U.S. Health Care Debate in Need of Some Plain Common Sense

June 15, 2009

The debate over health care reform has moved to the center stage of the Obama Administration agenda.  I hope but am that very encouraged that the discussion can avoid the swamp of loaded labels like socialized medicine, which crowd out an honest debate over the pros and cons of recommended courses of action.

Whether the present system needs a fix should be decided by a review of highly aggregated macro considerations.  So what if it might take a somebody  in Canada or some other country longer than in the United States to see a doctor in a particular instance?  Such examples involve anecdotal evidence that doesn’t reveal whose health care system is better or, more importantly, provide the best value.  The question to that search has two components: how long does a nation’s people live on average and what is health care costing to achieve that result?

With U.S. life expectancy ranked 41st in the world, the claim that America has the world’s best health care lacks credibility.

Health care gobbles up 18% of U.S. GDP, a number one ranking, and more than twice the proportion found in many other advanced economies.  From a value standpoint, Americans are receiving even less bang for the buck than life expectancy rankings alone suggest.

No ethical or moral argument can be made for an employer obligation to the health of its employees beyond ensuring a safe workplace that does not directly compromise worker heath.  The U.S. tradition of employer-funded health care had its roots in the immediate aftermath of the second world war and GI benefits, when employees tended to work much longer for the same firm than is customary now.  A paternalistic employer-employee relationship in health care is understandable in that context but conceptually flawed nonetheless.  The preamble to the U.S. Constitution makes the pledge to promote the general welfare of its people.  Businesses are not required to make a similar pledge when they incorporate.

Health care is an unusual field where competition among private insurers increases costs rather than cutting them.  Competing insurers devote considerable energy to activities intended to foist the cost for medical services onto somebody else.  This game of “hot potato” is not a free activity but rather one that enhances the total bill for medical care considerably.

Employer-financed heath care puts U.S. business at a competitive disadvantage against firms based in countries where governments take greater responsibility for that role.

Continuity in health care is a desirable attribute.  Healthcare insurers attract firms by offering discounted fees to new members.  That practice gives companies an incentive to shop around for a new provider with a better introductory deal every year.  Employees as a result often must shop around for a new doctors, leading to a discontinuous and sub-optimal quality of health care.

Employee-funded health care imposes a stiff burden on workers, when they lose their job.  The squeeze on cash flow is magnified by sharp increases in heath care premiums.  This is not analogous to the hardship of meeting loan payments on less income, because prudent and conservative financial planning can plan for that rainy day.

These are some of the reflections I’ve had on this subject.  Let us know your’s.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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