Yesterday, Washington Post columnist Harold Meyerson pointed out a widely-overlooked aspect of healthcare reform that ought to be addressed before the final bill is deliberated upon. Throughout the deliberations on how to pay for increasing coverage, two options have solidified. The House’s plan is to tax wealthy households and individuals, which will cover about half the cost of the bill. The Senate, on the other hand, will tax “Cadillac” plans that exceed roughly $21,000, encouraging folks to buy less expensive plans, consume fewer costly treatments, and thus reduce expenditures.
Liberals are wary of the Senate’s plan because union members have, over the years, settled for lower wages in exchange for generous healthcare benefits, and any tax will ensnare middle-class families who happen to have well-earned, expansive health coverage. However, it has been pointed out that many union contracts will have to be renegotiated in the coming years and employers can simply reduce the level of healthcare coverage while boosting wages in an attempt to shift the balance between income and non-taxable health benefits. This will ensure that these workers will not cost the healthcare system as much in treatment and if they need to seek medical help above and beyond what their coverage entails, their extra wages can be used to cover that treatment.

But Meyerson cautions us not to fall into a rhetorical fallacy: just because two ideas appear to be connected does not mean that there is necessarily a logical link between them. In this case, we are dealing with the assertion that employers have a “pool” of money for each employee, into which are divided wages and healthcare benefits (in addition to Social Security taxes, pensions, etc.). If one part of the pool—healthcare—shrinks, the other part—wages—will get larger, and the overall size of the pool will remain unchanged, as long as revenues and expenditures remain constant.
Yet, this is not an ironclad deduction. Unions have been successively weakened in America, and many people disdain unions as only serving the purpose of protecting incompetent workers from being fired. This public condemnation—combined with the fact that in 2008, “top executives at 386 Fortune 500 companies averaged $10.8 million in total compensation, more than 364 times the amount paid to the average American worker”—demonstrates the relatively impotent bargaining position of the average employee.
Employers could very well shrink the pool—paying less for healthcare, refusing to increase wages, and then pocketing the rest. Congress ought to write a provision into the bill requiring employers to match dollar-for-dollar any decrease in existing health benefits with an increase in wages. If that cannot be done without a compelling reason, union leaders should have the right to appeal to the Labor Department for an inquiry and/or punishment. Among the administration’s many endeavors to reinvigorate the middle class and curtail the rampant greed of corporate culture, ensuring that unions receive proper respect at the bargaining table will prevent the further widening of the wealth gap that is a byproduct of the American myth that what is good for wealthy businessmen is good for the country overall.