs us that General Motors is a "failed welfare state", because it offers health insurance coverage to its employees and that coverage is expensive. (He presents another complaint as an afterthought - that many GM brands and cars are unattractive to consumers. So perhaps he means that GM is like Lada, except Lada didn't have to pay its employees' health care costs.) I'm still trying to figure out what he means here:
But remember: Employer-provided health insurance is employee compensation. It became important during World War II, when there were wage controls and a shortage of workers. Because wages could not be bid up, companies competed for workers by offering the untaxed benefit of health care. If GM's $5.6 billion were given not as untaxed workers' compensation in the form of health care but as taxable cash compensation of equal after-tax value, it would cost GM substantially more than $5.6 billion. Which means that soon -- GM's UAW contract is up in 2007 -- GM's workers may have to give back a value of at least $1,500 a year.
Hm. So, but for the wage controls of WWII, no GM worker would have cared about having health insurance? (Perhaps that explains why no corporation which has come into existence since the end of WWII's price controls offers health insurance to its employees.) Is he suggesting that if GM were to convince the government to offer a national health care plan, worker wages should increase by approximately the $6,500/year GM presently spends on their care, but due to tax considerations that GM might have to wrestle with the UAW about offering only a $5,000 raise to substitute for health care coverage? Even accepting Will's argument, I somehow don't see it as likely that the UAW would strike over "only" achieving a $5,000 per worker raise.

In any event, what I found most interesting about this piece was Will's notion that any company that offers health insurance to otherwise uninsured workers is a "welfare state". Presumably, in Will's world (although he certainly would not surrender his own employer-paid health insurance) everybody else should be uninsured.


  1. Welfare state? Having health insurance provided by a private employer is now considered part of the welfare state? Why?

    I guess I can't find the connection. I just always thought that "welfare state" meant government social programs.

    To me, the rise private health insurance is a triumph of capitalism (which tends to be at odds with socialism). Why? Because there is a labor market. People with needed skills are more likely to work at a company that offers benefits. So it can be advantagous for both groups involved.

    But I have no respect for George Will. So whatever...

  2. It is unfortunate the company can't provide its employees with health coverage. Health insurance should be a major priority for all employers.

  3. I hope we can start to improve our health care system as health insurance is very crucial to many lives.


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