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Heal the system

6/30/2009, 11:40 a.m.
“Baby, they say it’s pretty bad. You better get our banker in here.”

Heal the system

While most industrialized nations provide universal health care for their citizens, the United States does not. According to the U.S. Census Bureau, 45.7 million Americans were uninsured in 2007. An estimated 59.3 percent of Americans had employer-based health insurance that year, a drop from 64.2 percent in 2000. As unemployment has risen, many Americans have lost their health insurance.

In the spirit of free market enterprise, the nation has depended upon private insurance companies to finance the cost of health care. However, problems with that system have induced political leaders to initiate a program of health care reform, a change that most Americans agree is long overdue.

The basic problem is that health care is now too expensive. Health care costs reached $2.4 trillion in 2008, and the trajectory is going up. Projections anticipate costs of $3.1 trillion in 2012 and $4.3 trillion by 2016. The United States spent about 17 percent of gross domestic product (GDP) on health care in 2008, according to a study published in the journal Health Affairs. That number is expected to rise to 20 percent of GDP by 2017.

While the United States has the costliest health care system in the world, it does not achieve the best medical results. According to the CIA World Factbook, the United States ranks only 50th out of 224 nations in life expectancy. Citizens of Japan, Australia, Ireland, Italy, Canada, France and Israel all have a life expectancy of 81 or 82 years, compared to only 78.1 years for Americans. It appears, then, that the task is both to reduce costs and improve health care quality.

Most politicians agree that the country faces a health care crisis, but there is substantial disagreement on how to solve the problem. As the debate goes on in Washington, Americans have to keep in mind the essential goals and objectives in order to evaluate proposals.

The first criterion is that all Americans have affordable, quality health coverage. The system must be available even to those residents who have pre-existing medical conditions. And the coverage must be portable — it cannot depend upon where you work or whether you are unemployed.

An important aspect of health care reform that should not be overlooked is the burden placed on business. Excessive reliance on businesses’ contributions to the health care system has placed American firms at a competitive disadvantage in the global economy. Labor costs for foreign firms will be lower when they do not have to assume the cost of health care. Consequently, this will induce American firms to move jobs offshore.

Health care reformers must guard against an inclination to save money by failing to allocate sufficient resources to finance wellness and prevention programs. An investment in these programs will save future medical costs and will reduce job absenteeism resulting from illness.

Some opposition to President Barack Obama’s health plan is based on cost. However, economist Paul Krugman points out that “… even those high estimates were less than the $1.8 trillion cost of the Bush taxes.” However, the major opposition appears to be the creation of a voluntary government-administered health insurance plan, which Republicans characterize as “socialized medicine.”

Obama’s response is that private insurance companies have not solved the problem. He sees the government plan as an “important tool to discipline insurance companies.” He further asserted, “If private insurers say that the marketplace provides the best quality health care, if they tell us that they’re offering a good deal, then why is it that the government — which they say can’t run anything — suddenly is going to drive them out of business? That’s not logical.”

This battle is not over. Americans must stay well-informed to ensure that Congress develops the best possible universal health care reform.