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As G.M. Goes: Why We Need Universal Coverage

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Did anyone else notice last week that General Motors posted a 1.6 billion dollar loss?

Did you know that they spent 1.4 billion last quarter on health care?

That incredibly high number forced GM to renegotiate with the UAW last week to cut medical benefits to current and past employees – saving the company over one billion dollars a year.

G.M. pays health insurance for 750,000 current and former workers at a cost of about 5.6 billion a year (4 billion dollars of that goes to retirees). That’s up over a billion dollars from a few years ago. GM has been hit with double digit premium increases for several years running. What’s worse, these huge costs are hurting the U.S. division of GM, while other divisions, such as G.M.Canada (that bastion of low wage, exploitative off shoring I guess) are highly profitable and getting more of G.M.’s work.

No wonder GM has renewed its call that the government needs to step in and do something about the health care crisis.

For some reason in this country we view health care costs as the responsibility of corporations. Why? In every other way in this country we bend over backwards to give corporations almost unfettered freedom to compete in the global economy (oh ok we do ask them not to poison the ground and water, but this administration isn’t even tough on that), yet in what is probably the most unfair competitive disadvantage you could think of – a certain segment of our population goes up in arms at the thought of Universal Coverage because it’s “socialism.”

That’s just stupid…
And dangerously short sighted.

Did you know that in 2003, only 69% of companies in America offered health coverage to it’s workers?
In 2005 that number is down to 60%.

Who is covering those people?

Probably no one. Maybe, if they are lucky and we aren’t – they are being covered by Medicaid. Medicaid used to be a safety net for the poorest among us, now it has turned into a way for smaller companies (and even some very large ones) to offload the medical costs onto the state. There is a huge incentive to NOT pay adecent wage so you can keep your eligibility for your employees.

However, it would be the wrong lesson to drawn from this if we simply said “We need to fix those loopholes.” The sad fact is many of those companies can’t afford to pay insurance. When faced with competition from all corners of the globe, every penny counts. And when those pennies flow out faster and faster each year to insurance companies, that’s less money to stay in business – let alone expand, grow, higher more people and help grow the economy. No, the lesson we need to learn is that companies need the burden of health coverage taken off of their back.

I can hear the yelling now. “I don’t want the government running my health system” or “whose going to pay for that???” and my favorite “We have the best system in the world, you’ll destroy that.”

Nonsense.

First, the government already runs a huge chunk of the health care system in the form of Medicare and Medicaid. Medicare in particular is a well run organization with incredibly low overhead. No one is asking the government to decide who goes to what doctor, whether you can get treated for certain ailments, etc. Frankly, we already have that system now – the insurance racket.

Tell me which makes more sense to you – Universal Coverage, or a system with a huge amount of overhead built in to deny claims, deny coverage – and oh yeah, make a profit to boot. How do insurance companies make a profit? By spending less than they take in. How do they do that? By keeping sick people from spending their money.

Pretty simple.

On the question of “Who is going to pay for it?” I see a certain dishonesty in asking it. That makes it sound like we AREN’T paying for it now! We spend about 1.3 trillion a year on health care in this country (about 1 trillion of that is from the private sector), and more per capita than any other country – only to get less bang for our buck than the rest of the developed world. That doesn’t even speak to the fact we don’t insure 40 million folks.

Paying the immense overhead to screen people out of the system contributes heavily to that extra cost. Countless training hours by doctors offices to comply with individual insurance company requirements forces more overhead on the doctors (and more cost on you). Companies having to employee fleets of “benefit coordinators” to manage the coverage and the cost of their health care is another huge waste.

That’s efficient? There are enough layers of bureaucracy associated with insurance in this country to make the Politburo proud.

Finally the notion that we have the best medical system in the world is highly debatable. On nearly any measure of health care, we are not first. Just look at the stats. Wow does that make sense to spend more and get less? That doesn’t sound very smart to me. Pharmaceutical innovation? Arguable the best in the world, but they spend as much money marketing to doctors as they do developing drugs. Maybe instead of bringing lasagna to receptionists at the Doctors office on the way to play a round of golf with the MD crowd, or advertising Viagra to a bunch of horny geriatrics, they could plow that money back into R&D.

Further, it doesn’t really matter HOW good the drugs are if you can’t afford them. So great, there is a wonder drug at $500 a pill that will save my life – if I don’t have the cash, I’m just as dead as I ever was.

We’ve brought all this up before. We’ve also talked about the need to reform the system as a whole, not just coverage. We need to limit liability for all but the most egregious cases of gross negligence by doctors. No offense, but 30 million dollar settlements to an individual jeopradize the safety of everyone in the community. We need to do more to encourage preventative medicine instead of curative. That old “ounce of prevention is worth a pound of cure” saw is eerily accurate. There are lots of things we can work on – but the first step is to recognize that the system is broken. The first step is to realize that we can do better for the money we are spending. The first step is to realize we need Universal Coverage or it won’t just be our physical health that is in danger, but our economic health.

Just ask G.M.

