By: Richard Amerling, MD

“You load sixteen tons, what do you get,
another day older and deeper in debt,
Saint Peter don’t you call me ’cause I can’t go,
I owe my soul to the company store”
 
—-“Sixteen Tons”    Merle Travis
 
According to Wikipedia, the “company store” in this classic country song refers to the “truck system” where employees are paid in substitute currency, known as “scrip.”  This limits employees’ ability to choose how to spend earnings, generally to the benefit of the employer.  In closed economic systems, such as existed in various mining towns, workers had little choice but to buy from the company store, which often led to significant indebtedness, limiting their ability to leave the system.  This created a form of indentured servitude, prompting legislation that made payment in other than legal tender illegal.  

During World War II, the government imposed wage and price controls.  In an effort to attract and retain workers, companies offered health insurance in lieu of wages.  These benefits were not taxable for either the employer or employee.  When the war ended and controls lifted (everywhere except in New York City, where rent controls persist to this day), the tax subsidy for employer-sponsored health insurance was retained.   This explains why the majority of working Americans buy health insurance at work, at the “company store.”  This accident of history underlies much of what has gone wrong with health care in America.  

Since insurance is “in kind” payment in lieu of wages, it sustains the illusion that “someone other than you” is paying for your medical care and creates an incentive to use the benefits.  Along with low-deductible, “first dollar” coverage, this clearly led to overutilization of health care services, which drove up both prices for services and insurance premiums.  Most people are unaware of how much their insurance costs.  It is probably between $10-20,000 per year.  This money would be added to your paycheck, taxable, if there was no insurance provided.  When your employer deducts money from your paycheck for premiums, what they are really doing is shifting wages into non-wage benefits.  Assuming you are healthy and don’t use much health care, this is a bad deal financially and leaves you poorer.  

Employers naturally want healthy and happy workers, but they have bottom line requirements that compel them to shop for inexpensive policies.  This created a market for health maintenance organizations (HMOs) with their gatekeepers and intensive micromanagement that doctors and patients find so distasteful.  Employers must limit options for their employees, who are stuck unless they change jobs or refuse to buy “company store insurance.”  In the latter case, they will pay in after-tax dollars for an outside insurance policy.   

Employees, or their families, with chronic health issues may be quite reluctant to leave a job with a health plan, particularly if they have relationships with hospitals and doctors in that plan.  There are undoubtedly millions of Americans who are trapped in jobs they no longer like simply because they are worried about the consequences of changing health plans, or going without.  These people have “sold their soul to the company store” and are, at least partially, enslaved. 

Imagine how transformed the landscape would be if individuals purchased their own health insurance (as we do for all other types of insurance).   As proposed by George W. Bush and others, this could be done immediately and painlessly by transferring the tax break on health insurance from the employer to the individual.   A competitive market for individual health insurance policies would spring up overnight.  The majority of consumers would likely prefer a high-deductible policy to cover against a significant illness, coupled with a Health Savings Account, from which routine care could be financed.  Groups could form to enhance purchasing power, and to cover those with significant pre-existing conditions.  

According to 2008 Census data, of 45.6 million uninsured, 32.1 million earned over $25,000 per year (including 9.1 million earning over $75,000).  Many of these people chose not to buy health insurance, seeing it as the bad deal it is.  Many would likely buy a catastrophic policy were one available.  Far from being unable to get care, they can freely choose any physician they like and pay cash.   In many ways they enjoy more freedom than the 200 million covered by private insurance and the 87.4 million covered by government insurance.   Too bad we will all soon be enslaved under ObamaCare, and will “owe our soul” to the federal government.

 Richard Amerling, MD, is a nephrologist practicing in New York City.  He is an Associate Professor of at Albert Einstein College of Medicine in New York, and the Director of Outpatient Dialysis at the Beth Israel Medical Center.  Dr. Amerling studied medicine at the Catholic University of Louvain in Belgium, graduating cum laude in 1981.  He completed a medical residency at the New York Hospital Queens and a nephrology fellowship at the Hospital of the University of Pennsylvania.  He has written and lectured extensively on health care issues and is a Director of the Association of American Physicians and Surgeons. Dr. Amerling is the author of the Physicians’ Declaration of Independence (http://www.aapsonline.org/medicare/doi.htm).