To win the election and, once in power, to create new
jobs, Democrats need a big plan everyone can
understand: Have the government pay the first $1,000 in
healthcare costs for every man, woman and child.
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By Thomas Geoghegan
July 27, 2004 | In this summer of our discontent with
George W. Bush, here's the big question: Is John Kerry
going to try to win for himself, or bring back the
Democrats as the majority party? Democrats should try
to learn more from Ronald Reagan than just smiling.
They now know how to grit their teeth and out-grin the
GOP (though, unlike Reagan, they keep some gray in
their hair). But Kerry and others have failed to learn
the other lesson: Give people an idea they can
understand. Make it big, make it radical and, above
all, make it simple.
It is very hard for the Democrats to forswear the cult
of complexity. But they can't become the majority party
if they continue to make everything too complicated.
For example, I actually like Kerry's program on health.
But I doubt anyone but the New York Times' Paul Krugman
can explain it.
Labor law reform? Trade? Education? And these in a
country where the people the Democrats want to vote for
them don't even read a newspaper.
At times, John Edwards seems to get it. In his campaign
for president, he put out one or two very big ideas,
like one free year of college. Being a former trial
lawyer, he knows in his gut he has to keep it simple.
And yet Democrats have a big, Reagan-like idea, their
version of "Star Wars," something simple that everyone
will understand: a single-payer national health
insurance program like Canada's.
Democrats really have no choice. Aside from needing a
simple idea like that to win the election, if they win
they will face two big problems that could destroy a
Kerry-Edwards administration. First, it seems that even
in a boom, U.S. employers now cringe at adding jobs.
(In June, the figures for new jobs dropped back again.)
Second, boom or no boom, they cringe at coughing up to
pay for health. So in the future, we will have fewer
and fewer jobs, at least the kind that pay benefits --
jobs with bells and whistles. And as for health
coverage, more of us will be underinsured or totally
It is instructive to look at which countries around the
world have solved this problem and which have not. In a
way, the so-called free-market United States has much
in common with the social-market Germany. Normally,
these two countries are seen as opposite social models,
but both of late have had to struggle to add jobs.
America and Germany have the same labor market mess, in
which employers have to pay for health, which can
amount to 18 to 20 percent of the payroll. It's not
just the huge absolute cost but the uncertainty as to
what future costs will be -- even a little uncertainty
can paralyze a boss who wants to hire.
But look at Canada to the north. Or Great Britain,
Germany's rival. Neither has this problem: In Canada
and Britain, it's not the employer but the state that
pays. So it's not a big deal to add extra jobs. Or look
at other countries that are close to the single-payer
system, such as the Scandinavian nations and Australia.
What might be called the "single-payer difference" is
only going to grow larger. In years ahead, as new drugs
appear, as we beg for our lives from the drug company
gods, the cost of healthcare for one Fortune 500
company could dwarf what is spent for health in most of
Africa. Put it this way: General Motors in the United
States will tremble to add a job at the margin; General
Motors in Canada will go blithely ahead.
Maybe the best single predictor of a country's ability
to add new jobs is how close it comes to single payer.
In Norway, Sweden and Finland, despite huge tax levels,
it seems to be relatively easy to add jobs. In
Australia, which has a mix of single-payer and
employer-paid healthcare, the record on jobs is mixed
-- it's better than in the United States, France and
Germany, but not as good as in Canada, Britain, Finland
The difference is not a left vs. right split. It has to
do with whether the state pays or the boss pays. In
Europe, some social democracies, such as France and the
Netherlands, where the employer pays, struggle to add
jobs. Other social democracies, like those in
Scandinavia, do not. It is ironic that of all
countries, America and Germany, despite being rival
social models, would end up in the same labor market
mess. It's also ironic that Germany may be having
trouble adding jobs not because it's too socialist but
because, in rejecting a single-payer system, it's not
No doubt, at this point, some readers are spluttering:
"But Germany's unemployment is far worse than
America's." Is it? Yes and no.
Since it's more fun to be contrarian, I'll focus on the
"no." (See the Wall Street Journal's editorials for the
"yes.") No, it's not worse, at least if you're a
college grad. The reason is that in Germany as in the
United States, the employer has to pay for health
insurance. Since in Germany employers have to pay for
health for everybody, they might as well go upscale and
do it for blue-chip human capital. The result is that
in Germany, it's not people like you and me who go
jobless -- it's the people with no skills. Because U.S.
employers don't have to pay for every employee's health
insurance, they invest in freelancers, part-timers and
people with low skill levels. In fact, if you're a
college grad, you'd be better off in Germany, at least
in getting a true college-type job.
