health care – Page 12

Fixing health care will help heal economy

There is an element of the auto-industry bailout debate that has Watching the debate over the car industry’s implosion and the need for federal largess that has received scant attention: the impact that health benefit costs have on costs.

A few analysts have comment on this — Robert Reich, Paul Krugman, the UAW and this piece from The Coastal Journal — but for the most part the health care issue has been off the table, except when it has been framed as one in which greedy employees are killing competition.

Progressives would be smart to counter this anti-worker rhetoric forcefully and use the auto-industry debate to bring the discussion of health care into the larger issue of our economic future.

Too many analysts — like Michael Boskin, for instance — are offering this kind of misguided advice:

The most important issues facing the country right now are income, jobs and wealth — not energy, health care, the environment or the distribution of income. This recession is the real thing, far worse than the two brief, mild recessions of the last quarter-century.

Mr. Obama needs to think about everything his administration does through the prism of how it will affect the economy in the next two years. That means postponing, scaling back or slowly phasing in proposals that impose significant costs on the economy. For example, his energy and health care proposals, if enacted, would destroy investment and jobs now, whatever they might accomplish later.

But investment in green technology and reforming health care will go a long way to fixing what ails us. Consider how health care affects the price of cars — and the decisions made by Detroit on what kinds of cars to build and market:

GM’s obligations to its employees and retirees add about $2,500 to the cost of each automobile sold. In part because of the high cost of these benefits, and in part because GM simply failed to read the market properly, GM manufactures and sells mostly large vehicles with large price tags. They also consume large amounts of fuel.

Toyota, on the other hand, benefits from a national health program and a retirement program in Japan, and in most of the countries where it manufactures its goods … Canada, and the countries of the European Union. So even though Toyota does buy insurance for its employees in Kentucky, the costs are more than offset by benefits it does not have to purchase for its employees in Kyoto. While GM’s average car price tag includes $2,500 for benefits, Toyota’s average car price tag includes about $300 for benefits.

As a result, GM can’t compete with Toyota on a straight apples-to-apples cost comparison. A Camry-like vehicle, manufactured by GM, would be a couple of thousand dollars more expensive. GM would lose comparison shoppers in price. And Toyota has developed a well-earned reputation for reliability over the years, too.

So, to compensate, GM manufactures mostly big vehicles … trucks and SUVs, high-priced sporty vehicles, such as the Corvette, and luxury cars, like the Cadillac. And for a time, these vehicles were the vehicles of choice, due to a strategic and successful marketing campaign in the United States.

But then the price of gas went up and concerns about the environment also rose. And while Toyota adjusted quickly … spending its capital in R&D and getting its small hybrids out within just a few years, GM kept making its SUVs, large pickups, and gas-hungry sports and luxury cars, betting that the price of gas would go down and that buyers would choose to stay with the bigger vehicles. But they were going the way of the dinosaurs on whose ancient blood these vehicles feasted … simply put, no one could afford the gas. If a buyer didn’t absolutely NEED a large pickup, he didn’t buy one. Toyota, meanwhile, couldn’t keep its Prius hybrids in stock. Even zero-interest car loans couldn’t bring the buyers back to GM for long.

Other industries in the United States that compete globally face the same uneven playing field. Taking health care off the table as a cost of business would go a long way toward improving out competitiveness, which is why reforming our broken health care system has to be a major short-term priority and not something left to later.

The new administration appears to understand this. Consider what Tom Daschle — Obama’s top health care advisor — had to say the other day:

“There is no question that the economic health of this country is directly related to our ability to reform our health-care system,” Daschle said.

Daschle cited the fact that high health care costs are preventing U.S. businesses from staying competitive and creating jobs. “That’s what makes this so urgent and so much a part of the economic recovery process,” Daschle said. “I believe that for the first time in American history, health-care reform will be done.”

Let’s hope so.

Grassroots: Jobbed on healthcare

Here is my column for The Progressive Populist on employer-provided healthcare.

Rising costs, stagnant salaries

The Star-Ledger reports today that health care premiums in New Jersey are growing faster than wages. I doubt anyone is surprised.

What is surprising, however, is that no one quoted in the story mentions real health care reform, instead focusing on reigning in costs as if doing so in a vacuum will have any real impact.

Bad health care news

The Economic Policy Institute is reporting a disturbing — and dangerous — trend:

The share of the U.S. population under 65 years old with health insurance rose from 2006 to 2007. Despite these overall coverage gains, the news was not so good for employment-based health insurance: the share of persons covered through work (either their own or a family member’s employer) declined for the seventh year in a row. Over the 2000-07 period, the trends indicate a signifi cant shift from private to public coverage, especially among children. In particular, since 2006, public insurance was the only reason that more Americans did not become uninsured as coverage through work fell.

The news in New Jersey, according to the report, also was not good as it workers lost coverage at a greater rate than the rest of the nation. According to the report, New Jersey was 10th in the nation in the percentage of the work force, under the age of 65, who were covered by employer-provided health insurance during 2000 and 2001 with 75.6 percent of workers getting coverage.

In 2006-2007, however, the state ranked 11th, with its percentage dropping to 69.7 percent with the number of covered employees dropping by 252,315.

While New Jersey’s percentage remains above the national average of 62.9 percent, its percentage point decline of 5.8 was a full point higher than the national average.

New Jersey Policy Perspective, in an e-mail alert, said that over the last year — which falls outside of the report time frame — things may have gotten worse.

The drop in employer-provided health insurance coverage took place when the unemployment rate in New Jersey was only 4.2 percent in 2007, the lowest it had been in five years. By August 2008, unemployment had risen to 5.9 percent, suggesting that employer-provided coverage has likely eroded since the period covered by the report.

The numbers, as NJPP points out, are especially bad for low-income people and children:

At the national level, the EPI study found only 21.9 percent of low-income persons had employer coverage compared to 86.4 percent for higher income persons. The sad fact is, in our society, your health often depends on whether you have a job and how much money you make. That’s unfair to people and bad for the nation’s productivity.

New Jersey children are especially hard hit. For them, health insurance provided by a family member’s employer decreased to 68.6 percent from 76.2 percent.

There are ways of addressing it, NJPP says:

Fortunately, New Jersey enacted legislation this summer that mandates health insurance for all children by next year. The law also expands coverage for uninsured parents up to twice the federal poverty level. And, it made changes in the marketplace that should result in reducing the cost of private insurance for most individuals and group insurance for small employers. This should help to reduce shifting of the cost burden of health insurance from employers to taxpayers.

On the federal level,, Congress needs to pass pending legislation, as it did in the 2003 recession, that would temporarily increase the federal matching rate for Medicaid to avoid state cutbacks in health services. As Hippocrates advised, “First, do no harm.”

The McCain health tax

Matthew Yglesias comments today on something that really deserves far more attention than it is getting (actually, it has gotten almost no attention…): John McCain’s plan to tax our benefits. As Yglesias points out,

at the moment compensation you receive from your employer in the form of money is subject to income tax, but compensation you receive from your employer in the form of employer contributions to health insurance premiums is not taxed. McCain proposes to change this and start subjecting those benefits to taxation.

He quotes James Kvaal, who says that

McCain’s plan “would tax workers’ health benefits, which are largely tax-free today,” thus increasing the amount of tax people need to pay, which is a tax increase in any common sense understanding of the term.

It’s not just that McCain wants to tax workers’ health benefits, which is, no matter what the McCain campaign says, a tax on middle-income people at a time that he wants to cut taxes for the rich. He’s also making healthcare less affordable for working people at a time when too many people in the United States are uninsured or underinsured.