I’ve been considering why Republican politicians and pundits favor de-linking employment and health insurance. Portability is certainly a good reason; some workers can’t leave their jobs for fear they will lose coverage, or won’t be able to get new coverage due to a pre-existing condition. That interferes with the free flow of labor, and may well inhibit economic growth and prosperity.
The high cost of US health care is certainly worth mentioning, and especially the impact of that high cost on competitiveness. American manufacturers and service companies are at a big disadvantage simply because they have to pay a lot towards health care (via premiums and taxes, driven by the world’s most expensive health care).
Linking employment to insurance also means when people lose their jobs, they lose their coverage (except for those who can afford to pay the whole premium for the maximum 18 months allowed under COBRA). This last got me wondering – is there a correlation between unemployment and the President’s political party?
Turns out there is, and it isn’t what many suspect. In fact, unemployment under Republican presidents is significantly higher than when a Democrat is in the White House.
A study by Elliot Parker of the University of Nevada, Reno, found that unemployment at the end of presidential terms was significantly higher for Republicans (6.0%) than for Democrats (5.2%). And, the Unemployment Rate actually went up under Republicans (+0.3%), while it decreased under Democrats (-0.4%) Parker used the period from 1949 to present for his analysis, noting that the period prior to that date was heavily influenced by the Depression and two world wars. (but if you include the period from 1929 on, the numbers are actually worse for Republican administrations)
The reason for the differential seems pretty obvious – when economies perform better, jobs are added. As Christopher Hill at Boom2Bust writes;
“Real GDP Growth Rate (annual average) under Republican administrations now [for the preiod 1949 to 2005] stood at 2.9% and Democratic administrations at 4.2%. Real GDP Growth Rate Per Capita was 1.7% for the Republicans and 2.9% for the Democrats. These results prompted Dr. Parker to conclude that “the economy has grown significantly faster under Democratic administrations, and more than twice as fast in per-capita terms.”[emphasis added]
Parker also considered whether there was a lag effect – policies can take time to make their impact felt, time that may influence results. As Mr. Hill put it; “The professor found that even with up to four years of lagged effects, there was no evidence that the economy performed better under Republicans.”
It’s not just unemployment and economic growth. Parker’s research found that by many measures, Democratic administrations delivered better economic results than their Republican counterparts – Dow Jones Index, weekly wage indices, corporate profits…
This is one of those great validations of the internet – start looking for something and you’ll be surprised what you learn. Is it possible Republicans want to delink employment and insurance due to their poor record on the economy? I don’t think so.
And as their record indicates, they certainly wouldn’t publicize it.
Thanks to Joe Lyles for getting me thinking about this.
Sep
7
Competitiveness and health expenditures are clearly linked. The low productivity related to poor health is at least twice as costly as the cost of care. US employers are doubly disadvantaged by (1)poor workforce health status and (2) high healthcare cost, compared to other nations. So, the Republicans has this doubly wrong, from an econimic standpoint. Not investing in health will make the critical boomers lowfuncting sooner, but many will continue to work and draw salaries. For their own economic good, employers should contintue to support the health of workers; this need not be done in a way that creastes “job lock”. Is should be done in a way that invests heavily in prevention, the highest value component of health care but which in the the US gets only about 5% of the healthcare spend. Businesses must become better customers of the health care system, and demand value… more health per dollar spent.
Let us consider basic GOP philosophy, which is based on individual responsibility as well as anti-government programs. Fundamentally, Republicans are opposed to governmental programs and so some things, like health insurance, fall into employers’ parental responsibilities. Employers love talking about being the “employer of choice” when things are competititve, yet cut niceties when things are tough. As HC has become an enormous drain on the bottom line, large employers are looking for a way out (See General Motors, et al). Small businesses are hammered by high premiums and individuals are slammed if they have the slightest of pre-existing conditions. Unions view health as a bargaining chip and overall, health care insurance has been the bastard child of health and tax policy.
Your analysis is misleading because it looks only at which party controls the presidency. Economic policy is a combination of executive and legislative action or inaction. I have seen the same analysis based on when one party controls both houses of Congress and that analysis shows that the economy performs better when Republicans control Congress than when Democrats do. For example, if you look at the last eight years, the economy did better when Republicans controlled Congress than in the last two when Democrats did. And interestingly, the best economic performance occurs when there is a split either between the executive or between Senate and House. I think the lesson is that a split government keeps either party from doing too much stupid stuff.
Kevin – thanks for your comment. I’d ask that you back up your assertion with citations specific to that assertion. Statements without support are not very useful as they may be merely opinion.
I’d also argue that my analysis is not misleading – it simply shows a correlation between the party in the White House and the economy.
As to your claim that the Democratically controlled House (I would argue that neither party controls the Senate today as the minority party exercises significant influence and the split is essentially 51/49) is somehow responsible for the lousy economy, that is just not believable.
Historically, a split government can act as a brake on either party. That said, the level of partisan rancor is higher than in recent memory, which makes it unlikely anything will get done unless one party controls both branches.
Paduda
interesting supporting article: http://finance.yahoo.com/expert/article/futureinvest/104492
Bonnie, please refer to the follwing link. http://www.boom2bust.com/2007/12/12/is-a-republican-president-really-better-for-the-economy/ Look at Dr Elliot Parkers paper form the Univ of Nevada – Reno. It takes into account who controls the legislative branch and the executive branch. You may be surprised.
I tried to follow up on your comment to my comment on under which party the economy does better but you appear to have taken the post down. I was a little surprised that you asked me for cites, since I would have assumed that before posting you would have done that research. In any event todays WSJ has an opinion piece which goes into greater detail on that research and supports what I told you I had seen in several studies. Please note that the strongest performance of all is actually when we have had a Republican president and a fully Republican controlled Congress.
Kevin – thanks for the comment.
As I’ve said a gazillion times, disagree but cite sources – I do not have the time to do commenters’ research for them. Before I post I do research, but it is a big world out there and I can’t find everything.
Now on the WSJ piece, I read every piece on line in the opinion section that looked as if it might somehow link support your claim, and I couldn’t find anything remotely fitting the description – send me the specific link and I’ll read it.
Paduda
“or won’t be able to get new coverage due to a pre-existing condition.”
HIPAA makes this a completly invalid argument. Unless you wait till your sick to get coverage pre-ex doesn’t effect anyone.
“Linking employment to insurance also means when people lose their jobs, they lose their coverage (except for those who can afford to pay the whole premium for the maximum 18 months allowed under COBRA)”
29 or 36 months for COBRA to be accurte. If there is no link between employement and insurance that means the person would already either be paying the premium themselves or through taxes. If they can afford to pay it those ways then why couldn’t they pay COBRA?
Kevin, the link works for me…
http://www.boom2bust.com/2007/12/12/is-a-republican-president-really-better-for-the-economy/