Health Care: Is America being short changed?

> Well, it seems someone is making a huge profit here... Who's the loser
> though?
>
> "Every other industrialized nation provides comprehensive care to
> everyone at a much lower cost than our system that leaves so many out.
> Other nations spend 6 to 10 percent of their Gross Domestic Product,
> or GDP, whereas we, the wealthiest nation on earth, spend 14 percent
> of our GDP.
>
> Single payer insurance is commonly defined as a single government fund
> within each state which pays hospitals, physicians and other health
> care providers, replacing the current multi-payer system of private
> insurance companies and health plans. It would provide coverage for
> the 44 million who are uninsured. It would eliminate the financial
> threat and impaired access to care for the tens of millions who do
> have coverage but are unable to afford the out-of-pocket expenses
> because of deficiencies in their insurance plans. It would return to
> the patient free choice of physicians and hospitals, not just choice
> of restrictive health care plans. It would relieve businesses of
> administrative hassles and expenses of maintaining a health benefits
> program. It would remove from the health care equation the middleman -
> the insurance/managed care industry - that has wreaked havoc on the
> traditional patient-physician relationship, while diverting outrageous
> amounts of patient-care dollars to their own coffers. It would control
> health care inflation through constructive mechanisms of cost
> containment that improve allocation of our health care resources,
> rather than controlling costs through an impersonal business ethic
> that strips patients of care to improve the bottom line.
>
> In sum, single payer national health insurance would provide access to
> high quality care for everyone at an affordable price. Since this
> would be beneficial for individuals, businesses, and even the
> government, why don't we have a national single payer plan? The
> reason: The political will has not developed because of lingering
> concerns over the alleged defects of such a proposal. These supposed
> defects have been publicized widely by those interests that for
> ideological, financial, or other self-serving reasons are opposed to
> it. Since the benefits are unimpeachable, we should look the claims of
> the plan's critics."
>
> full text...
>
> http://www.rickhubbard.org/Issues-HealthCare-WouldASinglePayerSystemBeGoodForEveryone.htm
>
> Meanwhile the industry--or what's left of it--suffers from high labor
> costs...
>
> Health Costs Soaring, Automakers Are to Begin Labor Talks
> By DANNY HAKIM
>
> DETROIT, July 14 — The Big Three automakers, which open contract talks
> with the United Auto Workers union on Wednesday, are making a bigger
> issue out of reducing medical costs than they have in years.
>
> But the union has staked out health insurance as untouchable. "We're
> not going to share costs," said Ron Gettelfinger, the U.A.W.
> president, at a recent news briefing.
>
> Instead, many in the automobile industry think, the union, knowing the
> competitive pressures that Detroit is under, may give ground on issues
> like wage increases, plant closings or work rules. The matter of
> controlling medical costs would remain largely untouched.
>
> Health costs have been soaring for many employers. In other
> industries, businesses have generally passed along more and more of
> the costs to workers and retirees, if they maintain benefits at all.
> Not so in the auto industry, where union leaders have negotiated some
> of the most substantial medical benefits in the country for their
> members.
>
> What is more, in contrast to recent years when sport utility vehicles
> and pickup trucks were highly profitable, vehicle prices are falling,
> if one factors in the effect of interest-free financing and rebates as
> high as $4,000.
>
> Proposals in Congress to add prescription drug coverage to Medicare
> would help the likes of General Motors, the largest automaker and also
> the nation's largest buyer of popular drugs like Viagra, Prilosec and
> Nexium. A recent Goldman, Sachs report referred to the proposed drug
> plans in Congress as the "automaker enrichment act."
>
> But even this change would barely scratch the surface of the Big
> Three's health cost problems. For G.M., which is also the largest
> private buyer of health care in the United States, such a plan might
> trim $2 billion from the $57 billion health care liability it projects
> in coming years.
>
> As contract talks open, few expect anything like a strike over health
> care payments because both sides have too much to lose. G.M. and the
> other big American producers, Ford and Chrysler, could little afford a
> strike in the face of bruising competition from foreign automakers
> like Toyota and Honda. And as the Big Three go, so goes the U.A.W.,
> whose membership has dwindled to fewer than 650,000 at the end of last
> year from 1.5 million active workers in the late 1970's.
>
> "The balance of power has shifted to the unions' favor because they
> have the power to shut the companies down, and these companies,
> because of international competition, are very fragile," said Douglas
> A. Fraser, a former president of the U.A.W. and now a professor of
> labor relations at Wayne State University.
>
> "There would be devastation if there were shutdowns even for a few
> weeks," he said. "But the union knows the competitive landscape and
> will exercise that power with intelligence."
>
> In the late 90's, the booming sales of high-margin sport utility
> vehicles and pickup trucks helped mask sharply rising health care
> costs. But now, the hold of the Big Three on the sport utility and
> pickup truck market is under assault from far more profitable Japanese
> automakers, which have better reputations for quality.
>
> That has left domestic automakers fighting to hold ground, offering
> incentives three times as large as those of Toyota, Honda and Nissan,
> yet still watching their market share diminish in a sputtering market.
>
> The absence of a national health system in the United States means
> that the Big Three take on social responsibilities that the
> governments in Japan and Germany bear. Gary Lapidus, a Goldman, Sachs
> analyst, referred in his recent report to the Big Three as "H.M.O.'s
> with wheels" that only happen to make cars. G.M. alone provides
> medical coverage to nearly half a percent of the United States
> population, when dependents are included.
