Thus began an era in which health care, through the tax code, received special treatment, subsidizing its delivery through companies and encouraging its consumption (why not have employer-provided groceries?).
In 1946, health-care expenditures amounted to 4.5 percent of America's GDP. Today it is 15 percent.
Escalating health-care costs are of mounting concern to everyone. We need to get away from a regime that uniquely encourages one form of health-care delivery. Special tax treatment for employer plans should end. We need to get the third-party intermediary out of the equation and get new products into the marketplace aimed directly at consumers.
But change is always politically hard. Will the Change to Win Coalition be different from the AFL-CIO by encouraging rather than impeding change?
Retirement benefits constitute another area undergoing dramatic change. As in other areas, the direction for reform is away from centralized control and paternalism and toward individual ownership and management. Company defined-benefit plans, another fading American institution, are rapidly being replaced by defined-contribution 401(k) plans. There are 26,000 defined-benefit plans nationwide today, compared to 128,000 in 1978.
Social Security is part of this equation. The central control model doesn't work. We need to go to individual accounts, like the 401(k)s and IRAs. One reason why this change has been so politically difficult has been because of aggressive opposition by unions. The only way that Social Security in its existing form can continue is through some combination of benefit cuts, tax increases and raising the retirement age. Can you think of any reason that a union worker would want any of this?
So, why have the unions worked so hard to defend the current system? Moving toward individual control undermines union political power. That simple. The unions clearly work against the interests of their own members.
Few Americans don't realize that we are in a new era. We need flexibility and individual ownership and control that will allow for quick adjustments in a dynamic marketplace.
Unions simply appear to be on the wrong side of history.
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