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The mirage of U.S. healthcare

August 26, 2009

On healthcare, the White House is struggling with a political riptide that threatens to drag it into deep water.

Americans, as they contemplate change, have suffered a weakness of nerve. The main reason is that nearly two thirds of Americans are apparently happy with their healthcare coverage, for all its deficiencies. Repeated reassurances from President Obama that those who like the existing set-up will not be forced to change, have had little effect.

A change of tactics may be in order. The administration must do a better job of underlining the glaring defects of the existing system. The genius of the U.S. healthcare is in providing the illusion of value and security. For their own sake, Americans must be encouraged to set aside jingoistic claims about having the best care system in the world and look more honestly at its short-comings.

Let’s start with value. Most Americans are blissfully unaware that their healthcare system provides appallingly little value for their money. This is because when it comes to costs, they see only the tip of the iceberg. While companies typically pay about three-quarters of an employee’s family premium — on average $12,680 a year — individuals ultimately bear the burden. In a free market, companies do not hand over to their workers more than they absolutely have to. Money spent on healthcare is carved out of take-home pay or other benefits.

“We pay for healthcare in considerably lower salaries,” Uwe Reinhardt, a Princeton University economics professor, said in a telephone interview. “The system seduces people into thinking care is pretty cheap. We are kidding ourselves if we think that the shareholder pays.”

One measure of this financial sacrifice is that employer premiums are now 17 percent of median household income — up from 15 percent in 2003. From 1999 to 2008, family health insurance premiums rose by 119 percent.

With healthcare costs rising fast, it is small wonder that middle-class Americans have failed to wring real pay increases out of employers. The drag on pay will increase further, according to research by the Commonwealth Fund. The foundation estimates that without reform, the cost of premiums could double again by 2020 — gobbling up still more take home pay.

The second big healthcare mirage is security. If the current downturn has demonstrated one thing, it is the fragility of an employer-based healthcare system. Lose your job — as more than 6.5 million have in this downturn — and your insurance can disappear with it. (COBRA provides only a temporary patch and can be expensive.)

It also means that you can lose your coverage if you get very sick. “Get so sick you can’t work, you can also forfeit coverage,” Gary Caxton, an analyst with Kaiser Family Foundation, said in an interview. The very idea of insurance is to protect you during a crisis. Instead Americans are getting insurance that works only when the sun shines. “The American system is least good at the worst times,” as David Cutler, a Harvard healthcare economist, puts it.

The final illusion is that the healthcare system can be relied on in the longer term. In reality it is taking on water fast. This is most obvious in small companies. Less than half of companies with fewer than 10 employees now offer insurance, down from 57 percent in 2000, according to the Kaiser Family Foundation. For all companies, the percentage is down from 69 percent to 63 over the past 8 years. Companies are also starting to unload a growing share of costs onto employees anyway.

Deductibles for most employees have more than trebled since 2000 — a trend that looks almost certain to continue. This is all before you take into account the prodigious quantity of tax dollars soaked up by healthcare.

As the private sector has faltered, the state has been forced to step in. The result is that America is stumbling toward nationalization.

A recent Gallup poll found the share of Americans dependent on the state for healthcare — including Medicare, Medicaid and VA benefits — had climbed to 29 percent from 26.5 since the start of 2008. If you include the 17 percent of U.S. workers employed by the state, then closer to 40 percent are covered by the government.

Americans need to take a good look at their existing healthcare system, warts and all. It is the administration’s job to hold up a mirror to U.S. healthcare. If they fail to do so, the U.S. will pass up an opportunity to build a system that’s fair, sustainable and offers better value.

Comments

Got any more useful tidbits of information from that script of yours…

You will have a difficult time even finding a GP in your state run system. The government will drive out the private option. They will be addicted to money. Your money. You (I mean your parents) and the rest of the middle class will be paying dearly for this ‘free’ health care. Your leader, Obama, says its not right that people should go broke when they sick. You will all be broke! The middle class always pays the tax burden. You will be paying for everybody’s health bills and people will be paying for your high level autism. And yes I have no interest at all except the amazing challenge of drumming this into your overly dense skull. I’m right and you are wrong.

Posted by Drew | Report as abusive
 

At least with the insurance companies, you have the option to opt out, like your 30 – 47 million uninsured. When the government takes over your health care plan. You will have no choice. You will have given up that choice.

Don’t believe everything the government says. That’s why I know you’re just a dumb kid.

Posted by Drew | Report as abusive
 

Few people are choosing to opt-out of insurance today, but there are many people that cannot afford to opt-in. Reuters has an article just today titled “Study links 45,000 U.S. deaths to lack of insurance”. That is the reality of our current health insurance system. People should Google that article. There is something very wrong when the richest country in the world allows 45,000 of its people to die simply to protect the profits of private insurance companies. That’s 45,000 people a year, one every 12 minutes. Those are just the people who die, many more live with debilitating conditions that could be fixed if they could afford the care. Healthcare reform, at its core, is a human rights issue.

Health insurance reform is not a government takeover of healthcare. It is simply more safeguards (regulations) on the private insurance industry to ensure that you can’t be rejected based on pre-existing conditions, you can’t be dropped if you pay your premiums, and you will know what your insurance company covers and doesn’t cover.

In addition, there will be a public option that will be a government run plan. No one is forced into the public option. It is an option that Americans can either choose or not choose. The public option is not subsidized; it is paid for through the premiums of those who participate, just like private insurance.

The only subsidies are tax credits to purchase insurance. These tax credits can be used either for private insurance or the public option. It is up to the participant to choose which plan to use the tax credits on. It is these tax credits that will ensure that every American has health insurance.

Posted by Kirk | Report as abusive
 

You still sound like a generated script from the Obama camp. And now you are changing your position to the Republican insurance reform idea. Hmmm. That’s interesting. I miss something here?

