U.S. HEALTH INSURANCE CHANGE HAS TO COME

Cutting the tax deductibility tie to jobs and cutting the maze of bureaucratic rules that tie up health care providers would be big forward steps -- among others

In today's world economy, health care costs are a drain on many businesses as they struggle to compete with overseas companies that pay workers far less and provide few benefits. Even unions that have fought to maintain generous health insurance for workers are beginning to make concessions. Last fall, the United Auto Workers agreed to health insurance cuts at General Motors in hopes that the $1 billion in annual savings would help revive the company. Workers and retirees will pay more in the deal, which will reduce the health care liability that GM has said adds $1,500 to the price of every car it sells. Ford recently struck a similar deal and Chrysler also wants concessions from the union. Given that GM and the UAW were pioneers in establishing job-based insurance, the agreement was a strong signal of just how troubled America's system is.....

Health care costs have made it attractive for employers to hire workers not eligible for typical employee benefits, including those who work through outside agencies or who are self-employed independent contractors. A recent report by the Iowa Policy Project, a nonpartisan research organization, found that one in four workers, or 34 million Americans in 2001, worked in temporary, part-time and contract positions. The report noted that our economy's shift to these kinds of jobs is "threatening to unravel the employment-based health insurance system in the United States and swell the ranks of the uninsured and underinsured."

In the face of rising costs, some business leaders are openly calling for an end to the job-based health insurance system. One is Robert S. Miller, chairman of Delphi, an auto-parts supplier and former GM subsidiary that recently went into bankruptcy. "Back in the days, when you worked for one employer till age 65 and then died at age 70, and when health care was unsophisticated and inexpensive, the social contract inherent in defined-benefit programs perhaps made some economic sense," he told the Wall Street Journal in October about his efforts to turn Delphi around. "Today, defined-benefit programs are an anachronism" ...

While some discuss how to replace the job-based insurance system, others are trying different ways to shore it up. There are proposals in Washington to make it easier for people to buy insurance on their own. Congress has appointed a citizens task force to hold town meetings around the country on the future of America's health care system. National initiatives are pushing the health care industry to expand its use of information technology, such as computerized medical records, in hopes of reducing costs.

Employers are offering wellness programs, discouraging unhealthful behavior like smoking and banding together to rate the quality of health care providers in hopes competition will ultimately lower their insurance rates.

There are also new "consumer driven" health plans that pair high-deductible health insurance with tax-free medical-savings accounts. Many economists predict that these plans, only beginning to be offered by employers, are the wave of the future. Supporters say such plans will save employers money, allow more people to obtain coverage, turn Americans into more prudent consumers of health care and improve the overall health care system by giving patients greater flexibility to shop for their own care. But critics say the higher deductibles and out-of-pocket expenses will cause some people to skimp on care and drain people with chronic conditions. "I am convinced that consumer-driven health plans will save money," Dr. A. Mark Fendrick, a professor of internal medicine and health management and policy at the University of Michigan, told employers gathered in Scottsdale in November at a National Business Coalition on Health conference. "But as you cost-shift, people will get sick and die."

Still, even the most optimistic experts say that these and other ideas will not be able to avert the crisis in health coverage that many predict in the next decade. America's aging population combined with the expense of new medical technology and treatments are likely to continue to drive care costs up. And, as costs rise, the job-based insurance system will continue to unravel, overwhelming hospitals and public-assistance programs.

Tommy Thompson, secretary of the U.S. Department of Health and Human Services from 2001 until January 2005, supports many of the new cost-cutting initiatives. But he believes they will not be enough to avert a crisis. He said more drastic measures are necessary, including major reforms of Medicaid and Medicare, government assistance to help employers provide insurance and programs to cover the nation's 46 million uninsured. "We have eight years to make some dramatic shifts in the transformation of health care," Thompson predicted. Without significant changes, spending on health care in the United States is projected to climb from $1.9 trillion this year to $3.4 trillion in 2013. "I don't think the system can afford that."

More here

***************************

For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

Comments? Email me here. If there are no recent posts here, the mirror site may be more up to date. My Home Page is here or here.

***************************