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Auto-Dependent Communities to Gain from Health Reform

Big-time health care reform, now passed, will, like a lot of federal policy, have different effects in the very different American metros that make up our national economy. Those having perhaps the most to gain are the Great Lakes industrial metros--hardest hit by the restructuring of their auto and manufacturing-based economy.

As House Speaker Nancy Pelosi noted in her closing argument before the House vote to pass the Senate’s health care bill, one of the most important effects of this legislation will be to untether workers and families from relying on legacy employers for their health care… freeing them to get new skills, change jobs and careers, and unleash their inner entrepreneur.

This new freedom will allow workers to better navigate the fast changing economy, while still providing a safety net of economic and health security, making our whole labor market more flexible. This flexibility with security is most needed in the part of the country that invented the employer-run health care system, and has the greatest numbers of firms and workers held hostage by it--literally locked in a death embrace that has hurt both the employer’s competitive position and workers’ ability to adapt to a changed economy.

As the Brookings Metro report on the economy of the Great Lakes region: The Vital Center described, the health care system we just replaced was largely created after World War II when employers began to offer health benefits as a job inducement chasing scarce labor. The United Auto Workers President Walter Reuther, among others, pushed then for national health insurance, or “socialized medicine,” as it was called at the time. Rather than go along with “socialized” anything, the big employers, led by the sectors with unionized workers in the Great Lakes--steel, automakers--negotiated the deal to provide employer-sponsored health care. The “pattern was cut” and copied across America, creating our unique American health care system.

Fast forward 50+ years to today and you know the story. Legacy health care costs cripple many of our older companies. GM before its bankruptcy was jokingly but accurately called a benefits company with a small car business attached. More autos are assembled in Ontario than in Michigan--not least because of $3,000-$4,000 of health care costs not carried by the employer. And most importantly, to Speaker Pelosi’s point, the health care of thousands of workers, retirees, and families is locked up in the fate of GM, Delphi, Visteon, and Chrysler—and hundreds of other manufacturing firms. And those lucky enough to still have a job with health benefits are discouraged from going out on their own, starting a small business, or jumping to a new job in a sketchy emerging industry--and lose or go without health benefits.

The auto-dependent communities of the Great Lakes have the greatest need for new business start-ups, a rekindling of entrepreneurial activity, and a more diverse economic ecosystem. Workers need to get new skills and be free agents on their own behalf in a labor market where “rock-climbing” has replaced the “career ladder” as the operative metaphor. Health care reform, long overdue, provides the safety net, for workers in hard hit auto country--to climb the wall, and, maybe even become their own Henry Ford or Bill Gates.

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