America's Sick Health Insurance System

Are you covered by your employer’s health insurance plan? Are you confident of continued coverage in the years to come? Well, good morning! Did you forget to set the alarm? It is time to wake up and face the obvious. You are not going to have health insurance in the years to come. Forget it! Let’s start with a few facts.

General Motors recently agreed with the United Auto Workers Union to cut back on its annual expense for employee health care by about $1 billion per year. Because the costs of health insurance are rising dramatically, the amount of those cuts, plus the huge increases in health insurance premiums, are going to have to come out of the pockets of GM employees.

Delphi Corp., currently in Chapter 11 bankruptcy, will demand that the unions agree to drastic cuts in health insurance coverage for employees. In the future, Delphi employees will have to pay much of their health insurance coverage out of what little remains in their pockets. Ford and Daimler Chrysler are also negotiating similar health insurance cuts with the UAW. Companies all over America are either eliminating health insurance coverage entirely or significantly raising the amount of employee contributions to premiums and co-payments. You may love your company’s health insurance plan, but you can start kissing it goodbye.

A survey by the Kaiser Family Foundation and Health Research Educational Trust found that in the past five years the number of companies offering health insurance to their employees declined by 13 percent. This does not include the large number of companies, such as GM and Delphi, which are vastly reducing the amount of health care coverage and raising employee contributions to premiums. According to the Kaiser study, health insurance costs are escalating far faster than the rate of inflation. For the four years prior to 2005, the increase in health insurance costs was over 10% per year. They continue to rise. This rate of growth is more than three times the growth in workers’ earnings (2.7%) and two-and-a-half times the rate of inflation (3.5%). Since 2000, health insurance premiums have gone up 73%. Most workers whose companies provide health insurance paid $2,713 in 2005 toward the $10,880 premiums for family coverage. As the companies cut back, and the cost of insurance surges, this amount will continue to rise like the floodwaters of Katrina.

Meanwhile, it is not surprising that health insurance companies continue to be hugely profitable. Health insurance company profits are rising every year. Weiss Ratings said that profits for the nation’s health insurers jumped $5.9 billion to $8.7 billion in just the first three months of 2004. In May 2004 Aetna announced an 11% jump in first quarter net income. Meanwhile over 45 million people are without any health insurance at all and the number is rising every year. A study by the National Academies’ Institute of Medicine found that 18,000 people die prematurely each year as a result of being uninsured. Lack of health insurance is a major cause of bankruptcy in America. It is also the cause of untold suffering.

We need governmental action now to protect the citizens of America. Even Roger Wagoner, CEO of General Motors, said: “We would welcome a more proactive role from elected officials at the national and state levels in broad-based strategies to address the U.S. health care crisis.” The answer is to do what Canada and virtually every other developed democracy in the world has done; switch to a single-payer health care system. In such a system the government could provide universal health care coverage for all Americans at a cost to taxpayers well below what’s now paid annually by employers and workers.

The system we now have is enormously expensive and wasteful. A study by the Cambridge Hospital, Harvard Medical School, and Public Citizen Health Research Group, stated that the U.S. wastes more on health care bureaucracy than it would cost to provide health care to all of the uninsured. Administrative expenses for health insurance companies cost more than $400 billion a year. This is substantially more than would be needed to provide full insurance coverage for the uninsured. Companies and individuals pay for these administrative expenses in the form of higher and higher premiums.

If we had a single-payer system, all of the extra administrative expenses would be eliminated. The Harvard study illustrated that the participation of private insurers in any health care system dramatically raises administrative costs. That is why the new Medicare drug benefit program will be so expensive. The study said, “A fragmented payment structure is intrinsically more expensive than a single payer system. For insurers, it means a duplication of claims processing facilities and reduced insured-group size, which increases overhead.”

We already have an agency set-up to administer health insurance—Medicare. In a single-payer system, everybody in America, like everybody in Europe and the rest of the industrialized world, would be guaranteed health care. Companies like Delphi would be less likely to file for bankruptcy, and American workers would have far greater job security. GM, Ford, and Daimler Chrysler, could lower the cost of cars by around $1,500 per car and become more competitive and profitable. American workers would actually have more money in their pockets to buy the cars and goods produced by the companies they work for. The huge reduction in the cost of premiums would more than offset the taxes needed to fund the system.

If all those other industrialized countries can have a single-payer system, we can. Don’t say that the other countries have inferior health care. That is nonsense! Our citizens are less healthy than those in Europe, Canada, and Japan. We may have high technology, but the United States ranks 21st out of 27 countries in infant mortality, 17th in life expectancy of women, and 21st in life expectancy of men. While our health care costs rise, and the health care industry in America grows fat and wealthy, the quality of our health care is slipping into third-world status.
We like to think that we live in an open democracy where every person has a say in our government, but actually, we live in an oligarchy where our President and Congress are beholden to wealthy and powerful companies which really run America. These companies are able to thwart every effort to provide our citizens with health care at reasonable cost.