Sunday, October 23, 2005

The US As a Good Example...

...of how not to do things.

The cost of health care is not an issue unique to the United States. All nations concerned with the well-being of their citizens have to grapple with the issue. The Netherlands is currently considering a revision of their system, as noted in NRC Habdelsblad.

While Dutch citizens are worried about the phase-in of a new and revised health care benefits system, we have just received a clear message from the United States: things can always get worse. Much worse even. Last Monday, the automobile giant General Motors (GM) settled its differences with the United Auto Workers Union. In the United States, health care benefits for workers and retirees will be cut to the tune of a $1 billion per year over the next 3 years, as GM cannot sustain the current level of benefits. Every car produced comes with a $1,500 healthcare burden. This is another reason that GM is now effectively unable to compete with the Asian manufacturers. The generous benefits package, a legacy of the 70s, is the reason some had started to refer to GM as “Generous Motors.”

GM’s course of action underlines again how dangerous it is when pension and health care benefits all depend on an individual corporation. Employees and the corporation find themselves in the same boat when the company gets into trouble, or closes its gates. The GM issue puts the spotlight again on what has become the American way of organizing healthcare benefits: an impenetrable jungle.

The latest findings by the American Census Bureau found that 45 million Americans are uninsured. This is almost one sixth of the population! At the same time, the Americans are spending more on healthcare than any other country in the industrialized world. In 2003 that number stood at 15% of gross domestic product, according to the Organization for Economic Cooperation and Development or OESO.

This type of fragmented healthcare delivery system, completely left to the whims of free market forces, is screaming for reform. Especially when the costs are increasing much faster than general inflation, a higher portion of the population runs the risk of being shut out of the system.

[Emphasis added]

While an argument can be made that GM and other corporations have reneged on the deals they made to their employees in all sorts of ways (including pensions) mainly to accomodate the bottom line, it is a fact that health insurance is a significant cost of doing business and it does have an impact on the cost of products and services.

One reason health insurance and health care is so expensive (15% of the the gross domestic product) is that the free market forces are concerned only with profitability. The days of "competition will drive prices down" are long gone. One need only look to the obscene profits of the multinational oil corporations to see that. Adequate health care is simply one area that should not be left to those whose only concern is the bottom line.

While I believe a national single-payer system would be the most equitable and, in the long run, most effective way to control the costs of health care, I have no illusions about the US going the way of Canada and the UK. I do believe, however, that the sensible blending of private enterprise and government oversight might stop the upward spiral.

It will be interesting to watch the Dutch program evolve. I just hope the Democrats are among those watching. We need to start facing this problem head on yesterday.


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