Health Care Meltdown
American workers cannot keep up with constantly rising health costs. The obvious and imperative solution: a national plan for universal, affordable coverage.
By Clyde Weiss
Many Americans, especially those covered by union contracts, enjoy decent wages and health care coverage. But even for those workers, and for many millions across the country, health insurance is increasingly unaffordable. For the 46 million who are uninsured, it's a downright nightmare. As the cost of drugs and services skyrocket, one thing is clear: The nation's health care system is collapsing.
Shamefully, Americans live in the only industrialized nation that does not guarantee health care as a right of citizenship. Canada and 27 other industrialized nations offer universal health care. Instead, our health care system is built on a model that maximizes profit for providers, insurers and drug companies, while minimizing care for those who cannot afford it.
And that price is steep. Since 1998, the cost of providing health care services has risen faster than the nation's gross domestic product — and reached an obviously unsustainable 16 percent of GDP in 2004. The overall outlay works out to $1.9 trillion, or $6,280 per person, and that figure is projected to reach a shocking 20 percent of GDP ($4 trillion) by 2015, which will mean that even less of our nation's economy can be devoted to such priorities as education, infrastructure, and research and development.
Rising health care costs are busting state and local budgets. In California, for example, insurance premiums have risen more than 70 percent over the last five years, putting pressure on lawmakers to cut public services, including many that AFSCME members provide. And Medicaid is increasing as a share of all state budgets, fueled in part because many profitable employers do not offer health coverage to their low-wage workers, but instead encourage them to enroll in public programs.
The crisis is also jeopardizing America's corporate health, making companies less competitive internationally. A clear example is the auto industry, where General Motors, America's flagship automaker, is saddled with health care expenses for workers and retirees that do not affect its manufacturing operations in Canada, simply because that country provides universal coverage.
Manufacturers in other countries with universal health coverage, such as in Germany, have similar advantages over their U.S. rivals (see chart below).
Corporations and state and local governments that continue to provide coverage to their workers are shifting more of the expense to their employees. "Whenever you get a raise, the health care insurance premium goes up," says James Brown Jr., a West Virginia road maintenance worker and president of Local 3250 (Council 77). "I'm only making $11.68 an hour. You look at the price of gas now — $3 a gallon. My pay doesn't go up every time the cost of living goes up. That's why you see a lot of employees working longer. When they retire, they can't afford the health insurance premiums."
AFSCME has been very successful at winning and maintaining health care benefits for its members. Unfortunately, such successes have often come at the expense of wages. And even with a good union contract, members are paying more for health care but getting less.
MEGA-PROFITS
America's $2-trillion health care industry — long one of the country's most profitable sectors — is unwilling to support real reform because it is in its interest to keep the money rolling in. Drug makers spent about $18 million on politicking during the 2004 election cycle (66 percent went to Republicans), according to the nonpartisan Center for Responsive Politics. Those companies got a terrific return on their investments. Exhibit A: the defeat of proposals requiring the federal government to negotiate for the lowest drug prices for the new Medicare drug plan — a reform that would have cut into industry profits and opened the door for price controls.
Preventing changes that would help workers and retirees afford decent health care has also paid off handsomely for UnitedHealth Group Inc., the nation's second-largest health insurer. Its 2005 net income rose to $3.3 billion, nearly four times higher than in 2001. For such profiteering, its chief executive, William McGuire, has been obscenely rewarded with what The Wall Street Journal called "one of the largest stock-options fortunes of all time" — valued at $1.6 billion — plus his $8-million annual salary and lavish perks.
Meanwhile, average Americans pay through the nose for their prescription medications: $188.5 billion in 2004, about $14 billion more than the year before, according to the Centers for Medicare and Medicaid Services. For seniors living on fixed incomes, high drug costs and insurance premiums jeopardize retirement security.
No wonder affordable health care is now the top concern of Americans: 68 percent of those questioned in a recent Gallup poll worried about it a "great deal."
NEEDED: FEDERAL SOLUTION
Employer-based insurance has been the backbone of America's health care system. Yet such coverage has dropped from covering 69 percent of the population in 2000 to 61 percent in 2005, and further erosion is all but certain. To make up the difference, low-income workers, and other disadvantaged groups, have had to turn to taxpayer-funded programs like Medicaid and S-CHIP, the State Children's Health Insurance Program.
At the bottom of the economic ladder stand 46 million Americans who lack any health care insurance. One of them is Kathleen Brown, a registered child care provider living in Des Moines, Iowa. A member of the newly formed Child Care Providers Together/AFSCME (Council 61), Brown says she's had no health care insurance since 1999, despite a history of high blood pressure that she controls with drugs and checkups paid for out of her own pocket.
Brown, 47, knows she's taking a big risk. "I don't have a choice," she explains: She simply cannot afford coverage. "Why," she asks, "don't they just have one universal health care plan that anybody can get?"
For the uninsured, hospital emergency rooms are the refuge of first resort. Joyce Tiddei, a Red Cross blood service nurse/technician from Bethany, Conn., has seen them at her local ER many times. Tiddei, who is also president of Local 3145 (Council 4), says it's comforting to know that the uninsured "can't be turned away" from ERs except in non-emergencies. But as a taxpayer, she also knows that those costs "are triple what insured people pay when they go to a doctor's office. And that expense is passed on to the people who do pay for health insurance."
The Bush administration's few short-sighted attempts at reform — Medicare Part D's confusing and inadequate prescription drug-program, plus Health Savings Accounts that only the financially comfortable can afford — do little but pass the buck. That's why some states have tried to find their own solutions. In April, Massachusetts became the first state in the nation to require that all residents have health insurance within the next three years. While it is an attempt to expand coverage, it does not address the problem of rising costs.
That leaves the federal government as the logical — indeed, the only — entity that can provide guaranteed, affordable health insurance for all Americans. Calling on the same determination AFSCME mobilized to save Social Security from privatization, the International Union is marshaling its political strength to persuade Congress to pass comprehensive reforms that guarantee coverage while controlling costs. The time for real health care reform is now.
A Heavy Burden at GM
This chart demonstrates why America's economic competitiveness is being hurt by its inefficient and overly expensive private health care system. In this example, the per-vehicle cost of providing medical coverage to employees and retirees hits GM in the United States hard in comparison to its Canadian counterpart. The same is true with DaimlerChrysler's U.S. and German divisions.
Canada changed to a single-payer, universal health care system in 1971. Germany, like the United States, has a multi-payer system in which health care is provided through various public and private providers. Unlike America, however, Germany also provides universal coverage for all its citizens.
THE PER-VEHICLE-MANUFACTURED COST OF PROVIDING HEALTH CARE TO EMPLOYEES & RETIREES:
General Motors Corp.: $1,500
General Motors of Canada: $500
DaimlerChrysler AG's Chrysler Group (North America): $1,044
DaimlerChrysler AG's Mercedes Car Group (Germany) $419
Source: A.T. Kearney Inc.; United Auto Workers; Edmonton (Canada) Journal, July 17, 2005.
