In yet another sign that health care, national health policy (or the lack thereof), and the impact of same on the US economy (free subscription required) is fast becoming a national crisis, Paul Krugman has published an editorial linking GM’s incredibly high health care tab to its recent financial problems, and using GM’s troubles to highlight the impact health care costs have on other manufacturers.
I’d extend that to any employer that provides health insurance for its workers. I was speaking with a senior partner at a large Florida law firm at the Florida Workers Compensation Conference in August about just this issue. The gentleman, a self-described conservative, was reflecting on the costs of health insurance, and the problems firms such as his encountered in obtaining and funding coverage. We had just heard a talk by former HHS Secretary Donna Shalala in which she made a case for national health insurance.
This gentleman, no fan of Shalala or governmental solutions in general, was acknowledging that the present health care “system” was not serving his firm or its employees very well, was costing a huge amount of money, and there did not appear to be any promising solutions in sight. We discussed the unseen costs of health insurance – higher costs prevented them from hiring a new associate, opening a new office, or adding a new document management system. By the end of the conversation, I sensed a willingness to relook at health care and health insurance, to consider it as not a governmental hand-out or employee benefit, but rather as a drag on his firm’s effectiveness.
The more this happens, the closer we get to a solution.
What does this mean for you?
My guess is we will have some form of consensus on national health policy, perhaps with universal coverage, within five years.
Nov
27
The more this happens, the closer we get to a solution.
Or at least, the closer we get to a change.
Over 20 years ago the director of benefits for Chrysler told me over dinner that an important reason contributing to Chrysler’s financial crisis in the late 70’s was that neither Ford nor GM was willing to take a strike on benefits. What goes around sometimes actually does come around.
I doubt it. It sounds simple, “let the government deal with it” but the devil is in the details. I always find it interesting how rising costs in health insurance drifts the conversation toward a national health system. It’s like complaining about the cost of a Mercedes SLK and thinking that if the government makes it, somehow it will cheaper. It won’t.
Florida is a good example of this. Medicaid (a form of government run health care) already consumes nearly 25% of the budget (and that’s with price controls!). While still failing to cover many who are eligible.
GM and other legacy manufacture’s problems lie with the decisions made decades ago. These commitments included offering very rich health benefits to active and retired personnel (better than Medicare) and funding nearly ALL of it. The same commitments were made for pensions. Almost 60% of GM’s covered population is retired!
The majority of their workforce pays NOTHING for health care, and never has! The problem with GM is not the lack of national health care (although that would be an easy way to unload their problem) it is their poor ability to negotiate a fair deal with their unions. Tell the unions that GM will provide benefits no richer than Medicare to retirees and watch them go on strike.
In one sense, GM’s problem provides insight into what will happen to the US economy 20-30 years from now when there be less workers to subsidize the growing number of Social Security, Medicare, and Medicaid beneficiaries.
Universal coverage makes for good soundbit, but it is a little more complex than that.
Almost forgot, if you want some insight into UM President Shalala’s view on coverage for all employees take a look at her stance toward health coverage for janitorial employees at her school
http://www.yeswecane.org/
I guess she talks a good game, but when it comes right down to it she doesn’t put her money where her mouth is.