First, don’t tug on my heart strings (lol). 45,000 die every year in the U.S. in motor vehicle accidents. I believe twice that die from misdiagnosis in the U.S.

In Canada, (I won’t look this up), we have that comparable amount dying every year because they cannot get their needed surgery or specialized medicine in time.

Did I mention your state run care will lead to long waiting lists?

The government, your government, like my government will be addicted to that cash and will squeeze out the competition (private health providers).

A great example is your cash-for-clunkers program: look at how your government screwed this up. Did you see on Youtube, destroying all those vehicles. I thought the green-era was about reuse and recycle. But no. Your government, which nows owns GM destroyed those cars. Destroyed the competition.

The same thing will happen with your health care, Kirk. I like the U.S. and its strong economy. When you go down that road of Big Government, its a one-way street and you cannot turn around.

But I still haven’t got an apology for calling me a liar. And I still haven’t heard your experience and how you got “jerked around” by your insurance provider. And you still haven’t got off this site, like I asked you to.

Empty broken record rhetoric will only get you so far. I have refuted and counterpointed everyone of your arguments.

I like to think you are akin to a punch drunk boxer, Kirk, back in his corner, muttering the same strategy over-and-over, but already lost the fight with the spectators long gone from the building.

Posted by Drew | Report as abusive
 

Yes, I’m well aware that health insurance reform opponents could care less that 45,000 people die each year from the lack of insurance. Health insurance reform opponents do not have America’s interest at heart. They only care about the profitability of private insurance companies. They also will continue spreading misinformation to try and kill health insurance reform.

Health insurance reform does not create state run healthcare. It simply creates safeguards for those with private insurance and provides an option to join a public insurance plan – the public option. The public option is paid for through the premiums of its participants just like private insurance.

Posted by Kirk | Report as abusive
 

Wrong again, Kirk.
Big Government is not the answer, friend.

First:

The uninsured (according to CNN) are mostly young, healthy Hispanics. Many have the opportunity to work, save and keep their money for a rainy day.

Second:

This is why many of the world, unlike myself, do not sympathize with you. You work and lived in the most dynamic economy in the world. But instead of taking advantage of this mostly tax free windfall, saving for a rainy day and living within your means. You and other Americans decided to piss away that money on larger houses, the nicest cars, not very fuel efficient cars, flat panel televisions. So don’t come crying to me.

Third:

Big Government redistributes wealth. So do the insurance companies. Both redistribute. Both are technically the same. Premiums, payouts. Taxes, benefits. Insurance companies redistribute payouts from premiums (less the profit motive).

Governments too redistribute income (benefits) from taxes. There is no profit motive in government and no need to be efficient. There is graft. The result is government going back to you for more money. Again and again. Did I mention how high your taxes are going to be? You will pay no matter what. See.

Third:

You mention politicians being bribed. Wait till your Big Government dream (nightmare) comes to fruition. You will be bribed with your own money. They will take tax after tax and give you back a few crumbs.

Governments will be addicted to the cash, your friends Pelosi and Franks will be salivating over that added revenue and then decide. ‘Hey, lets get rid of all the private insurance. Lets take over everything’. This could happen and probably will. Don’t be so naive. More so don’t trust sleazy Democrats.

Fourth:

Why is that Liberals perceive Conservatives as uncaring? I do care. I care about you. And I care about me. Don’t give up your right. Don’t have a larger entity manage (take and redistribute) your money from you. Conservatives care.

Yeah you have a problem with your health care, Kirk. But Big Government is not the answer. Like most Americans, impatient, you are looking for that quick band-aid fix. One vote and your problems will be solved.

So naive, Kirk….(sigh)

Posted by Drew | Report as abusive
 

To quote Kirk, “I am well aware…”

You aren’t aware of anything. Get your head out of the clouds.

Posted by Drew | Report as abusive
 

Luckily, we have an excellent solution to the health insurance crisis in the United States and that is the public option that is being proposed by the White House, the House of Representatives and now the Senate.

The public option will compete with private insurance and will operate like Medicare with the exception that it will be an optional program. You don’t have to pay for the public option if you choose private insurance. This is because the public option is paid for by its participants. If you choose the public option then you will pay a premium for the coverage, just as you would with private insurance.

While the health insurance reform being proposed has many fixes for the private insurance industry – like not allowing claim denials because of a “preexisting” condition – it is the public option that really brings the reform we need. Insurance companies will no longer be able to jack up rates willy nilly since they will have to compete with the public option. In addition, insurance companies will have to provide good service to their customers since their customers will switch to the public option if they don’t.

The public option is an essential part of health insurance reform.

Posted by Kirk | Report as abusive
 

These are simply facts. The leading cause of death in America is abortion (1.2Million/year). Obamacare is a Trojan Horse that is designed to bail out the abortion industry. While everyone is arguing about details and the impact to their own pocket book, the American government has created tax funded genocide larger than Hitler and Stalin ever dreamt of.

 

What a great example of the fringe. The irony of the previous commenter’s abortion statement is the fact that health insurance reform will actually reduce the number of abortions. Why is this? Since all Americans will be insured, all Americans will have access to affordable contraception. Logic dictates that this will reduce unwanted pregnancies and thereby reduce the number of abortions.

The previous commenter’s statistics are also wrong. Abortion has been on a steep decline since 1991 and there are far fewer abortions performed than the commenter stated.

The last comment is such a perfect example of the misinformation and scare tactics used against health insurance reform. We even had Hitler and Stalin thrown in. Most people will ignore the comment, but some won’t. This is the tactic of health insurance reform opponents. Just throw out as much false information as possible and hope one of the falsehoods will stick, no matter how ridiculous the statement is.

Posted by Kirk | Report as abusive
 

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