Bad Ass Business Side of Healthcare

Unions are pretty docile these days, knowing that their members are often skating on the edge of unemployment, feeling the pain as overtime hours evaporate and basically accepting the fact that big raises aren’t really in the cards in most companies. In fact, two-tiered pay systems – one for new hires and another for those who have been around for a while – is becoming a nasty part of life for those younger employees even able to find union work. But where you do see threats of labor disputes, it almost always comes down to healthcare cutbacks and having employees pick up an increasing share of the coverage. Union members scream like stuck pigs at the thought of losing or decreasing those benefits, but for those without the benefit of company or union health insurance, the costs are even more absurdly high – the highest on earth. And while we may have the best-trained doctors with the latest equipment, we also have insurance companies denying their members access to the best available when cheaper (usually less effective) alternatives exist.

While “Obamacare” was supposed to cut healthcare costs by tearing away at the layers of administrative and “mal-practice-avoidance testing” excess of the existing system, with no real competition, our medical costs actually increased 9% in the past year, a vast multiple above the increase in the cost of living. With powerful lobbies and the frequent and indelicate use of the words “socialism” and “costly and inefficient government bureaucracy” sprinkled into the healthcare debate, the controversial plan to provide direct government insurance to those unable to afford the better private plans died in a flurry of compromise, and the insurance companies laughed all the way to the bank. They even got the government to force folks to become new customers. Further, the restrictions on bringing in meds from Canada and other comparably-regulated nations had the big pharmaceutical companies adding their snickers to the mix. With no new competition added to the market, there really was little reason to tear down rate structures and pricing considerations.

Writing for the September 30^th New York Times, Princeton economics professor Uwe E. Reinhardt, analyzed the ratio of money paid into the system versus the amount actually spent for medical services (versus administrative or profit costs), and found that both Medicaid and Medicare, two federal programs, were significantly more efficient than the private sector, both programs allocating over 92% of such funds to actual services. So much for the accusation of inefficient government bureaucracies, even though there will always be anomalies and abuses in a system this large.

But a more significant observation was made by Dr. Fareer Zakaria, journalist and political scientist, in his The Post-America World, Release 2.0 (pages 225): “Consider the automobile industry. For a century after 1894, most of the cars manufactured in North America were made in Michigan. Since 2004, Michigan has been replaced by Ontario, Canada. The reason is simple: health care. In America, car manufacturers have to pay $6,500 a year in medical and insurance costs for every worker. If they move the plant to Canada, which has a government-run health care systems, the cost to the manufacturer if around $800 per worker. In 2006, General Motors paid $5.2 billion in medical and insurance bills for its active and retired workers. That add[ed] $1,500 to the cost of every GM car sold.” It also was the straw that broke GM’s bank, shoving it into bankruptcy and resulting in a government bailout of this significant industry.

Zacharia continues his analysis (page 226): “Jobs are not going [just] to places like Mexico but to places where well-trained and educated workers can be found: it’s smart benefits, not low wages, that employers are looking for. Tying health care to employment has an additional negative consequence. Unlike workers anywhere else in the industrialized world, Americans lose their health care if they lose their job, which makes them far more anxious about foreign competition, trade and globalization. [A] Pew survey found greater fear of these forces among Americans than among German and French workers, perhaps for this reason.” The photograph above is of the Chrysler plant in Brampton (Ontario, Canada), where Dodge Magnum, Dodge Charger, Dodge Challenger, and Chrysler 300 M and other popular cars are/have been built since 1986.

As the Obama administration presses the U.S. Supreme Court for an expedited review of its omnibus healthcare legislation, all those in opposition to such medical program should really be aware of its impact on jobs… and perhaps that it doesn’t go far enough. Whatever the outcome, Americans are dealing with the most expensive medical system on earth and also one of the most inefficient, one that delivers the “best in class” medical care only to those with the money to afford the platinum insurance plans available only to those able to afford this higher-level policies… or those rich enough not to care. For the rest of us, we have to limit our choice of doctors and often have to opt for second-rate treatment, because that’s all the insurance company will pay for. And pay for the most expensive pharmaceuticals in the industrialized world.

I’m Peter Dekom, and I wonder how the nay-sayers would (will?) respond if they could no longer afford health insurance (and their employers simply terminated that benefit).