Reality of health-care reform: We're all subsidized by the poor

Jon Margolis

September 20, 1993|By Jon Margolis

REGARDLESS of the outcome, there is about to be an interesting debate over whether it is a good idea to require businesses to provide health insurance for their workers.

And regardless of the outcome, the debate itself contains an important lesson, no less important for being unwelcome.

Begin the lesson with one of those small businesses that is going to be so much discussed in the debate, a little restaurant. Call it Mom and Pop's Luncheonette. Mom and Pop own it and work all day with the help of five employees, none of whom has health insurance.

Not that Mom and Pop are heartless. But it's a low-margin business. They don't earn enough profit to pay the full costs of health care. The workers, with their low wages, could not afford the payroll deductions if they had to pay part of the premiums.

Now comes Bill Clinton proposing that all of them -- Mom, Pop, the cook, both waitresses, the dishwasher and the busboy -- no longer have a choice. They'll have to get at least some minimal health care program.

According to one tentative White House proposal, the plan would cost each employe $240, while Mom and Pop would have to pay $1,440 per worker. For a business of their size, there would be a federal subsidy. Still, the net cost to Mom and Pop would be about $5,000, while each worker would lose about $120 from annual take-home pay.

For the workers, that's a bargain. Almost all of them now spend far more each year in uninsured health costs. Or, worse, they go without care and treatment. But organizations that claim to represent Mom and Pop are already complaining that employer mandates will put Mom and Pop out of business, or force them to lay off some of their workers or at the very least keep them from giving wage increases.

Forget for a minute that these organizations don't really represent Mom and Pop, who can't afford the dues. Most of the "small business" lobbies actually represent large businesses that are not corporations.

Forget, too, that there is a certain amount of disingenuousness BTC in the whining from the business community. After all, if the costs are mandated, nobody is going to be put at a competitive disadvantage. Joe's Grill, Mom and Pop's competitor a few blocks away, will have the same costs. If Joe, that old softie, has already been providing health care, he'll benefit, and deservedly so.

Still, there is some foundation to Mom and Pop's complaint. At their income, $5,000 isn't easy to absorb. Either they end up $5,000 poorer (well, $4,250 after taxes) or they start charging more for hamburgers, sodas and tuna sandwiches. Not much more, but maybe enough so that a few of their customers decide to brown bag it instead of eating at Mom and Pop's. Then higher prices might mean less income, maybe even business failure.

That's the debate, which we will now leave to the debaters so that we may turn to the lesson. The lesson is that our present level of material comfort is to no small extent subsidized by the lowest-income workers among us. Politicians and academics may debate the extent to which the rich ought to subsidize the poor. Nobody notices the continuing reality of how the poor subsidize everyone else.

It isn't just Mom and Pop who benefit because they don't have to provide health care. Their customers get cheaper hamburgers, sodas and tuna sandwiches. And their customers are all of us.

Nor is it just restaurants. If you work in an office, the chances are that the folks who clean it don't get health care. If they did, their service would cost your employer more. This would leave less for you because you can bet that your employer isn't going to take it out of profits.

It isn't just health care, either. The workers who pick the lettuce and tomatoes that Mom and Pop put in their sandwiches, and that all of us buy in the store, aren't treated quite as badly as they were in 1960 when Edward R. Murrow presented the TV documentary "Harvest of Shame." But neither are they treated, or paid, a whole lot better.

If they were, Americans might do the work, obviating the need for pliable foreign migrants. But then our lettuce, tomatoes, radishes and mushrooms would cost a little more. We can all buy more toys, ball game tickets and restaurant meals because our food is picked by serfs.

We would rather not pay the money. Even more, we'd rather not think about it. The health care debate might just deprive us of the luxury of this particular piece of national denial. If so, regardless of its outcome, it will have proved valuable.

Jon Margolis is a columnist for the Chicago Tribune.

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