General Motors’ Problems
Posted by Moonage on 01 May 2005 | Tagged as: Health Care Debate
George Will writes an excellent article on the current problems facing General Motors. One snippit sums it all up IMO:
GM says health expenditures — $1,525 per car produced; there is more health care than steel in a GM vehicle’s price tag…..
The issue of health coverage in the US is hitting a catastrophic level. It is affecting the way we do business. More importantly, it is affecting the US’s ability to compete with social medicine countries.
I’m going to start harping more and more on health insurance particularly on this board. Something has to be done and done ASAP. The price of oil does not have the emotional and financial ramifications of health insurance. But, health insurance and employee benefits in general are not getting the headlines. It’s my aim to assure it does.
Health care in the US will be socialized. The majority of it already is. The sooner it happens, the better.
5 Comments »
on 01 May 2005 at 9:39 pm 1.Bryan Kerwick
said …
The problem with healthcare in this Country is that we have no Tort Reform.
The ONLY reason drugs made here, exported to Canada and re-purchased here in America are cheaper is because there is no way for the masses of Attorney’s to sue.
Healthcare in America would be considerably cheaper if all components that make up the system were protected by Tort Reform. Right down to the lowly bedsheet manufacturer who supplies linens to the hospitals.
We can not just protect the Doctors, Hospitals and Drug Manufacturers for this to work but they need help the most.
Hospitals and Doctors should be able to have Liability Waivers signed prior to providing services. This would make the Trial Lawyers loose their collective minds but I think the American Electorate is willing to forego the right to sue for affordable health care.
High risk specialties like Cardiovascular Surgeons, OBGYN and Neurologists are simply giving up their practice because the cost of Malpractice Insurance is way too high.Why should these fine professionals work to pay taxes and insurance premiums that amount to 11 months of income?
We need Tort Reform across the board but we definately can get some passed for the Healthcare Industry now.
In the UK, all legal fees are paid by the loser of the lawsuit. Attorneys would be liable for all legal expenses when they loose a case if their client has no ability to pay them. That alone would stop these junk lawsuits in their tracks as the Insurance Companies no longer would settle cases that would be more expensive to defend.
The pariah the legal system has been on the business world in this country is a prime reason many jobs have been shifted overseas but no one has explained this to the electorate.
Nationalizing Healthcare is a big mistake and we should avoid doing so. Rather, we should just change the legal system so that it is fair to all.
on 02 May 2005 at 8:58 am 2.Moonage
said …
Good point and well presented. However, it’s not the only problem.
The billing process is a mess. It takes months to get a typical bill paid. The insurance process is a mess. Tort laws are definitely and issue. The cost of medical services is a mess. The cost of pharmaceuticals is a mess. Basically, every aspect is a mess right now. The AMA is unwilling to realistically attack the problems. The American Bar Association is unwilling to look at the issues realistically. And, the various state Departments of Insurance are incapable of addressing the myriad of issues. The entire situation needs to be regulated by something bigger than each of the various parts of the problem. The only thing bigger than the AMA, the ABA, or NAIC is the federal government.
on 23 May 2005 at 4:44 am 3.Bryan Kerwick
said …
Therein lies the problem. Tell me how the Government can do anything better than the private sector outside of the Military.
The beauty of the private sector is that it is driven by market forces. Build a better mousetrap and the world is yours. The more regulated an industry is the more screwed up it gets.
Doing away with regulations makes a free economy more free. Tort reform like the UK example would be a win-win situation for all.
Protections for the consumer would be maintained while eliminating junk lawsuits at the same time.
Bad billing companies would be replaced be efficient ones through normal competition. The ABA and State Insurance Departments would have no bearing on Federal Legislation.
The AMA is another issue entirely. Bad providers couldn’t get insurance and therefore would be eliminated or worse, work for the government like they do in Canada. Want that system instead? I think not. I would however accept the UK system of dual (Private and Public) healthcare if I had to choose between those two.
I still prefer the best in the world which happens to be ours.
on 29 Apr 2006 at 6:35 pm 4.Russell Hellein said …
It might be noted to begin with that I believe the argument that market forces are inherently better than alternatives to be simply ideology rather than physical reality. Actual empirical reviews of how markets perform relative to government fails to find the economic efficiencies supported by conservatives. But that largely besides the point so I won’t pursue it here.
Socialist health care systems in Western Europe, Canada, and Japan have produced health care similiar to what is produced in the US for most at a fraction of what the US pays be that measured in health care as a percent of GDP or cost for services. For instance Switzerland, the worse in terms of high cost, dedicates only a 7.5 percent of its GDP to health care the US cost is well over 10 percent of GDP. For most of the OECD the comparison is much worse for the US. There are little differences in measured quality of health care and health statistics are actually better in the OECD than the US (for instance life expectancy) although why is subject to debate.
This is not primarily due to legal fees and eliminating suing companies for defective medical care would not change the basic equation. Instead it is tied to 1)the structure of health care 2)higher profits and labor cost in the US for health care and 3) the nature of emergency as compared to preventive health care. In the OECD there is a focus on lower end health care, which the mass of the public needs at the cost of high end high technology health care which relatively few need. Much of the cost of US health care comes from funding very expensive treatments that involve a small percentage of the public and buying extremely expensive equipment. We sacrafice greater cost for medicine (and in many cases treatment at all for much of the public) to be able to heal a small number of high end cases.
Second US medical companies earn signficantly higher profits than the foreign health care companies (or for tha matter other US firms) and pay far higher wages (especially to doctors) than do other firms. The reality is that Americans pay far more for the same services, notably medicines, than they do abroad where such prices (and wages and profits) are all signficantly limited by government rules. At base national health care serves as a giant HMO, forcing down the prices firms can charge in the process. This of course does not occur in the US which is a signficant reason our prices are so much higher.
Third, the US has opted for a system in which much of the public simply can not afford regular medical care - those without insurance a number which is growing significantly. The result is that these people have to put off health care until it becomes an emergency often in emergency wards. That care is far more expensive and in any case by the time you get there what would have been a simple problem to solve has bloomed to a major very expensive one. Similarly, much of the US medical cost has been tied to poor neo-natal care which effects health, and thus cost, throughout life. Because much of the US public can not afford it, and because we refuse to have government pay for it, we drive up health care cost signficantly.
Its simply a myth, or an ideology if one prefers, that market systems always outperform non-market ones. The national health care systems has produced a product which for most is essentially the same as the US at a fraction of the cost. This wont be changed by the modifying the legal system because its not primarily tied to legal cost.
I encourage any who doubt this to look at the relative cost of medical care and quality in the OECD and the US and factor in the legal differential. For most, except for a small number who benefit from very high end care, the national health care system is simply a much better deal.
on 29 Apr 2006 at 9:10 pm 5.Moonage
said …
Nice post Russell. And quite frankly, one that I mostly agree with. Tort reform is the boogeyman of this whole issue. But, my experience in the industry is that it is WAY over-rated and solves very little. I won’t argue with Brian in that it is abused and adds to the problem. But, it’s nowhere near the crux of the biscuit.