Wayne O'Leary

Health Care Tipping Point

We may have finally reached the tipping point in the long twilight struggle to achieve national health insurance in the United States. The present healthcare system, a chaotic hodgepodge of public and private programs and coverage schemes that ultimately answers to the marketplace, is clearly not working. According to a government report from the Centers for Medicare and Medicaid Services, the cost of American health care has doubled in the last decade and now consumes 16% of the nation's economic output (GDP), the most ever and twice the average for other industrialized countries; based on the latest figures (2004), it is now rising at three times the overall rate of inflation.

Equally troubling, the money spent (roughly $2 trillion annually) does not guarantee adequate or affordable health care for all Americans. Approximately 14% of the population, 46 million people, remain without any health insurance at all, either not getting proper treatment or visiting hospital emergency clinics, where the cost is indirectly transferred to patients who do have coverage. No other major country has so many uninsured, and it's nothing short of a national embarrassment. But the uninsured are only part of the problem, and a relatively small part at that.

The US is unique among advanced nations in that the majority of its population (54%) obtains medical coverage through mostly private workplace health plans. (The remaining 46% is either on Medicare or Medicaid, self-insured, or uninsured.) The estimated 174 million Americans who depend on job-based health coverage, including workers and their family members, represent nearly two-thirds of those with medical insurance of some kind, and they comprise the group most directly at risk in the slow-motion implosion of the healthcare system. American employers are feeling the effects of the inflation in health costs, which is running at 8% per year and cutting into profits. As dedicated capitalists, they know the prescribed remedy: Treat employee health coverage as unnecessary overhead and reduce or eliminate it.

That's exactly what is happening. Medical spending, led by doctor, hospital and drug costs, has risen 40% since 2000, and health-insurance premiums have more than kept pace (the greed of insurers knows no bounds), rising by 60% over the same period. In response, the 70% of companies providing medical coverage in 2000 has dropped to 60% today. Over just the past few weeks, Sears Roebuck has announced it will no longer subsidize health insurance for future retirees, and Verizon has said it will no longer offer medical benefits to new employees; they are typical of the trend.

Although the situation is only now reaching crisis proportions, it has been long in the making. Since its peak in the 1970s, reports The Economist, the share of American workers receiving health insurance from their employers has fallen by nearly a third. An ad hoc system of providing medical coverage that began during World War II, a time of wage controls, as a means of compensating unionized workers other than with increased paychecks, and which reached its fullest development during the similarly restricted wage freeze stagflation years of the Nixon administration, has finally hit the wall.

Employer-based health insurance simply can't work in an era when unions are weak and the last thing employers are contemplating is increasing worker compensation in any way. The present structure was created during unparalleled good times: the great postwar economic expansion of 1945-75, when close to a third of the workforce was organized. Times are still good for most American companies (if not their workers), but they're tenuous good times. Globalization, which corporate America wanted -- indeed, demanded -- for access to cheap labor, is a double-edged sword. Open markets make some companies grotesquely rich (witness record overall profits for the top 500 US firms), but others fail in a competitive laissez-faire environment of creative destruction.

General Motors is a case in point. A company with generous health benefits won by United Auto Worker negotiators over many years, GM is now in trouble -- it's cutting 30,000 jobs worldwide, including a quarter of its domestic workforce -- and looking for a way out of its expensive healthcare obligations. The company pays $5 billion a year to private insurers to cover the healthcare costs of 1.1 million workers and their dependents, an outlay that adds $1,500 to the cost of producing one of its cars. US Rep. John Dingell, D-Mich., who notes that a GM car built in Canada (where health insurance is socialized) costs $4 an hour less to manufacture, sardonically calls GM "a healthcare company that makes cars to pay for the health care."

The Detroit auto maker is constrained from a wholesale abandonment of its employee health plan by its strong union. Other American firms are not similarly constrained, however, and the handwriting is on the wall. This may be one reason why poll results cited by CBS News in January revealed that two-thirds of the public was worried about healthcare costs, and 61% "very worried." A CNN report around the same time indicated that 77 million Americans with health insurance were not merely worried, but were having actual trouble paying their medical bills because of copays, deductibles and non-covered procedures.

Republicans, in an effort to preserve for-profit medicine, are proposing to address the medical crisis with market-oriented reforms. At the federal level, their cuts in Medicare and Medicaid ($11.2 billion in fiscal 2006, with more to come) are aimed at balancing the healthcare budget on the backs of the poor and elderly by forcing recipients to rely less on government and more on the private health-insurance market that is the core of the problem. It's no answer. Neither are George W. Bush's health savings accounts for the affluent, nor Massachusetts Gov. Mitt Romney's draconian plan for mandatory purchase of private health plans by the uninsured.

The situation calls for more than tinkering with market fixes. It's time to start thinking big again on the subject of health care. If the aforementioned 77 million insured Americans struggling to pay their medical bills are combined with the 46 million uninsured and the additional millions worried about losing their coverage, there exists the makings of a majority constituency for real, fundamental reform -- perhaps even a single-payer national health insurance system.

Wayne O'Leary is a writer in Maine.

From The Progressive Populist, April 1, 2006

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