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“A critical national competitiveness issue”

"This rapidly rising health care burden is not, in fact, unique to GM — it is a critical national competitiveness issue for the United States, affecting our entire economy’s long- term strength. It’s clear that the health care crisis could benefit from stronger leadership by governments at all levels, and by business, and consumers, too — and I want to assure you that we at GM are not giving up our commitment to work proactively and constructively in these areas."
- Rick Wagoner, CEO of GM, in annual address to stockholders, 06/07/2005 LINK to GM investor news

In June, General Motors announced that 25,000 of its American workers would lose their jobs. The reason for the cutback? Skyrocketing health care costs, which put GM at a disadvantage with its foreign competitors. GM is not alone in its concern about health care costs.

In one recent survey, 57 percent of business executives cited hikes in health care costs as their number one worry.GM’s solution to the health care crisis is to get workers to shoulder more of the burden. Other employers have used the same approach, requiring their employees to pay higher premiums and deductibles. Some employers have taken even more drastic steps, dropping coverage entirely for current workers and especially for retirees. Retiree health benefits are going the way of the dinosaur.

These trends in employee health benefits will most surely increase the number of the uninsured, currently at 45 million Americans. Being uninsured reduces access to medical care and imperils health and well-being. The uninsured are often denied care that is available to people with insurance. Frequently, the care they do receive is in an emergency room where there is no primary or follow-up care. Many uninsured people do not have a regular family doctor and thus do not receive preventive health services like cholesterol-lowering drugs or screening for potentially fatal diseases like cancer, diabetes or heart disease. For example, two-thirds of uninsured women over 40 do not receive mammograms. Those who get breast cancer are more likely to be diagnosed at an advanced stage, often after the cancer has spread. Being uninsured can also place severe financial strains on families – nearly half of all individual bankruptcy filings are due to medical bills.

The uninsured raise the costs of health care for everyone. The expense of their care is borne by taxpayers through various government programs or through cost shifting by physicians and hospitals to privately-insured patients. Cost shifting, in turn, forces insurance companies to either reduce covered services or raise premiums for people with insurance. As premiums rise, fewer employers offer coverage, so more people wind up being uninsured. Thus, a never-ending cycle is perpetuated.

What can be done to ease the burden on employers and families? The simplest solution would be to expand Medicare to include people of all ages. Yet such a plan is likely to face substantial political opposition from insurance companies, medical groups and employer organizations. That’s been the pattern for the past 100 years from the first proposal for state sponsored health insurance in the 1910s to President Clinton’s failed attempt to provide universal coverage in the 1990s.

For the short term, we can tackle pieces of the problem. Why not allow people aged 55 to 64 to buy into Medicare at a reasonable rate.  Older adults are far more likely than younger people to report being in fair or poor health and much less likely to be able to purchase coverage in the private insurance market. Another option is to expand Medicaid, the health insurance program for the poor. Current Medicaid regulations make no sense. They exclude most low-income workers, all childless couples and single adults. Unfortunately, Medicaid expansion also would do nothing to help middle income people who have no health coverage. One way to improve coverage for these individuals and families is to provide federal vouchers for the purchase of a private health insurance policy. Another idea that merits consideration is to establish a “stop-loss” plan where the federal government would reimburse health plans for some percentage of their “catastrophic” cases. That would make costs predictable for basic health insurance policies, and the premiums for those policies more affordable to employers.

Over the long term, however, we must adopt universal coverage as a national policy objective. Incremental measures can never solve the problem. In other countries, national health insurance has proved to be a major tool for restraining costs and controlling inflation. In the United States, planning the rational distribution of health care resources has been impossible. The result is duplication of services, unnecessary procedures, tests, and drugs, inefficient use of technologies, and rampant inflation that motivates employers to outsource jobs overseas and cut benefits.

Certain future cost increases are inevitable. The first wave of the 76 million baby boomers will reach 60 next year. An aging population means higher health care costs. But staying on our present course only worsens the problem.

Employers, besieged by huge health care bills for their employees, seem more willing than ever to consider reasonable plans for health care reform. Polls show that the public also supports reform, even if it costs more in the short run to do so. Using the power of government to provide universal coverage will help individuals, allow employers to offer higher wage increases and improve the competitive position of the United States in world markets.

- Jill Quadagno, author of One Nation, Uninsured and Professor of Sociology at Florida State University.

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6 Responses to ““A critical national competitiveness issue””
  1. hgstern says:

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    Professor Quadagno: Thank you for the link, and for this post. Quite well done.

    FWIW, I’ve also posted the first two items in a series on High Risk Health Pools, which also addresses this issue (albeitly from a legislative perspective).

    I’ve not been here before, but I’ll be back: it’s an interesting blog.

  2. Terry says:

    You wrote, “In other countries, national health insurance has proved to be a major tool for restraining costs and controlling inflation. In the United States, planning the rational distribution of health care resources has been impossible.”
    What are those “other countries.”? Do they have a higher standard of living? Is their medical care superior to ours? What drugs and medical equipement have they invented recently? What country has rational planned the distribution of health care?
    You wrote, “Using the power of government to provide universal coverage will help individuals, allow employers to offer higher wage increases and improve the competitive position of the United States in world markets.”
    How will it help individuals when they will be forced to pay for medical services and drugs they don’t need? Why would it allow employers to offer higher wage increases when the government won’t reduce employers taxes or expenses? Which nation is more competitive the the US that has universal health care?
    When has socialism been more efficient at providing a service people need?
    You should study the Canadian universal health care system. Its a disaster.
    Terry

  3. Matthew Holt says:

    Terry — If you want to learn something about the realities of Canadian and the US system, rather than just saying “It’s a disaster” which is a meaningless phrase, I suggest you go read my piece “Oh Canada”, which summarizes the actual peer reviewed research done on the topic.

    http://matthewholt.typepad.com/the_health_care_blog/2003/11/policy_oh_canad_1.html

  4. Great article on health insurance. I really believe universal health care would provide a better health care system.

  5. Sarah says:

    I think the authorities should not force enterprises to pay health insurance for their employees. I mean not always.

  6. Daniel says:

    Terry, your a clown! one word FRANCE

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