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About Cranky Liberal

  • Alethinos

    I don’t feel sorry for GM on damn bit. TRUE the union has gouged the car makers too much… But Detroit has had 40 years to really remake itself. All they did was WINDOW DRESSING. They never did build a better car than Japan. EVER. And then they went into building sizable ACREAGE ON FOUR WHEELS, commonly referred to as SUVs… Your post does make a good suggestion – universal healthcare would take care of a IMMENSE drain on all US businesses, not to mention the hospitals and doctors (when treating those that cannot pay anyway).

    But GM has reaped what it sowed. If they were building a truly superior car than they would be selling a helluva lot more of them – profits would be up and this situation wouldn’t be nearly the burden it is now.

    I am SICK and tired of big business trying to blame the little guy down there in the goddamned pit for ALL their woes!!! You can bet there is NEVER a question of the CEO and senior management not having THEIR health needs met – in perpetuity!

    Alethinos

  • Bernhard

    Car quality by GM vs. Universal Health care.

    I have a Saturn SVU AWD and had a Jimmy before. Both cars have had regular check-ups and oil changes and that’s it. Quality has been at paar with the Japanese cars. The writer Alethinos I guess has not baught a GM car in over 20 years, back then he may have been right.

    National Health care should be based on the individual who needs it and he/she should pay for it. Everyone living in the US should be required to purchase it. The Government involvement would be very limited and restricted to mandate that every resident has bought it. It has to mandate the framework on a US communittee rating to lowe costs. Insurance companies would be required to accept every resident and would not have the power to deny coverage for any reason within the framework of the mandate. The premium would be set by and approved by the government for the basic package covering hospitals, doctor visits, prescription drugs, eyecare and basic glasses as well as nursing homes. Then insurance companies could sell upgrades above the mandated basics and with rules at their own discretion in a competitive environment. Employers are out of the picture for financing any part of health coverage. Employers would become more competitive in the ingternational markets too. Healthcare costs would come down because 40.000.000 would not have to be covered by the taxpayer indirectly or other subscribers indirectly. Elimination of Medicare, Medicaid, VA healthcare etc. could be eliminated.

    Weissbc

  • Baronius

    There are a number of flaws in your reasoning.

    On a historical note, employer-paid health insurance was a consequence of government policy. In this case, it was a reasonable policy, the wage controls during WWII. Employers sought ways to get around the fixed wages, so as to appeal to workers, so they introduced benefits.

    It is government regulation that keeps employers in the health insurance business. Excessive lawsuits (a judiciary failure) keep the malpractice insurance rates high, which drive up health costs, which drive up health insurance rates. Add the layers of bureaucracy to protect the insurers and health care systems from lawsuits, and you’ve got a much bigger drain on the system than pharmaceutical lasagna (mmmm, pharmaceutical lasagna).

    But GM’s big lapse in reasoning is yours as well: the economic consequences of higher health care costs don’t disappear when the government takes over. The costs will be there. They will be draining the economy to the extent that they are wasteful, and when does government make a system less wasteful?

    The upside is that much of the increase in health care costs isn’t wasteful. It reflects genuine improvements. You can’t compare the cost of heart surgery ten years ago to today, because you can’t get low-quality surgery any more. You could get it in Britain if you wanted to wait long enough.

    To the extent that there are inefficiencies in the health care system, government is unlikely to fix them. To the extent that the prices reflect an improved level of care sustaining a much older population, yay.

  • http://www.crankyliberal.com Cranky Liberal

    Nevsky I would suggest you look at the British model. People do not hang around a long time waiting for heart surgery. That is not true.

    On the other hand, my wife had to schedule her mammagram ONE YEAR in advance here, missed it because of a sick kid and had to wait another 6 months. Not because it didn’t jibe with her schedule – it was the next available appointment.

    18 months for a mammogram and my rates have gone up every year by double digits. Now you tell me why universal coverage is a bad thing?

    Yes I agree we need to reform the malpractice aspect, and mentioned that in the piece.

    Medicare runs with less waste than the majority of private insurance companies. I’d say there is a perfect example. Since they do not need to waste a ton of money trying to cull people from the coverage herd, they have a built in margin of savings. They have also led the way in cost savings initiatives like paperless billing.

    Of course the costs will still be there, but we already spend more than every other country and get less. Period. You can’t argue that fact. I’m saying we can spend it better.

    Yes we have better technologt than we did before. However if “market economics” really worked in health care, those procedures would drive costs down like they do in every other industry – not up up up.

    Find a free markey solution that maximizes value and covers everyone then I’m all for it. We don’t have it in this country, I’m not sure they have it in any country.

    What the do have is an increasing number of our jobs because the burden of providing healthcare is lifted off the shoulders of the employer. You may not buy that, but its true.

  • Baronius

    Cranky, you made me dust off my “favorite quotes” file to find a gem that Walter Williams frequently uses:

    “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” – Frederic Bastiat

    It may appear that companies experience a lifting of their health care burden, but the burden is shifted. Taxes go up; pocket money diminishes; consumer spending diminishes. GM gets a break, but people are buying fewer cars. Health care costs won’t vanish; they just run through Sacramento and Washington instead of Detroit and Hartford.

    I hope the wife is ok, and I’m sorry if any general statements I’ve made hit a nerve due to personal experience.