Costs of Health Care Drag America Down

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http://www.truthout.org/issues_05/060805HA.shtml

 

Costs of Health Care Drag America Down

By David Lazarus

The San Francisco Chronicle

 

Wednesday 08 June 2005

 

General Motors' chief exec spelled out Tuesday why U.S.

manufacturers are getting their economic butts kicked. And a big

reason has nothing to do with the productivity of our workers or the

quality of our products.

 

It's because our health care system is killing us.

 

Addressing GM shareholders, Rick Wagoner said runaway health care

costs are partly to blame for the world's largest automaker cutting at

least 25,000 U.S. jobs as it closes more assembly and component plants.

 

GM is the nation's largest private purchaser of health care. The

company expects to spend $5.6 billion this year on health benefits for

workers and retirees - more than it spends on steel for its vehicles.

 

GM says this cost translates to $1,500 for every car or truck

produced.

 

" Our $1,500-per-unit health care expense represents a significant

disadvantage versus our foreign-based competitors, " Wagoner said.

" Left unaddressed, this will make a big difference in our ability to

compete in investment, technology and other key contributors to our

future success. "

 

He added: " It is crystal clear that we need to achieve a

significant reduction in our health care cost disadvantage, and to do

so promptly. "

 

GM isn't alone in facing this problem. It's a dilemma confronting

virtually all U.S. industries as health care costs post double-digit

growth year after year.

 

" Name any manufacturer in the United States, and this is an issue

for them, " said Steven Szakaly, an economist at the Center for

Automotive Research in Michigan. " There's got to be some way to rein

in health care costs. "

 

Heavy Losses

 

GM's problems run deeper than just health care, he noted. The

company lost $1.1 billion in the first quarter and has seen its U.S.

sales drop almost 7 percent this year.

 

" But double-digit increases in health care prices are just not

sustainable, " Szakaly said.

 

GM's decision to slash its payroll by nearly 8 percent illustrates

that this country's health care crisis isn't just a matter of quality

of treatment or availability of drugs.

 

It's a matter of jobs.

 

It's a matter of whether the United States is prepared to make

fundamental changes to its health care system as a safeguard for our

economic well-being in years ahead.

 

" Companies are responding to this by reducing benefits for

workers, " Szakaly said. " That's not the answer. Any time worker

benefits are cut, it always impacts spending. "

 

That, in turn, impacts other businesses and other workers,

dragging us all down in a spiral of belt-tightening.

 

To take the case of the auto industry alone, Szakaly estimates

that each U.S. car-making job supports seven other jobs throughout the

economy, from parts suppliers to ancillary services.

 

Further Repercussions

 

The math is harsh: When GM cuts 25,000 jobs, as many as 175,000

other jobs elsewhere in the economy could be affected.

 

A recent survey by the Society for Human Resource Management, a

business group, found that 57 percent of execs rate rising health care

costs their top concern.

 

The question is: What are we going to do about it?

 

With an estimated 45 million Americans now lacking health

insurance, any lasting solution has to involve universal coverage.

 

It also must address the bureaucratic waste, excessive pricing and

outright fraud that some experts say account for about half of the

nearly $2 trillion spent annually in this country on health care.

 

Quentin Young, co-founder of Physicians for a National Health

Program, representing about 13,000 doctors nationwide, said it was " a

historical freak " that companies began offering health benefits during

World War II to attract workers.

 

Now we're stuck with a system that saddles businesses with

unwanted health care costs and leaves employees vulnerable to

dwindling coverage, he said.

 

" What we need is a government system, " Young said. " We need

Medicare for all, only much better, based on tax collections from

companies and individuals. "

 

This is known as a single-payer system. Canada, Britain and most

other industrialized democracies have one.

 

" We're not talking about socialized medicine like they had in the

Soviet Union, " Young stressed. " We're talking about national health

insurance with a private delivery system. "

 

In other words, hospitals and doctors wouldn't be controlled by

the government. The main difference would be in how medical bills get

paid, with potentially enormous savings resulting from a standardized

insurance program.

 

Benefits of Universal System

 

A single-payer system not only addresses the problems faced by GM

and other businesses, but paves the way for a critically needed

overhaul of the $350 billion-a-year Medicare system.

 

Medicare already provides coverage for about 42 million retirees

and people with disabilities. That number will swell exponentially as

millions of Baby Boomers qualify for the program in years ahead.

 

Over the next 75 years, thanks in large part to soaring costs,

Medicare's deficit is projected to run as high as $27.7 trillion,

compared with a $3.7 trillion deficit for Social Security.

 

It's not realistic to think that the U.S. health care system can

be reformed overnight. But a single-payer system could be introduced

gradually, state by state, as part of a long-term remedy.

 

California can lead the way. State Sen. Sheila Kuehl, D-Santa

Monica, introduced legislation this year that would create a

single-payer program for all residents.

 

The bill, SB840, was approved by the Senate last week. It now goes

to the Assembly.

 

What's good for GM is good for America, the saying goes. In the

case of universal health care, that's true.

 

We can start now. We can start here.

 

David Lazarus' column appears Wednesdays, Fridays and Sundays. He

also can be seen regularly on KTVU's Mornings on 2. Send tips or

feedback to dlazarus.

 

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