Job Lock and Universal Health Care

There has been an interesting discussion about health care in a discussion group on Joel on Software, motivated by a piece on NPR. This coincides with an article in the January 29th issue of BusinessWeek, "Held Hostage By Health Care". The gist of the BusinessWeek article is that many employees are held captive by their health insurance, the so-called "job lock". This results in two things: from a personal perspective, the employee is not doing what they really want to do, and from an economic perspective, the employee is not being utilized most effectively.

I am a 50-year-old self-employed software engineer who unashamedly sponges off his wife's benefits. When I quit my day job which provided full benefits, you can bet I would not have done so had I not had her benefits as a safety net. The risk for me was small: no kids, house almost paid off, no other large debt, large sums already in our 401(k)s, stockpile of firearms in the gun safe in the basement for the coming end-times. Given our personal situation and the fact that she's a physician with a large not-for-profit HMO, you can imagine that national health care issues have been a big topic of discussion during our 23-years of marriage.

Something will have to be done about this as the baby boomers start retiring in bulk. There will be a kind of domino effect as there aren't enough young people domestically to replace all those folks in their jobs, and so those positions will have to automated, off-shored, or just eliminated, and employers can no longer afford to continue to subsidize the growing health care burden of their retirees. The effect of this is that offshore employees will be paying for the health care of an America that is largely populated by retirees. This will not go over well. If the baby boomers become a majority voting block, they will simply keep voting elected officials out of office until someone solves the problem with some kind of socialized medicine. This is going to have to be done even though a big percentage of tax paying citizens are themselves retired, and a huge portion of the national wealth (and, hence, the ownership of publicly traded companies) is tied up in their retirement funds. The math alone makes by brain hurt.

This will also require a lot of rethinking, and some hard talk, about health care on each of our parts, given some of the stories my spousal unit tells me. No, you can't have a CAT scan just because you think you need one. Socialized medicine will pay for your kidney transplant three years from now, if you're still alive. Your alternative is to pay for it yourself. You're still drinking after your first liver transplant? Sorry, no third liver for you.

I'm amazed big corporations aren't all over this like white on rice. (The BusinessWeek article suggests some are.). Is employee mobility that scary? Have they mistreated their employees so badly that they think they need the health care lasso to keep them on the job? Is the cost of employee turnover in the short run so much scarier to management than the cost of retiree health care in the long run? Are we really talking about a fundamental change in the balance of power between employers versus employees? Surely getting, and keeping, the right employee in the right job is the right thing for both the employer and the employee. Otherwise we're making it sound like some kind of indentured servitude.

There is some evidence to suggest that high-tech will be hit worse than other job sectors by this effect. Another article from BusinessWeek, October 16, 2006, "Still Working and Loving It", cites the following statistics: "From 1980 to 2000 the total number of science and engineering degrees earned grew at an annual rate of 1.4%, far below the 4.2% growth of science and engineering jobs" and "nearly 30% of all science and engineering degree holders currently in the labor force are age 50 and older". Of course, these are just measures of science and engineering degree holders; some of the best developers I've ever worked with had degrees in music, some from very prestigious conservatories. Still, it does give one pause to think about where the intellectual property of the future is going to be developed, and by who.

Taking a purely global view, maybe it is okay if globalization moves all manufacturing (which in an information economy is the development of intellectual property) offshore, but only if the offshore work force also willingly participates in supporting the global collection of retirees. Isn't this fair? Otherwise you have a disconnect between business responsibility and social responsibility. If you're going to take the jobs, you have to take the responsibility that goes with them.

This suggests a shifting of the burden of the funding of socialized medicine from personal income taxes to corporate income taxes. I think it's going to get ugly.