Health insurance imploding
- From: "Steven L. Robinson" <srobin21@xxxxxxxxxxx>
- Date: Wed, 19 Oct 2005 22:46:51 -0400
Health insurance imploding
David Lazarus
Wednesday, October 19, 2005
<http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/10/19/BUG26FADJS1.DTL>
And so the demolition derby that is the U.S. health care system shifts into
high gear.
Mighty General Motors, the world's largest automaker and biggest
private-sector purchaser of health insurance, said this week that it'll
slash its $5.6 billion annual health care spending for workers, retirees and
their families by about $1 billion a year.
For its part, the United Auto Workers, one of the nation's most powerful
unions, is apparently prepared to swallow this hit to organized labor's most
sacrosanct benefit to forestall additional job cuts.
We have reached a critical turning point in the decline of health care in
the United States, one almost certain to expand the already appalling figure
of 45 million people lacking health coverage nationwide.
"It's not just a breaching of the social contract that's existed between
companies and workers," said David Autor, an associate professor of
economics at the Massachusetts Institute of Technology. "It's a reflection
of how health care costs are out of control.
"Hopefully this will be an opportunity for government and companies to
rethink how health care is provided," he added. "The old system is clearly
breaking down."
Since World War II, the old system has been predicated on the notion that
employers will bear the primary cost of insuring U.S. workers and their
families.
That system, as the GM announcement plainly illustrates, is no longer viable
in the face of double-digit annual increases in health care costs.
Businesses have responded by insisting that workers -- and especially
retirees -- shoulder more of the burden of their health coverage.
To be sure, GM has been rewarding its more than 750,000 union members,
retirees and their dependents with an uncommonly generous benefits package.
The company also faces numerous other issues that affect its profitability
(or lack thereof; GM reported a staggering $1.6 billion loss for the latest
quarter). But health care is undeniably one of the automaker's biggest
headaches. GM estimates that health care adds about $1,500 to the cost of
every vehicle it sells in North America.
The company's chief exec, Rick Wagoner, told employees on Monday that health
care is an issue "of great importance for the future of overall U.S.
competitiveness." He also all but pleaded with political leaders to do
something about the situation. "We would welcome a more proactive role from
elected officials at the national and state levels in broad-based strategies
to address the U.S. health care crisis," Wagoner said.
Helen Darling, president of the National Business Group on Health, a
nonprofit organization composed of some of the country's largest employers,
told me that more and more companies will follow GM's example and
significantly scale back health coverage for workers.
For example, Ford and DaimlerChrysler are already negotiating similar
concessions from the UAW. "There's no one in the business world who doesn't
share the position that the U.S. health care system has a crisis," Darling
said. "The issue here isn't General Motors. The issue is the unaffordability
of health care."
So what do we do about it?
I've written repeatedly about how a single-payer health care system could
provide universal coverage for all Americans at a long-term cost to
taxpayers well below what's now paid annually by employers and workers.
Single-payer systems are the norm in virtually all other developed
democracies. While far from perfect -- long waits for treatment are a
frequent complaint -- such systems ensure that any citizen can receive care
from any doctor at any hospital.
There are no co-pays or deductibles, no private-sector premiums soaring year
after year.
"The basic system is quite good," said Steffie Woolhandler, an associate
professor of medicine at Harvard University. "We just need to fund it
adequately."
As it stands, she said about a third of all health care spending in this
country is now squandered on bureaucratic overhead. Under a single-payer
system, savings from streamlined paperwork alone would be sufficient to
provide coverage for all Americans.
"The meaning of GM's announcement is that even people working for a powerful
company can have their health care cut," Woolhandler said. "Anyone who gets
health insurance from an employer or former employer should be worried."
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