Here's one eerie glimpse of America's future: Since
March 200l, the employment rate for college grads has
dropped at the same rate as that for high school grads.
And once unemployed, a college grad now has a much
harder time finding a new job, much less a good one. He
or she is not just less likely to be employed, but more
likely to be among the long-term jobless. In other
words, America may wake up one day to find that for
college grads, there is actually some "structural"
unemployment. Such a thing would be simply
inconceivable in Europe.
What's worse, I suspect the statistics understate the
actual unemployment of college grads. With so many
people in "sales" and "working from home," it's pretty
hard to say who really has a job. Many people with
college degrees can say, "I'm self-employed," or "I'm a
salesman." For example, Willy Loman in "Death of a
Salesman," delirious on his deathbed, would still have
told the Labor Department, "Yes, I have a job."
More important, a huge percentage of college grads in
America have settled for "non-college" jobs --
something many Europeans would find odd. About one out
of five of these grads is doing the equivalent of
selling ties at Macy's, according to the last big Labor
Department study in the 1990s. Although some economists
think that percentage will drop, the scarier thing is
what we in America define as a "college" job. Ready?
Claims adjuster ... cop ... I'd add salesman, or car
salesman, but probably only a college grad could put up
with listening to all those self-help tapes from
In Germany no college grad would consider "cop" as
being a college job, and none would end up selling ties
at the equivalent of Macy's. Not one in five anyway.
And German grads sure don't do much manual labor.
But over here? When I deal with the ironworkers or
carpenters who come to see me as a labor lawyer, I now
assume that some of them are college grads. A good
friend of mine, a blue-collar worker in construction,
has a J.D.
And they are the lucky ones. They could have "college"
jobs as claims adjusters, and at least in this type of
manual labor, they probably have health insurance.
Under Bush, job growth, even for college grads, has
predominantly been in industries that offer no health
insurance. I have clients who have B.A.'s and are
fathers but have no health insurance, or they have the
kind with a deductible of $5,000 or more.
So why is it that college grads in Germany from time to
time whine, "Oh, if only I were in New York or London,
then I'd make some money." If only I were out of here
I'd be Donald Trump. Sure. The great thing about being
in Germany is that, unlike in America, one can
fantasize this way about being an Ubermensch, or free-
market Superman. As Americans, you and I know how far-
fetched this is. You and I know, at this point in our
lives, that we will never be, and never could have
been, at the top of Lazard Freres. But in Germany, many
people like us go on thinking, "Oh, I could have been a
But is employer-paid health really holding us back? In
the United States, the situation is a bit more
complicated than in other countries. It's best to think
of the United States as a spectrum of health systems.
At the highest level, in the top 10 percent, the
incomes are so huge that healthcare costs a relative
pittance. Those people might as well be living in
Canada or Sweden. In the middle, i.e., where you and I
are, it's like Germany or France -- the employer has to
pay for health. But it's in the middle where, like
Germany, America struggles to add jobs.
In the lower middle, i.e., among the poor (to be
blunt), America has a system that from an employer's
point of view is better than single payer -- no payer.
New hires may have no choice but going out on the
street to die. Think of our 44 million uninsured and
millions more underinsured. If U.S. employers had to
pay for their health, how many parking valets and maids
would still have jobs? If we had employer healthcare
like that in Germany or France, our unemployment rate
might be much higher than theirs. Imagine the murder
rate in Chicago, New York or Detroit if we had
universal, employer-paid health insurance. And worse,
who would be left to ring us up at Wal-Mart?
It's fine for Democrats like Kerry to rail about
"outsourcing" jobs abroad. But what's killing college
grads in this country is outsourcing at home -- into
jobs that don't pay healthcare and that college grads
So what should Kerry do if he is elected? At first
blush, what he proposes -- picking up the uninsured by
expanding Medicaid and providing relief to employers if
their premiums rise too high -- seems to make some
sense. To employers, Kerry's promise is: "I'll insure
you against the cost of health insurance." And to my
shock, though the idea seems far too expensive, I find
myself agreeing with what he wants to do.
Still, without a single-payer system, the Democrats get
into a deeper trap. The more they try to shore up the
employer-payer system, the worse it is for jobs. On the
other hand, if they create a single-payer system that
picks up the cost of healthcare only for the working
poor, then they reinforce investment in the lowest-
skill jobs. Without a full single-payer system, the
more outsourcing there will be -- not just to overseas
workers but to the working poor at home.
