Collective Bargaining, Healthcare and the NBA

Ben passed along this great video about the healthcare costs in the United States. Oddly, while watching it, it got me thinking of the issue in the NBA and the recent labor woes of the players. The last two lockouts have seen the players make great concessions to the owners. Surprisingly, this video gives some insight into why.

Bargaining Collectively and Inelasticity

For those against government run healthcare and letting the market dictate it all, the video provides two interesting points. The United States government actually spends more per-capita on healthcare costs than many of the more “socialist” countries with government run healthcare. The issue is that in many cases healthcare has inelastic demand. If I walk into a McDonalds and they’re charging $20 for a bacon egg and cheese biscuit, I’ll leave. If I have a medical emergency, I don’t exactly have a choice but to get treatment. And based on the severity of my condition, it’s not like shopping around is easy. As another tangent, my mother-in-law used to work in an urgent care. She even explained how they weren’t allowed to “use prices to discourage people from seeking care”.

When the government shops around for costs, it is not the same. They can bargain. And of course, those with insurance will get the same benefit. But for those without insurance, or with bad insurance? The costs can go up and often the demand will stay untouched.

The situation of NBA players is actually quite similar. Yesterday I mentioned that the NBA player’s club is a super elite group that has had less than 4,000 members in its 73 year run. Well guess what? The players that actually make big bucks are super rare too. And of course, players career spans are short. Most players don’t see more than six seasons. Finally, most players don’t have skills or options that will be anywhere near as lucrative when their career is over. For as rare as being an NBA player is, being a head coach is even rarer. This means for many players, when there is a lockout, they often do not have much bargaining power. They have to take the offer on the table! And what’s more, the NBA’s reach is pretty far. The NBA’s agreements with the NCAA and FIBA means there aren’t many other places players can attempt to play.

Now, if the players were united and leveraged together, yes, they’d be able to get better deals in the lockouts. However, much like a bunch of Americans on their own, many players find they don’t have much leverage. The players are looking for a new head of the union. Hopefully they choose wisely. If not, it’s likely the next lockout — and yes, I predict it will be a lockout and not a strike — will end up similarly for them.

-Dre

H/T to Ben Gulker (@brgulker) for the link

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