July 15, 2005

Commentary:

Sickness in America ...

By Robert H. Linnell

We have a national health care crisis in the U.S. but few seem to care. The numbers are damning. Over 45 million Americans (15.6% of the population) without health care insurance, a number that is increasing by over 1.4 million per year. A third of the population under 65 (when Medicare becomes available), nearly 82 million, were without health insurance sometime during 2002 or 2003. Health insurance is provided by fewer companies now, down to 61% from 70% in 1987 and some employees choose to be uninsured as employers require increasingly large copayments. Young people, ages 18-24, were most likely to be uninsured (30.2%) and Hispanics (32.8% uninsured) had the lowest insurance coverage. The lack of health insurance has been estimated to cause 18,000 excess deaths amongst uninsured adults aged 25-65. What is happening to our alleged best health care system in the world? And what are the economic implications?

First, is the claim that we have the best health care in the world true? The answer is yes only if you have the money (and/or insurance) to pay for it. Overall our health statistics rank amongst the poorest in the industrial countries. According to one study we rank 37th in the world in quality of health care; other studies give a somewhat better ranking but none rank the U.S. very high. Statistics ranking from infant mortality to life expectancy all put the U.S. far down on the list. Cuba, for example, ranks much better than the U.S.

Yet when it comes to health care expenditures, the U.S. is the highest in the world. We now spend 15% of GDP (Gross Domestic Product), the highest in the world and forecast to rise to 17% in less than 10 years. Other industrial nations, all having universal health care, spend amounts ranging from 6% -10% of GDP on health care. These other nations have healthier citizens as judged by health statistics. Thus the U.S. appears to have the most expensive health care in the world and at the same time has the least efficient system. What are we doing wrong?

The most striking difference between the U.S. and the other nations is that they all have universal healthcare in one form or another. In the U.S. the emphasis is on for-profit companies that are supposed to keep costs down. They have failed. This is not surprising because their primary goal is making profits not delivering quality health care. If we break down health care spending into the percent GDP from government sources vs the percent from private sources for the U.S. the numbers are 6.7% and 7.5%; for France 7.5% and 2.1%; for Italy 5.5% and 2.3% and Britain 6.0% and 1.0%. Note that private predominate only in the U.S. In the U.S. Medicare uses less than 2% of its funds on overhead leaving over 98% for actual health care; private for-profit plans use 25% or more on overhead and profits leaving 75% or less for health care. This is a major part of the problem.

In the last five years health care premiums have increased at an annual rate of 11.4% compared to an annual inflation rate of 2.5%. Drug costs have increased the most rapidly, and are projected to be 14.7% of total health care costs by 2011, up from 9.4% in 2001. In the drug benefit legislation for seniors, pushed through by President Bush at the end of 2003, the government is specifically prohibited from negotiating lower drug prices. Other nations regulate drug prices which is why more and more Americans are importing their drugs, at much lower prices, from Canada or Europe. Drug company profits are amongst the highest of any industry and can easily be reduced. Our Congress has been bought by the drug companies.

There are serious economic implications of our current government policies that favor for-profit health care companies. General Motors recently reported a first quarter loss of $1.1 billion and its bonds were reduced to junk status. GM stated that a major factor in its loss was its massive $5.2 billion ($1500 per car) health care costs for its 1.1 million employees (including retirees). Health care costs are going up 7.7% for GM. Foreign auto makers, with new plants in the South, have new young workers (no retirees) with low health care costs giving them a major competitive advantage. If the U.S. had universal health care, like Canada, Japanese competitors, with their new U.S. plants and GM would pay the same health care taxes; this would level the playing field.

A number of states are considering universal health care. For example Connecticut estimates it is paying $43 million annually for health insurance to cover workers at the top 25 employers, led by Wal-Mart. This must be the topic for another oped which will follow. Health care is too important to allow millions of Americans to be uncovered. It is also a mistake to allow foreign auto makers a competitive advantage over older, established American manufacturers.

Robert H. Linnell is a member of the International Society of Weekly Newspaper Editors. Reproduced with permission from: www.my-oped.com.

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