The Germans and the French, of course, have the same
problem. And their barrier to creating a single-payer
system is also the same: Too many people have a stake
in the existing setup. In the United States, it is the
whole conglomerate of health insurance interests, with
their lobbying slush funds and TV ads. In Germany and
France, it may be the simple fact that employers (and
unions) like to staff up the bureaucracies of national
While businesses in all three countries have every
reason to go to single payer, they consist of people
who in their real lives like the way things are. For
that reason, I disagree with those who think that one
day, over the rainbow, businesses in America will opt
for single payer because it's so rational and is in
their interest. Business people have outside lives as
rich people, and rich people detest single payer. So
even in Canada or the U.K., where single payer has been
so good for business, I'd bet that if CEOs had a say,
they'd vote to get rid of single payer; as rich people,
they simply hate it.
So how do we get there? Well, here are three
possibilities: 1) Against all odds, business will put
in single payer. 2) Labor will come back, and labor
will do it. 3) There will be a big depression, and
thanks to an experiment in cloning, we will get FDR to
come back and do it. But it's unclear whether even FDR
could do it now. In 1935, the great reformer Sen.
Robert Wagner actually proposed national health
insurance, and it almost got through Congress, with no
one paying much attention.
But back then, the cost was not heart-stopping. Back
then, in 1935, DNA decoders James Watson and Francis
Crick were still kids, and there were no antibiotic
drugs. Now, every time we see a story about a
breakthrough in stem cell research, it means the cost
of moving to single payer is only going up.
So what is to be done? Here's my unsolicited advice to
Kerry: First, the Democrats have no way out. If they
really want our country to stop struggling to add jobs
as health costs go up, then, somehow, they have to move
to single payer. They have to remove that payroll add-
on for each job of 18 to 20 percent, which could rise
to 30 percent if medical breakthroughs keep coming.
The Democrats have to stop pretending there is some
other fix. There isn't. Even the German left has begun
to realize it has to move to single payer. Although I
love Kerry's current plan, the most it could do is stop
the cost for employers from reaching the skies. In the
long run, we have to move the cost, all of it, onto the
Second, the Democrats have to creep up on this. Yes,
I'd like to shoot Niagara and leap over to the Canadian
system. Yes, single payer is not so outlandish, even in
cost. Even now, the federal government is already
three-fifths of the way to paying for the equivalent of
single payer if you add up the costs of Medicare,
Medicaid, all the other aid to hospitals, the National
Institutes of Health and the subsidies to drug
companies that sell cheap to those damn socialist
countries but turn around and gouge us here. And why
not add in the health component of the budget for the
Department of Veterans Affairs?
We can afford it, but we can't get it. Why? The vested
interests are too powerful. People out there rattle
easily; they don't understand it.
So Democrats should start with something very simple
that does not attack the vested interests too directly
and that the people who vote for Kerry will understand:
Pay for the deductibles -- the first $l,000 per year
for every man, woman and child, insured or not.
Wouldn't that be expensive? You bet. But so is Kerry's
current plan. Wouldn't employers and insurers just
raise the deductibles? There are ways to discourage
this; for instance, one could institute penalties. But,
in a way, I hope that this is what employers and
insurers try to do. If they raised deductibles, it
would clear out more territory for an even larger
guarantee. The government would just raise the $1,000
to $1,500. In 10 years, it might be up to $2,000. In
other words, if insurers kept raising the deductibles,
they'd end up liquidating themselves.
And people would not be worse off. Indeed, what people
need more than coverage for their big bills, which are
devastating but largely uncollectible, is the freedom
to see a doctor before they get too sick. The real
problem is the little bills: not the $25,000 for a
hospital stay but the $1,000 deductible that could have
prevented it. For we live in a country in which half of
families have practically nothing in savings -- a few
thousand dollars, often less. So Mom or Dad holds off
on a visit to the doctor's or a blood work-up until the
situation becomes catastrophic.
Isn't it time people really got something back for
their taxes? FDR, if we ever do get him back, would
tell us: We can't get any big change past these
dreadful Republicans unless everybody in the country
can see it, understand it and think, Hey, I would
benefit. Or unless we take a tip from some Germans, who
are trying to figure out a similar way, step by step,
to move over to single payer. They would call it
"citizen insurance." Democrats should do the same.
The hard truth is that we won't cure our employers of
their paralytic fear of hiring until we figure out a
way to move to single payer.
About the writer Thomas Geoghegan, a lawyer, was a
Fulbright Fellow teaching in Germany in 2001 and is
currently writing a book about Germany and the United
States. He is the author of "In America's Court" and
"Which Side Are You On?"