Game Change: Health Care

One of the most important points of Stephen M. Pollan's 'Die Broke' and 'Live Rich' books was that life in the American workplace had changed.

So many of America's institutions are based on a business model that belongs back in the golden age of the 1950s - when people earned livable wages in a job they might have for twenty or thirty years.

Health insurance is probably the most obvious of these; the American private insurance system worked beautifully when people worked for the same company for most of their adult lives; and therefore stuck with the same insurance company.

However, the system no longer works like that.

In general, people don't have 'jobs for life' any more. In fact, in Die Broke Pollan pointed out that most successful Americans give each job two years and then move onto something new - and if it's not the 'new American worker' jumping ship, it's corporate reshuffles firing huge portions of their workforce to improve margins and nudge company stock up a few cents.

This fluidity in the workplace is actually a real boon for corporate America. With less job security, companies can pay less to attract employees, or offer reduced benefit packages. Old institutions, like powerful unions who bent companies over a barrel for wage increases, are rapidly becoming a thing of the past (and partly because of their own greed and short-sightedness; a good example being in the American auto industry.)

But this is a terrible thing for you and me; the average American worker.

Not having any security in your job is a terrifying thing; I spent two years in my last job with the Pink Slip of Damocles hanging over my head and when it finally dropped, it was almost a relief not to have to worry about whether your job, or your entire company, would exist the following week.

But more noticeably, a fluid workforce means that wages are driven down; middle class incomes in America have actually dropped by 9% since the year 2000. The concept of a 'living wage' is becoming something of a fantasy. When I first moved here, the wonderful thing about America was that it was still possible to live on one person's income. These days, the cash-strapped middle class are finding that both parents need to go out to work just to make ends meet (as has occurred in most of the much more heavily taxed countries of Europe.)

And then there are benefits...

I've written several posts on the subject, but I'll reiterate my point one last time; losing your job is a terrifying thing in the United States. Just yesterday, our doctor called us to tell us that our health insurance had been canceled; it turned out that the company picking us up from our last program hadn't processed the forms we sent them two weeks ago, which in turn meant that the coverage that was meant to start at the beginning of the month hadn't.

Fortunately we got the situation sorted and our coverage reinstated retroactively; but it was a scary moment. Middle class families go bankrupt every single day because of medical expenses.

My point is this; back in the 1950s, when people had 'jobs for life', the idea of private medical insurance worked beautifully because people would stay with the same insurance company for decades. These days, the workforce is constantly switching jobs; and the current system is inadequate to deal with that.

What's worse, the health insurance companies have used this as an excuse to make gouging premium increases and quietly sift out the 'uninsurables' along the way; the poor folks who actually need health care, but can't get access to it because of 'pre-existing conditions.'

As Andy and Paul Mitchell pointed out in my last post on the subject; 45% of Americans are already on some kind of government-funded health insurance program and that figure is increasing every single day.

This is why I believe we'll have a European-style single payer system - so-called 'socialized medicine' - within the decade; because the private insurance companies are eating themselves alive and leaving more and more people for the government to look after.

One final point about the changing face of the American workforce; it's becoming increasingly popular, or necessary, to become one's own boss here in the states. 42 million Americans class themselves as 'freelancers' and that's a figure that's increasing every single day.

Working as free agents can be an attractive proposition; with fewer companies hiring full-time employees, a temporary contract worker is a commitment-free way to get the skilled staff you require onboard without having to offer them benefits and salary.

Along with single-payer health care, I wouldn't be surprised if the entire American middle-class was 'unemployed' within a decade; working for themselves as 'private contractors' and pulling extended gigs with companies that are too frugal to hire employees full-time any more.

But this is the area in which the current health care system is most deficit. Buying insurance outside of a company scheme is tough. Many people are denied because of pre-existing conditions. The rest are forced to pay 300% more than they would as part of a company scheme. It's currently an impossible situation; only the most successful freelancers can survive within it.

In the next few years, though, individual purchasers, such as freelancers, are going to become the largest growing customers for health insurance. Unless the insurance providers grow up and start offering them affordable coverage, this 'freelance middle class' will be the single biggest catalyst to ensuring the inevitable introduction of 'government funded' health care for all.

If the raging debate on the health care industry has helped me realize anything, it's that this is a battle the opponents of 'socialized medicine' have already lost.