Single-Payer Healthcare: Why Republicans and Business Leaders Should Push For It

The Republican campaign to “repeal and replace Obamacare” has ignited a furious debate about the healthcare system in America. Who should have coverage, who should pay for it, what services should or should not be covered… the arguments are intense.

For many, the dream is to get the United States to move to a single-payer healthcare system, where the government basically serves as an insurance provider for all. That dream is typically viewed as a left-wing fantasy, “socialism” applied to a large portion of the economy.

There are compelling reasons why single-payer healthcare may actually be a huge benefit to business and labor markets, however.

Single-Payer Takes A Burden Off Business

Think for a moment about the burden placed on businesses to select and purchase health insurance for employees.

Almost all businesses have to devote time and resources on a regular basis to set up benefits for new employees and process COBRA for employees who leave, requiring constant Human Resources attention. There’s the annual “open enrollment” period which involves negotiating deals with insurance providers, educating employees on any changes coming up in the next year, which plans are available to choose from, and how much of the cost will be shared between the business and the employee. And that’s before you even get to processing the paperwork!

It’s all a massive burden, and distracts everyday businesses from focusing on providing the goods and services which represent their reason for existing.

Why not take that duty off of businesses across the country and let them focus on real, valuable work?

Employer-Based Health Insurance Distorts The Labor Market

There is a downside to landing a job with a generous healthcare program, in that the health insurance can become an anchor keeping that person in that particular job. Another opportunity may come up (a job with a small startup, going to school, etc.) that an individual simply cannot choose to take because they can’t afford to give up the health insurance they currently have.

This is where Obamacare’s ban on restrictions involving pre-existing conditions plays an important role. Before that rule was put in place, many people had to rule out any job change because of the potential loss of healthcare coverage for themselves or a family member suffering from a long-term, chronic health issue.

That ban is very much “up for grabs” in the current healthcare debate, potentially putting workers back into a situation where they have to stick with a particular job simply due to the associated health insurance.

What if, instead, we had a labor market that was completely disengaged from these considerations? Where health insurance didn’t impact an individual’s career choices?

Under a single-payer healthcare system, the labor market would have this serious obstacle taken away, allowing it to work better for both workers and employers.

Employer-Based Health Insurance Hurts Older Workers

We all know that health insurance costs rise with age, and since our current system has businesses paying the bulk of those costs, this adds to the cost of an older worker from their perspective.

That additional cost quite literally forces employers to push older workers out of jobs in favor of younger, more affordable employees. This situation hurts both employers (who lose experienced workers) and the older employees themselves, who are often forced into retirement far earlier than they would have chosen.

For the unemployed, this age-related disadvantage presents an additional obstacle to finding work. Faced with a number of candidates for an open position, employers have a built-in reason to reject older workers due to the additional healthcare cost they would have to take on.

Again, this distorts the labor market by allowing health insurance factors to play a role in a decision which should be left to an employer and a worker, with nothing else getting in the way. Under single-payer healthcare, this issue simply goes away.

Employer-Based Health Insurance Hurts Small Business

Much of our current healthcare system is built around pricing schemes negotiated between insurance companies and healthcare providers, like hospitals or physician networks. Then the insurance companies negotiate deals with employers to offer coverage to their employees. As with most negotiations, the bigger one side of the negotiation is, the more influence they have to get a better deal.

In practical terms, that means large companies with thousands of employees can negotiate better benefits and/or lower prices for health insurance. Small businesses, on the other hand, get stuck with fewer choices, less coverage, and higher prices. The Rand Corporation published a report detailing just how differently insurance rates grew for large vs small companies over the course of several years.

Small business, however, is the engine that drives employment and economic growth in the U.S. According to the Small Business Administration,

Small businesses make up:
99.7 percent of U.S. employer firms,
64 percent of net new private-sector jobs,
49.2 percent of private-sector employment,
42.9 percent of private-sector payroll,
46 percent of private-sector output,
43 percent of high-tech employment,
98 percent of firms exporting goods, and
33 percent of exporting value

So why do we hang on to a healthcare system that puts small business at such a disadvantage, in an area that has nothing to do with commercial activities?

Single-Payer Healthcare Would Let Business Off The Leash

So as we’ve seen, there are four major factors from adopting Single-Payer Healthcare which would free businesses to focus on their work and allow US labor markets to work much more efficiently:

  1. Eliminate the burden placed on employers to select, purchase, and administer health insurance for their employees;
  2. Workers would gain freedom to make career choice independent of health insurance considerations;
  3. Older, experienced employees would stay in the work force longer, and have an easier time finding work if unemployed;
  4. Small businesses would no longer be at a disadvantage at providing health insurance relative to larger firms.

Maybe it’s time for Republicans to start talking up the tangible, serious economic benefits for the labor markets and small business in particular that would result from implementing a single-payer healthcare system?