The great chicken 2,000-mile bird monopoly or how health care becomes a crisis when an employer shuts down…

June 30, 2009

Read a story about a chicken plant in a Georgia town closing down and something caught my eye.

The local medical center in Douglas, Georgia stands to lose the annual $2.3 million in revenue from the plant’s employee health insurance. Now it is facing the prospect of a huge spike in uninsured patients. The plant employed 1,000, but total employment in the town linked to the plant is estimated at 2,000, and I don’t think that counts the local chicken farmers who went out of business. Actually nearly the whole economy of the town is linked to the chicken plant, the story indicated.

So the quick points here are that there is a big problem in having health insurance tied to employment and having a town’s economy so intertwined with one employer.

But on the health insurance, I just thought of something. Maybe employer-sponsored health insurance is not such a bad idea (I know, who said it was?). Having employers pick up the tab (or at least a large part of it) for health insurance is kind of like a tax. I think I’m correct is saying that businessmen in general are opposed to government-sponsored universal health care because it would create the need for higher taxes.  (ADD 1:  Walmart is now reportedly supporting part of President Obama’s health plan that requires large employers to provide health insurance, but that is a tactic that other heretofore opponents have adopted in the face of  likely changes  — they want to at least be part of the program if change is to come.) Thus far at least the larger employers have evidently considered offering health insurance a cost of doing business. So if they are comfortable or at least accepting of that cost, which as I said is essentially the same as a tax, maybe that is the way to go – but with one caveat, since people need health insurance even if their job disappears or especially when they lose their job due to health problems, then the employer ought to be obligated to continue that health insurance. But that could be quite a burden on an employer. So maybe at that point the government could step in and help subsidize continued insurance.

Employers began offering group health insurance way back when premiums were not nearly as high and when there was more competition for labor. And that is in large part what led to the mess we have today. So many people at one time had what they called “free” health insurance from their employer that medical costs skyrocketed, maybe from overuse, and so did the services that could be offered. All folks had to do was show an insurance card, and voila! Everything is paid for. That was then and this is now. Nowadays there is not much “free” insurance left. Even most employer-sponsored insurance costs a huge amount to employees. And many have lost that insurance along with their jobs anyway.

The good thing these days is that we have so much more technology in medicine, financed of course by patients and their insurance. The problem is that the costs are exceeding the ability of people to pay and are absorbing an ever-increasing share of the gross national product.

There is much talk to the effect that any change in the system to make it more efficient will lead to health care rationing. Well of course it will, to some extent. Isn’t that the problem we have already? that is to say everyone wants everything no matter what the cost. The insurance companies could not stay in business if they simply doled out everything that anyone wanted at any time. So they deny certain things and figure out ways to get out of paying (a little too much emphasis on that, I think, to say the least). But that is rationing. It has been taking place for a long time. You can’t get care unless you can pay for it or someone else pays for it. That’s rationing.

So, bottom line, we have a inefficient system, but it works for those who are covered. So as I have been blogging lately, maybe the best idea is to cover those who are not and move on to other things, such as improving the economy.

The whole issue of health care is confusing in that recent polls show a vast majority of people support some public option and it is thought that pressure from the public option would force private plans to become more competitive in cost. But for some reason the health insurance lobby seems to hold more sway in congress than voters (so far). Why is that? I don’t really fully understand that. The only thing I can figure is that polls are suspect in that respondents are liable to be responding to leading questions. And never underestimate the power of propaganda put out by lobbyists.

Originally, after reading the article on the chicken plant I wrote the following:

I think having a home-cooked chicken dinner was cheaper in grandma’s day. And I’m going way back in time because my parents were older than most when they had me and grandma was gone by the time I was born.

But the way dad told it, down on the farm in the early 1900s grandma had a cane and would pull in one of the many chickens that ran around the yard, the unlucky one of the day I guess, and whack its head off with a hatchet, pluck it and cook it. I said cheaper, not easier.

But today more than likely you buy what here where I live in California is a dead bird that has been hauled maybe 2,000 miles or more to the supermarket having been processed by some chicken conglomerate. And judging by a story I just read in the Wall Street Journal online version, that conglomerate is doing its best to control the price of chicken by trying to stifle competition.

Seems the demand for chicken is not what it had been so one of the major conglomerates, Pilgrim’s Pride, has filed bankruptcy and closed down plants, but is refusing to sell the closed plants to competitors in order to cut down the capacity, thereby keeping the price of chicken up. And it has apparently worked to some extent. Prices are up slightly (the power of the agribusiness monopoly).The creditors are supporting that scheme because they feel it will help make Pilgrim’s Pride a more viable company and therefore they stand a better chance to get their money back.

But not only is this manipulation of the market not helping consumers it’s not helping all the laid of chicken plant workers in places such as Douglas, Georgia where a plant has been closed down. Not only the plant workers are affected, but so is the rest of the community that depends upon the dollars those workers made and that was otherwise circulated in the community from the chicken plant operation. That includes the area’s chicken farmers too.

We do have a couple of major chicken producers in California, but it’s a big state with millions of consumers, so that conglomerate’s actions affect us.

Douglas and its economic development authority would like to attract another chicken plant operator but Pilgrim’s Pride sometimes won’t even let others look inside the plant, citing trade secrets, and has turned down bids to buy the operation.

Seems like to me the laid off chicken workers should pool their resources (except they probably don’t have enough) and get the city to condemn the shut-down plant and buy it themselves and operate it as an employee-owned business. The U.S. Supreme Court’s Kelo vs. New London decision of 2005 in which a Connecticut city condemned private property for use by another private owner but for the economic development of the city might work here.

Pilgrim’s Pride’s actions in closing their plant and not allowing anyone else to buy it so they can hold down the production of chicken is what gives free enterprise a bad name. You could say it is none of the government’s business, but does not the business depend upon the governmental-run system of bankruptcy protection?

And not only that, but the the Douglas Development Authority, a public entity, gave the land to Pilgrim’s Pride and bought its equipment in the first place to lure it into town.

You’d think that in this time of recession and high unemployment chicken, usually a low-priced meat, would be in demand without the great chicken monopoly resorting to OPEC tactics.

Maybe a better idea for the displaced workers would be to move onto something else. Too bad they can’t raise chickens like grandma did, at least they could put dinner on the table.