Industry and Health Insurance

Heath Care – New York Times

Long, but interesting, piece in the Sunday Times about the history of how we got to the point of companies providing healthcare. No, and it’s not an article calling for a single-payer system (nor am I advocating that).

One tidbit on how far we’ve come in healthcare:

The first calls to create what we now know as universal health care date back to the early 20th century. Before then, medical care was generally cheap because it was, for the most part, ineffective. As one scientist put it, “It was around 1910 or 1912 when it became possible to say that a random patient with a random disease consulting a random doctor stood better than a 50-50 chance of benefiting from the encounter.”

That’s a pretty high process defect rate! Things have gotten much better, but we still have a long way to go with preventing healthcare delivery errors.

So how did we get the rise of industrial/company-provided healthcare?

And during World War II, when the government exempted fringe benefits from its strict controls on wages, employers started offering ever more generous health benefits in order to attract workers. Another government decision — to exempt group health insurance premiums from personal income taxes — made health insurance an even more attractive option for business to offer. This effectively made a dollar of insurance worth more than a dollar of income, giving companies an easy way to cement worker loyalty.

But as this developed in the auto industry:

former Chrysler C.E.O. Lee Iacocca was warning about health care’s impact back in the 1980s — the problem had magnified over the years. Uwe Reinhardt, a Princeton economist, has described the Big Three automakers as “a social insurance system that sells cars to finance itself.”

All of this is a huge distraction from taking care of the customer, I might suppose. Companies should be able to focus more on their direct “value added” activities. Every minute spent talking about or worrying about the rising cost of employee benefits is a minute not spent on taking care of customers or innovating/kaizening core business activities. It certainly provides a distracting excuse for the automakers, then and now. If we had a “level playing field” healthcare wise, what excuse would be used for the gap between Toyota and the Detroit Three?

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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1 Comment on "Industry and Health Insurance"

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  1. Kari Chisholm says:

    Howdy – great thoughts.

    By fixing health care, we’ll not only be able to allow companies to focus more on direct value-add and customer support… but we’ll level the playing field between American companies, who right now are incentivized to cut benefits as a competitive move (see Wal-Mart.)

    There’s lots more info about Senator Wyden’s plan for affordable, non-discriminatory comprehensive, high-quality, universal health care reform over here.

    Full disclosure: My company built Senator Wyden’s website – but I don’t speak for him or his staff.

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