Thursday, December 28, 2006

Want to jump start the economy? Unclog our economic arteries with health insurance reform.

In addition to its obvious inequities, our inefficient and dysfunctional system of health insurance has become the plaque clogging America's increasingly arteriosclerotic economy. Not only does the American approach to health insurance impose huge, anticompetitive costs on mature rust belt manufacturers like the auto industry in the face of foreign competition, but it is stifling the entrepreneurial energy of the American people.
As health costs soar, more would-be entrepreneurs are reluctant to quit Corporate America and its blue-chip benefits to start businesses, entrepreneurship experts say. That raises alarms about the impact on innovation and job growth, when both are of growing importance to the U.S. economy.

"This is a real problem," says Carl Schramm, CEO of the Ewing Marion Kauffman Foundation in Kansas City, Mo., one of the USA's biggest entrepreneurship advocates.
Energetic young people with ideas can't afford to pursue their dreams by leaving the jobs that provide their health insurance for themselves and their families. Boomers who would love to retire from jobs that have grown tiresome -- perhaps to start part-time businesses of their own -- grimly hold on to ride out the years until Medicare kicks in, because of the sky-high cost of individual health insurance premiums a their age. It's a progressive hardening of the arteries of an economy that was long regarded as the most dynamic in the world.

It's all so unnecessary -- and accidental, as blogger Ezra Klein pointed out in his LA Times Op-Ed the other day. The result of World War II tax legislation, our ramshackle healthcare system is one of the more dramatic examples of the law of unintended consequence.
Few mention this, but the American healthcare system is something of a mistake. It blossomed out of a World War II tax reform meant to guard against corporate war profiteering. Liberals, with their usual combination of good intentions and inadequate foresight, imposed massive marginal tax rates on corporations, effectively freezing their profits at prewar levels. But the law had a loophole: Corporations could funnel their wartime riches into employee benefits, such as healthcare, thus putting the cash to use within their company. And so they did, creating the employer-based healthcare system.

But healthcare was simpler in the 1940s, and far less expensive. In the 21st century, it's not simple at all. Once a perk of employment, health insurance is now a necessity, and a structure that dumps such power, complexity and cost in the laps of employers is grotesquely unfair to both businesses and individuals. There's no logic to an auto manufacturer running a multibillion-dollar health insurance plan on the side; it should stick to making cars. There's no excuse for pricing the self-employed and entrepreneurial out of the market. And there's no reason the owner of a three-employee start-up should have to go to bed with a heavy conscience because his coffee shop can't pay for chemotherapy.
Klein argues that pressure for reform has reached a tipping point, and that the time for reform has finally come.
The work is not done, of course. There are arguments yet to be had, wars yet to be fought.

Insurers want to retain their ability to discriminate against the ill and the old; conservatives want individuals to assume more risk and expense in order to force wiser health decisions; liberals want the government to guarantee universality and utilize its massive market power to bargain prices down to levels approximating those paid by other developed countries.

What's important, though, is that for the first time since the early years of the Clinton administration, these arguments are being made, and employers, insurers, politicians and, most crucially, voters are making their way back to the table.

The realization that our illogical, mistaken healthcare system can't go on forever has dawned, and so it will end. The question now is what replaces it.
For the time being, progress will probably have to come from the states. It's hard to imagine a presidential candidate having the guts to go out on a limb on health care in 2008, given what happened to Bill and Hillary's plan. But Massachusetts enacted the nation's first nearly universal plan, and California Gov. Schwarzenegger is going to announce his own plan for reform in his State of the State address Jan. 9. I wouldn't quit my job just yet, but it's a start.


Anonymous said...

Just stumbled onto your site. Great thoughts and very excellent points about how health care coverage keeps people locked into jobs, etc. Not to mention that some people do not receive the care they need.

The hard sale? Convincing people with employer-based insurance programs that: (1) they won't have a change to or less/lower quality coverage if a national plan is enacted, (2) if there is a change, convincing people that it's worth giving up their high quality care for pretty good care so that everyone can afford it. People are motivated by self.

I have multiple friends in Canada who are proud of the fact that they have national coverage and wouldn't want it any other way. But when you talk to them about details, they have to wait days/weeks to see doctors, even primary care. Americans who are used to better won't want to give that up.

losrivas said...

Support state-based health care reform! In California, I'm advocating for the passage of SB 840, an initiative that would establish a single-payer system that would hopefully begin to solve many of the problems you mentioned in your post.

Avedon said...

When I moved to England, I discovered that I wasn't moving to lower-quality care. The medical services I get are every bit as good as anything I could expect in the States, and sometimes better. The furniture in my GP's office isn't as stylish, and there are no hotel-room-style paintings on the wall, but aside from that, I don't see how it could be improved. I actually spend less time in the waiting room, less time sitting alone in the examining room, and less time waiting around for him to show up. And you can't beat the price.