Arming people with tax breaks and free choice, we could have health-care benefits that are competitively priced and are portable from job to job
IN January the Resolution Trust Corp. (RTC), the agency that handles failed savings and loans, closed Perpetual Savings Bank in the Washington, D.C., area. The RTC previously had taken over or closed nearly 100 other thrift institutions, employing more than 14,000 people; another 77 S&Ls, with more than 20,000 employees, remain on the RTC's critical list.
One of the biggest problems facing these newly unemployed workers is the loss of health coverage. They find themselves in the market for an expensive product, health insurance, designed for large company buyers, not individuals. And while company-provided benefits are tax free, these workers are unlikely to get any tax breaks if they buy insurance on their own.
It is a national problem. Last December, the 25,000 former employees of Pan Am saw their company-provided health benefits run out. The same fate awaits 20,000 IBM employees scheduled to lose their jobs, 10,000 being let go by TRW, and thousands being let go by General Motors.
The link between health-care benefits and the place of work is one of the great anomalies of modern life. Unlike auto, homeowners, and most life insurance policies, only health benefits are tied to the job.
In a booming economy, nobody really notices the problems this creates. With consumers buying, rising health-care costs can be padded into the price of goods an services. But when the economy goes soft, the problems become apparent:
First, workers who lose their jobs also lose all of their health benefits. Second, many smaller companies can't afford the high cost of medical benefits, making it difficult for them to attract highly skilled workers. Most of the estimated 35 million uninsured people in America have jobs, or are dependents of people with jobs - they just work for firms without health plans. Finally, rising health-care costs handicap United States businesses in the global marketplace.