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A Word from Richard Risemberg for May, 2005Life, Death, and Dollars I was reading an article in the Los Angeles Times recently on trouble at General Motors, and, while my primary interest, as readers of this magazine well know, are the troubles that GM's products cause in this world, the section that focussed on health care costs as contributors to the company's financial difficulties struck me as relevant to another large problem in American society: our bullheaded unwillingness to forego an illusory and divisive "individualism" in favor of certain collective actions that would, if enacted, leave the majority of individuals healthier, happier, and freer than they are now here.
I am speaking, of course, of national health insurance, such as citizens of every other First World country now enjoy. At one point, the article said that health care costs "add $1,500 to the price of each GM vehicle, compared with about $300 for Toyota...." Of course, Toyota, while it does have assembly plants here, performs the majority of its fabrication in Japan, where nationalized health insurance provides no-fee medical care to every person in the country (citizen or not) at any time. The same is true in France, Germany, and many other countries, including Canada, whose culture and economy are more similar to that of the US than in the other countries I mention. The rabid privateers and others will now accuse me of espousing socialism, communism, perhaps various other forms of despotism, or of wanting to raise their taxes by a few cents a year, which will of course destroy our great American economy yadda yadda yadda.... Except a day or two ago, I read an article by economist Paul Krugman in the New York Times, discussing differences in health care spending in these very countries. Being a numbers man, he ran the numbers and came up with some interesting comparisons: in 2002, for example, the US spent $5267 per person on health care, with nearly half coming from government coffers; Canada spent $2931, while France spent $2736, with most of it coming from public monies. This means that all three governments spend about the same per person on health care, but that health care costs the US economy as a whole nearly twice as much as it costs the good people of other advanced nations. Do we get better health care as a result? In fact, no: the United states suffers from the shortest life spans and the highest infant mortality rates of any industrialized nation, in spite of spending so much more on doctoring. Why is this so? Krugman's answer: the profit motive. Private insurers devote 15% of collected premiums to "administrative costs" (read: lining their pockets); government health programs everywhere devote less than 5% to the cost of doing business--to state it plainly, they are more efficient than the private sector. In other words, private corporations impose a tax on free citizens, and hold their physical health hostage to it! Furthermore, private insurers have a vested interest in denying requests for care, since payouts reduce the amount of money they can keep for themselves. So, they deny claims, and they deny coverage outright to persons who are at risk of actually needing it. This notoriously causes such persons to put off care till their needs become critical--at which time the care becomes far more expensive, and is usually foisted off on the public sector via trauma centers and charity hospitals, at much greater cost than would have been incurred had the person been treated early. Unaccounted for in this equation but still very real are the costs to our cities of lost productivity, as good people are taken out of the labor pool for longer than would have been necessary with prompt attention, or die younger than they must and so deprive us of their contributions forever. And of course the effects of paying for health care without insurance (with which I myself am familiar) can lead one dangerously close to bankruptcy, effectively removing a consumer from the economic arithmetic of our system. So national health insurance is not only more efficient; it is also more effective, fulfilling its stated goal of keeping both individuals and the country as a whole healthy and productive. I once worked in a private insurance company myself, and the one principle our underwriters hewed to most rigorously was this: The larger the pool of insureds in a plan, the more cost-effective the plan. This is why small business pay far more per person than large ones--another side effect of our insistence on private health insurance thus being the discouragement of entrepreneurship at a time when we need it most. Let's become a grownup society at last--one that puts individual and collective health above ideology. Even the very principles private insurance companies use to calculate their own costs argue against their existence. Let's no longer burden American enterprise with this bloated monster of a health care system--let us finally establish a national health insurance program that will leave our people and our businesses free of illness, debt, and death, and help us establish a more competitive as well as a happier economy in this epoch of global competition.
Richard Risemberg Go to A Word from Eric Miller
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