Put another way, if you are for fiscal discipline, you should be for health-care reform. If our government cannot produce some kind of reform, that will only reinforce the perception that our political system is incapable of resolving our largest, most difficult problem -- and that is what will make investors think twice about investing in America.
Senator Chris Dodd (D-CT) joined Dr. Mohammad Akhter, Executive Director of the National Medical Association and Dana Tillman, a victim of the health care crisis, at a press conference this morning to discuss the economic impact of skyrocketing health care costs.
This report uses the Health Insurance Policy Simulation Model (HIPSM) to quantify the intermediate and longer-term implications if America’s health care system is not significantly overhauled. Under a range of economic scenarios, the analysis shows an increasing strain on business owners and their employees over the next decade if reform is not enacted. There would be a dramatic decline in the number of people insured through employers, and millions more could become uninsured. There would be large growth in Medicaid/CHIP enrollment and spending, and increased spending on uncompensated health care. Middle-income working families would be the most affected.
Over the past 50 years, US workers have come to expect employers to pay for some part of employee health insurance; many consider this an important part of overall compensation. However, recent economic trends have resulted in a growing disparity in health care coverage and affordability. A study by the McKinsey Global Institute (MGI) identified three divergent categories of workers that are emerging from trends in health care coverage and income growth.
The top-income category (earning on average $210,100 annually1) has enjoyed rising incomes and growing employer-paid health care benefits, which have made their out-of-pocket spending on health care a relatively small and affordable portion of total spending. The higher-middle-income category (earning an average of $84,800 annually) and the lower-middle-income group (earning on average $41,500), have also seen increasing benefits and incomes—but at a much slower rate, making the uncovered portion of their health care costs ever-more expensive. In the bottom-income category (earning an average of $14,800 a year), incomes have been stagnant, and their employers are less likely to pay for their health insurance. This group is finding any health care difficult, if not impossible, to afford.
During a panel discussion the other day, I mentioned that health care is going to bankrupt our society if we keep spending more and more money on it.
It's a familiar refrain. Almost everybody involved with the health care debate says similar things. And yet, as I heard the words pass my lips for the gazillionth time, I couldn't help but think they weren't quite true.
There is no iron law of economics that holds we can't spend 20, 30, or even 40 percent of our wealth on medical care. In the aggregate, it's a matter of choices and trade-offs. If we pay more for health care, it simply means less money left over for other things. And, on the whole, there are surely some luxury goods that we could do without.
Think of this way. If you could live in a world where nobody died from cancer, but flat-screen televisions cost $20,000 a piece--in other words, beyond the reach of all but the richest Americans--would you take that deal? I sure would.
The real trouble with health care is that we're not getting our money's worth. You can see this most clearly in the famous studies by Dartmouth's John Wennberg, who has demonstrated that the intensity (and cost) of medical care in the U.S. differs wildly by region but without any corresponding difference in results. Senior citizens in Miami famously get more care, for more money, than their counterparts in Minneapolis. But they don't seem to be better off. International comparisons of health care show more or less the same thing.
So the choice isn't between curing cancer and having flat-screen televisions. It's between paying for a lot of unnecessary, unhelpful medical care and having flat-screen televisions. That's a little different.
This matters because, truth be told, it's not clear how well--if at all--many reforms designed to reduce the cost of medical care will actually work. That point comes through in a new paper from the Annals in Internal Medicine, written by Ted Marmor, Jonathan Oberlander, and Joseph White. The authors are skeptical that improving information technology, basing treatment on evidence, and other innovations will really make a difference on cost--as the Obama administration, among others, is hoping.
I've yet to study the paper that closely, but the argument is certainly plausible. And the authors are experts who should be taking seriously. (Treatment readers will recognize Oberlander from past posts.)
But even if the paper is correct and those innovations didn't reduce costs, they would still make a difference: They would produce better, more effective medical care. Ten or twenty years hence, we might find ourselves spending far more money on health care. But we'd at least have the knowledge that the money was being put to good use. That alone makes these initiatives worthwhile (as the writers readily acknowledge).
Of course, there's one other problem with spending a ton of money on health care. For an upper-middle-class professional, spending an extra few thousand dollars a year on health care might mean giving up a big television or other luxuries. But for everybody else, it would mean giving up more essential purchases--even basic necessities.
If, as a society, we think it's ok to spend an ever-increasing share of our wealth on medical care, we also have a responsiblity to make sure everybody can afford that care on an individual basis. That's going to mean creating a universal health care system in which all Americans have access to affordable and high-quality treatment. And the more expensive health care is on the whole, the more such a system has to distribute money from the haves to the have-nots.
"The Canadian plan has been a significant advantage for investing in Canada," says GM Canada spokesman David Patterson, noting that in the United States, GM spends $1,400 per car on health benefits. Indeed, with the provinces sharing 75 percent of the cost of Canadian healthcare, it’s no surprise that GM, Ford and Chrysler have all been shifting car production across the border at such a rate that the name "Motor City" should belong to Windsor, not Detroit.
Just two years ago, GM Canada’s CEO Michael Grimaldi sent a letter co-signed by Canadian Autoworkers Union president Buzz Hargrave to a Crown Commission considering reforms of Canada’s 35-year-old national health program that said, "The public healthcare system significantly reduces total labour costs for automobile manufacturing firms, compared to their cost of equivalent private insurance services purchased by U.S.-based automakers." That letter also said it was "vitally important that the publicly funded healthcare system be preserved and renewed, on the existing principles of universality, accessibility, portability, comprehensiveness and public administration," and went on to call not just for preservation but for an “updated range of services." CEOs of the Canadian units of Ford and DaimlerChrysler wrote similar encomiums endorsing the national health system."
How can the same corporations that in Canada recognize the bottom-line logic of a national health system be so opposed to the idea here?
Good question. And the answer is....
One answer is ideology. The notion of having the government take over an industry that represents about 15 percent of the U.S. economy gives U.S. executives the willies. But in backing insurance company interests, GM runs counter to both its own business interests and the sentiments of many customers.
Wonder if GM U.S wishes they had made a different choice now.