>
> And although Toyota and Honda assemble in the United States most of
> the cars they sell here, their plants are much newer, their work
> forces younger and their retirees number in the hundreds, not the
> hundreds of thousands that depend on the Big Three. They are also not
> unionized, except in joint ventures with the Big Three.
>
> While the out-of-pocket health costs of auto workers have not risen in
> years, many American workers have seen quite the opposite, and even
> white-collar Big Three employees can pay several hundred dollars a
> month in premiums and other out-of-pocket expenses. Auto union members
> enrolled in H.M.O.'s and P.P.O.'s generally pay $10 or less for
> prescriptions or visits to the doctor. Everything else is covered.
>
> As a result, many analysts think that the domestic auto industry is in
> a bind similar to the one that crippled the domestic steel industry.
> Both feature shrinking companies burdened with health and pension
> obligations to armies of retirees, as well as labor contracts
> originating in a time of much less global competition.
>
> Uwe Reinhardt, a Princeton University health care economist, calls the
> Big Three "a social insurance system that sells cars to finance
> itself."
>
> "It's insane to think that a company embedded in a fierce global
> competition can function as a social insurance system," he said. "It
> is a crazy, anachronistic idea. It's an idea that worked in the 60's,
> but lost its validity beginning in the 70's when the car market became
> global."
>
> The Big Three and their major suppliers spend some $9,000 and up per
> active worker annually, according to Mercer Human Resource Consulting,
> compared with $5,758 at the average large company. That rises to about
> $15,000 for retirees not covered by Medicare, including benefits for
> dependents, and $3,500 to $4,000 for retirees eligible for Medicare.
>
> For G.M., the problem is most acute. The company has 2.5 retirees for
> each active worker in the United States, a function of its domestic
> market share shrinking to less than 30 percent today from 60 percent
> in 1960. Ford has one retiree for each active worker in this country.
>
> Last year, G.M. had medical expenses of $5 billion and Ford $2.8
> billion. Drug costs reached $1.4 billion for G.M. and $800 million for
> Ford.
>
> Both Toyota and Honda declined to provide similar breakdowns of their
> health costs, but no one disputes that they are far lower. Seventy
> percent of Ford's $2.8 billion health bill went to retirees, a burden
> foreign automakers have yet to contend with in this country.
>
> Many Big Three retirees opt for expensive traditional plans that let
> them choose any doctor. Last year, 72 percent of Ford's blue-collar
> retirees were enrolled in traditional plans, compared with 23 percent
> of its active workers.
>
> At large companies nationwide, 6 percent of active workers pick such
> plans, according to Mercer, and Toyota said its North American factory
> workers were in line with that figure.
>
> G.M.'s medical cost is equivalent to about $1,200 a car in this
> country.
>
> So what could G.M. do with that money? A substantial job "dramatically
> upgrading the appearance and the feature portfolio," said Joseph
> Phillippi, an analyst at Auto Trends Consulting in Short Hills, N.J.
> Start with a sunroof, which costs a few hundred dollars, Mr. Phillippi
> said. Or, "$1,200 would buy you the top-of-the-line navigation
> system," he said, adding that such a feature generally costs a
> consumer $2,500 "and they could give it to you for free."
>
> "Or it could be used to dramatically improve the overall level of the
> powertrain of the vehicle," he went on "or you could pour a lot of
> that money into sharply upgrading the interior. You could go from
> vinyl to leather."
>
> But how do you ask factory workers who perform grinding physical labor
> to retreat from hard-won health benefits? More difficult, how do you
> ask retirees?
>
> "It's a killing job," Mr. Fraser, the former union president, said of
> the stresses and strains of auto work. "What an auto worker wants is
> peace of mind and security, and health care is security."
>
> Gregory Stack, 46, a union member who is a car designer for Chrysler
> and once was a G.M. factory worker, said the problem was with the
> health system itself — runaway drug costs, malpractice suits,
> unnecessary surgery.
>
> "Once we do give up some aspect of our benefits," he said, "it will
> continue to escalate. We're the highest of all industrialized nations
> on health care spending. It is not a sustainable model, but it won't
> be solved by being placed on the back of the U.A.W. rank and file."
>
> For many analysts, the health care problem is emblematic of the Big
> Three's broad problems and also an incentive for auto manufacturing to
> shift to countries like China, where hourly wages can be counted in
> pennies, or even Canada, which has a nationalized health care system
> and far lower costs.
>
> "When the industry lived in a cocoon and could price to reflect its
> cost, these were not issues," said Maryann Keller, a longtime auto
> analyst. "But now, the union has to be worried what the cost of
> production is in China because that's what's relevant to the ability
> of G.M. to support its benefit structure 10 years from now."
>
> Health care is only one piece of the competitive puzzle. G.M. recently
> undertook one of the largest sales of corporate bonds, worth $17.5
> billion, and used the bulk of the proceeds to offset a $19 billion
> pension deficit.
>
> Toyota and Honda also benefit from currency and quality advantages.
> And while G.M. has been making significant advances in quality, it
> takes years for consumer perceptions to catch up.
>
> Ms. Keller said, "If G.M., Ford and Chrysler can't find a way to make
> huge margins on some of their production, like they did with sport
> utilities in the late 90's, there is absolutely no way they can afford
> to pay these benefits."
>
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