Defuse The HealthCare Bomb
Rising healthcare costs, which have far outpaced overall inflation, require continually higher insurance premiums that challenge family budgets, business budgets and the federal budget. Households do not fully understand how their employers’ struggle with rising health costs has caused the stagnant wage growth for which CEOs—and capitalism itself—often bear unfair public criticism. If capitalism is to regain public trust or even to survive, health costs must be brought under control.
The clear public impulse is to make healthcare free, at the expense of the already bare federal Treasury. Instead, business leaders must harness capitalism’s free market incentives to ensure that all Americans have access to quality, affordable care. A bipartisan approach to fixing the Affordable Care Act’s (and Medicare’s) problems could start by offering all households single-purpose refundable tax credits for purchasing insurance.
Doing so would take the best ideas from both political sides: greater access as an American value and more competition to drive affordability and efficiency. If the tax credits covered the cost of comprehensive but low-priced plans, driven by consumer choice and value in the marketplace, then every consumer would have access to quality care. Those who want higher-priced plans would be responsible for the incremental cost. In this way, every provider and every plan would be motivated by market incentive to deliver true value: high quality at low cost.
Removing ineffective regulations would also lower the cost of care. For example, efficient plans must be able to market across state lines. A natural market for affordable care may only occur within a particular part of a state rather than statewide. For that reason, plans must be allowed to price locally, where the cost of doing business varies from, say, an affluent city to a more rural area. Allowing the broader insurance market to operate in metropolitan areas that cross state lines would further boost competition.
These ideas are by no means a cure-all. Healthcare costs have grown so large and are growing so fast that if the nation cannot achieve greater value at a lower price tag, all public and private budgets will explode. But sustaining capitalism through competition in healthcare just makes sense, and CEOs can champion such policy innovation.
Get Smarter On Trade
At the moment, politics dominates the conversation, which often includes mischaracterizations of trade—especially the corrosive notion that it’s a zero-sum game, in which one country’s benefit must come at the expense of another. Business leaders should make the case that open but fair trade policies would generate more prosperity for more people than protectionism. Moreover, a pro-trade message with broad appeal must also acknowledge those harmed by trade and address their hardships.
Trade makes America more competitive and provides its citizens with higher living standards. The typical consumer derives nearly one-third of his or her purchasing power from trade. And lower-income consumers arguably are the biggest beneficiaries because trade makes more goods more affordable. Make no mistake: open trade creates higher living standards.
But business leaders must advocate for modernization and equalization of trade agreements. While trade benefits America as a whole, it has diminished or eliminated entirely the paychecks of some workers. Such hardships do not mean that the U.S. should preserve existing jobs artificially by protecting them from globalization and technological change that proceeds around the world. Doing so would prevent competition from driving the economy forward, which would allow other nations to take the lead and make America poorer and less competitive. Rather, the dislocations from trade should compel public policies to better soften the blow and help those individuals access prosperity.
To that end, business leaders should press for a national policy for economic adjustment beyond the current Trade Adjustment Assistance system. It should be available to all workers experiencing involuntary unemployment for reasons other than their own conduct.
Such a program would create incentives for returning to work. It could include wage insurance, which would pay workers a fraction of any income loss associated with a new job, regardless of the reason for the unemployment, for a two-year period following the initial job loss. It should include health insurance, too—and not confront individuals with a choice between an available but lower-paying job, and unemployment with health insurance. It should also include a greater commitment to job-search assistance and training in new skills. Many such benefits are now available under restricted circumstances but should be universal.
CEOs can rise above the political mudslinging that seems to dominate this issue by pushing a program of fair trade paired with strong policies for helping those hurt in the process. Doing so would help the public understand that the common good and good business practices are not only compatible but also mutually necessary.
Shared values, including a belief in capitalism, long have pulled our country together. Now, economic insecurity and fear, including distrust of capitalism, are pulling it apart. Fewer than half of America’s millennials, for example, see capitalism in a positive light. That generation will someday take the reins of the U.S. economy, and thus their skepticism should ring alarm bells for any CEO wanting to sustain the American system. U.S. executives have the skills and experience to unite all Americans by making the case for sustaining capitalism—and the nation.