Motley Moose – Archive

This evening, I was talking about health care reform with a family member and she said something that threw me off-balance for a bit. She said that it was about people with their hands out wanting something for free. As far as she was concerned, no one gave her health care and she doesn’t see why anyone else shouldn’t have to go out and get their own. I was totally unprepared to hear this coming from someone in my family, so I didn’t respond right away. It was also late and I knew there wasn’t really time to go into everything involved right then. Since I really didn’t want to let it die there I wrote the information below and emailed it to her. I decided that if someone close to me could misunderstand the need for reform that it would probably be a good idea to put this on the Moose for everyone to read.

The email was titled, “A little primer I wrote for you on the health care debate – it isn’t all about the uninsured”

The cost for health care in the United States currently consumes 17% of the Gross Domestic Product (GDP) in this country. The U.S. spends, on average, 50% more per person than any other developed country. Unfortunately, the extra money we spend doesn’t buy us better health care.

An excerpt from a speech by Kathleen Sebelius the Secretary of Health and Human Services: (my emphasis)

“Today, we have by far the most expensive health system in the world. We spend 50 percent more per person on health care than the average developed country, according to the Organization for Economic Cooperation and Development. We spend more on health care than housing or food, the McKinsey Global Institute reported.

Nationwide, health care costs consume 18 percent of our gross domestic product. If we continue on our current path, health care costs will consume 34 percent of our GDP by 2040, and the number of uninsured Americans will rise to 72 million, according to the Council of Economic Advisers.

Even though we spend more than any other nation on health care, we aren’t healthier. Only three developed countries have higher infant mortality rates. Our nation ranks 24th in life expectancy among developed countries. More than one-third of Americans are obese.

These statistics are the signs of a system that is both unacceptable and unsustainable. They also show us the high cost of doing nothing. If we choose the status quo, more Americans will be uninsured, costs will continue to rise, and every American’s health care will be at risk.“

Not only do we spend more for less, we are the only major country without universal health care available to all citizens. France, Germany, the U.K., Canada, Japan, South Korea, Taiwan, all cover their entire population for less than what we spend and get better results.

There is far more to  health care than covering the estimated 47 million uninsured in this country. It isn’t even about the 10’s of millions more who are underinsured. It is about much more than that.

Every year 100’s of thousands of people file for bankruptcy. The majority of those bankruptcies involve medical bills. The majority of people who file bankruptcy because of medical bills had insurance at the time they got sick. The costs still bankrupted them.

American wages have been fairly stagnant for many decades. The middle-class and underclass have actually lost purchasing power. This has been disguised by the number of women who have entered the workforce. There are many more two-job families than there were 30 or 40 years ago.

Why have wages been stagnant while productivity has increased? Mainly because of health care costs. The following information comes from the National Coalition for Health Care.

Employer and Employee Health Insurance Costs

Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent.

The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007. The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).

Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999. Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.

Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by the end of 2008.

According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 1999.

The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.

The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 – a 16 percent increase.

The Impact of Rising Health Care Costs

National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.

Economists have found that rising health care costs correlate to drops in health insurance coverage.

A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses. Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.

A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.

About 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs.

A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses.

Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage. Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.

According to a recent report, the United States has $480 billion in excess spending each year in comparison to Western European nations that have universal health insurance coverage. The costs are mainly associated with excess administrative costs and poorer quality of care.

The United States spends six times more per capita on the administration of the health care system than its peer Western European nations.

This is why we need health care reform. The costs are coming out of your pocket already. They must be reined in or our economy will implode. Health insurance premiums increase at twice the rate of inflation, in good years. Employers have only two choices – either shift the cost of health insurance to their employees or drop it altogether.

One last point I’d like to make i
s about the effect all of this has on job creation and entrepreneurship in this country. Anyone who has a pre-existing condition, such as diabetes or something similar, can only change jobs if they go to another employer who offers group insurance. Otherwise, they are uninsurable. This prevents many people from starting their own business, going to work for an employer that doesn’t offer insurance, or leaving a job to go back to school.

That isn’t the only way our current health insurance system hampers employment mobility. This is a threat that also faces every employed person if they lose their job or their employer drops health insurance policies. Try getting insurance if you have had heart troubles or cancer. A woman who has had a hysterectomy would not be covered for hormonal problems, since those could be attributed to a pre-existing condition.

Let me restate a point I made earlier. This is not only about the 1/6th of all Americans who are uninsured. This isn’t about people having their hands out asking for something for free. This is about a serious problem that could destroy our economy and way of life if it isn’t dealt with soon. And by soon, I mean now. We have been having this debate since Teddy Roosevelt first proposed a national health insurance plan almost 100 years ago. The rest of the developed world is 20, 30, in some cases, more than 100 years ahead of us. It is no wonder jobs keep getting shipped overseas. They will continue to be outsourced until we fix this problem.