Health care and the minimum wage
TRY not to think of Michael Dukakis's medical insurance proposal as a national health-care program or as a hidden payroll tax. Consider it an innovative rethinking of the concept of the minimum wage and of what minimum wages can and cannot do. Governor Dukakis has proposed that the federal government require almost all employers to provide their workers with basic health insurance. Along with at least $3.35 an hour - the current federal minimum wage - every employee included would receive coverage for many medical expenses.
More than 20 million Americans have no health insurance. The problem falls largely on the working poor. Yet health care is the largest unpredictable factor in the average family budget. To the uninsured, the difference between good health and a disabling disease is the difference between making it and being wiped out financially.
Insurance was invented to deal with this by spreading the costs of disaster among many policyholders. Thus, group policy prices tend to be lower than the same coverage purchased by an individual.
Health insurance - especially in the form of health maintenance organizations - also plays a vital role in encouraging preventive medicine and healthy living. These practices are particularly important to children and the unborn. The insurers have an interest in promoting health-care choices that result in lower overall costs to them.
Thus, each dollar an employer pays for health insurance usually buys more coverage than a dollar spent by an individual. Mandatory health insurance would direct the next change in the minimum wage to one place where help for the low-wage earner is needed most. It would make their economic position far more stable and tenable than the minimum wage alone does.
Mandatory health insurance would begin to advance the minimum wage in another direction - flexibility. Today's $3.35 minimum wage does not buy nearly the amount of food and shelter it bought when it was put in effect. Mandatory health benefits would, by contrast, provide a stable benefit, automatically adjusting for inflation (or even deflation).
Because the benefit, not the cost to the employer, would remain constant, employers' incentives to find affordable ways to provide health care would increase. Employers and insurers, who have market clout and sophistication, are more likely to strike bargains than individuals who seek health care under the immediate pressure of illness and injury.
An appropriately shaped mandatory health plan could also help create full-time jobs. If the benefit is based upon hours worked, it could reduce the incentive that now exists for many employers to hire part-timers - without benefits packages - instead of full-time employees.
In short, something like Mr. Dukakis's plan breathes new life into the concept of minimum-wage legislation.
It focuses on providing benefits that the low-wage earner needs most, it provides stability of benefit received from work, and it provides market pressure to keep health care costs down for all. Finally, by providing to all workers benefits that now go mostly to the middle- and upper-wage earners, this type of plan reaffirms the dignity of all our laborers.
On the other hand, criticisms leveled at the minimum wage can also be leveled at this plan. For example, if one believes that minimum wages drive lower-paying jobs overseas or off the market altogether, one may oppose this plan; it will have the same sort of effect on employers' costs.
Whether or not Dukakis is elected, health care will be on the national agenda during the next four years. This proposal is a major and constructive addition to the health-care debate.
Kenneth S. Gallant is associate professor at the College of Law, the University of Idaho.