Monday, November 30, 2009

Perks and Benefits

A major part of an organization’s expenses is providing health insurance and pension benefits. While employed, we don’t think about the money spent by the employer and blindly think that we are covered and taken care of no matter what.

This, of course, is wishful or illusory thinking. Most Chapter 7 bankruptcies are caused by medical bills as a result of a major illness or accident. And yet the majority of those filing have initially been insured. Insurance companies routinely deny payment for any reason they see fit and it takes numerous letters and/or threat of a lawsuit to take the patient seriously. An illiterate nation as we are, writing the first letter is a major undertaking and even the thought of having to produce subsequent letters is simply too much for many, if not most. A lawyer will of course be happy to help, but good luck trying to cover those enormous fees from the insurer even if they change their minds. Chemotherapy in a hospital may be covered, but God help you if you have to take a new drug in pill form and pay thousands of dollars out-of-pocket monthly, as the treatment will fall under prescription benefits.

We are in the middle of a heated health reform discussion but so far none of the solutions proposed would really remedy the situation. Perhaps the one sixth of the population, which presently has no insurance and costs the taxpayer an arm and a leg since they get treated through an emergency room, will be better off and have some kind of coverage. But for the average Joe the Fiddler matters are not going to improve.

Since this country is involved in two war fronts, one of which, Afghanistan, will take a a decade or longer, our government needs more money. One of the ways I see as certain is taxing health and other benefits. This is when the employees will realize how insanely much their policies, which blindly cover everyone with pre-existing conditions, actually costs. Pressure by healthy young individuals will emerge to have the insurance money added to their salary and make them be responsible for getting their own deal. Anyone who has had to deal with a Cobra payment knows how exorbitant the premiums are. Why would a twenty-something single healthy person volunteer to pay $1,200-1,500 per month for their employers plan if, on their own, they could find coverage for one-tenth of it? Granted, it would probably come with a large deductible and a lousy prescription plan, if any. However, people in that age group tend to be healthy and might even gamble and opt for no insurance at all, unless it would be mandated by law.

Our tax laws differ from most other Western countries. For instance lottery winnings here are taxed, over there not. But any kind of a benefit is generally regarded as hidden income and tacked into your tax bill. If your employer provides you with a car (it may well be necessary for your job), not to mention a house or apartment (that you may need for company parties or a high-tech home office), all that is carefully calculated by the tax officials and added to your income. In many countries you don’t even fill a tax form: the Big Brother has all the data on you, other than what you might have made under the table, in the gray economy.

We cannot print new money endlessly. We are already charging our wars to China which in essence owns the once-mighty United States. It is sort of ironic that we try to force our style of democracy on third world countries which are used to doing things their way and by no means desire to have an American lifestyle. Yes, perhaps they would enjoy our cars and relatively cheap gasoline, but just imagine the chaos India and China would be in if every household had one or two cars. Traffic there already is a nightmarish mess. We feared another political system than the Soviet Union was promoting, often forcefully, to the point that we almost started a nuclear war because of their relations with Cuba. Yet it is the communist China that we presently depend on, a country whose system is the opposite of our beliefs.

So, taxes will have to rise. Most likely some people in the congress will eventually become brave and suggest that the rich pay more, as the regular wage earners cannot be milked disproportionately. It is impossible to squeeze blood out of a turnip. Yet, the tax burden will surely go up for all and those states, our Washington included, that presently don’t have state tax, must eventually change their course in this matter.

Let’s go back to arts organizations which I wrote about in my previous post. What, if instead of providing expensive health insurance, they would include a certain amount in every paycheck and have their employees, musicians, dancers and actors take care of their own package. They should still offer an insurance policy for those who don’t qualify for individual coverage due to pre-existing conditions. Obviously such a health plan, where most participants were actually sick, would cost a lot more, but the orchestra, ballet or theater would contribute the same sum everyone is getting and the employee the significant balance. Would this be unfair? Of course it would if you have a socialist view of life, but not so if you firmly believe in capitalism and the American way. A young and healthy musician would happily pocket an extra $12k a year and might be willing to take a sizable pay cut, thus helping the suffering organization.

Also, instead of money going into a pension fund, such contributions could and should be given directly to the worker, to invest in a way he/she sees fit. In thirty years such an investment would yield much more than the measly pension many presently provide. It would also free the “artist” from having to work for X number of years for the same employer to be fully vested, often the reason why people put up with intolerable bosses and work conditions in general. In many European countries pension contributions go directly to the state and upon your retirement (usually at a mandated age around 65) you will be paid according to the total earned for various employers.

Above should make anybody realize that having a young orchestra would be a lot cheaper than our present way where seniors seem to have seniority as long as they can breathe. To every person in a field who is holding a high-paying job with all the perks and is horrified by my money-saving ideas: what gives you the right to feel more entitled to your privileged lifestyle than a capable young person currently un- or underemployed? Are they all doomed to wait around for you to croak? You believe in a socialist model with almighty unions; the rest of us are stuck with good old-fashioned American capitalism, unless one works for Wall Street or some other Big Business which Capitol Hill has deemed too big to fail.