Bill to Cure Healthcare May Rise Too High
As the business community well knows, the U.S. healthcare system needs radical surgery. Unfortunately, no matter who wins the White House this fall, a little cosmetic surgery is all that we can count on.
The numbers are daunting: Officially, 43 million Americans -- including 18.5 million working adults -- are uninsured. But some think the problem runs far deeper. At times during the year, depending on the ebb and flow of seasonal workers, the ranks of the uninsured may rise as high as 78 million.
And, of course, when these folks get sick and head to the emergency room, the cost of their care is mostly passed on to the fully insured. In turn, those companies that offer medical coverage to their employees wind up getting stuck with higher bills -- a growing problem for smaller firms and giant corporations alike.
There seems to be “no effective way to control rising costs,” says Helen Darling, head of the Washington-based National Business Group on Health, which represents large concerns such as Exxon Mobil Corp., IBM Corp. and Procter & Gamble Co.
Last year, total healthcare spending in the U.S. increased by 7.4%, far outpacing inflation. That followed a 9.5% rise in 2002 and a 10% jump in 2001.
Gail Lindley is among those who have felt the pain. Lindley’s fourth-generation family-owned business, Denver Bookbinding Co., used to fully cover the premiums for its employees. After all, she says, “healthcare is a basic need, like food and water.”
But Denver Bookbinding now pays just 50% of premium costs, and Lindley’s 21 workers must shoulder the rest. As Lindley explains it, she had no choice but to cut back: The company’s medical expenses have nearly doubled in the last four years.
Scott George is in the same situation. He runs Mid-America Dental & Hearing Center, which makes crowns and bridges and hearing aids in Mt. Vernon, Mo., near Branson. He, too, used to pick up the health insurance premiums for 70 employees. But now, with those premiums having doubled in the last three years, he’s trimmed that to 75%.
As a result, some are doing without. George recalls one employee who couldn’t afford to pick up the 25%, so he decided to forgo insurance for himself and his wife. It was an unfortunate choice. “He got in a car accident,” George says, “and the bills were horrendous.”
Sen. John F. Kerry, in accepting his party’s nomination Thursday to be the Democratic candidate for president, spoke passionately about the need to rein in healthcare costs while extending medical coverage to those who lack insurance.
“When I’m president,” he declared to thunderous applause, “America will stop being the only advanced nation in the world which fails to understand that healthcare is not a privilege for the wealthy.... It is a right for all Americans.”
The problem is, fiscal reality belies such a bold vision.
With the federal budget deficit approaching $450 billion, and the full cost of the war in Iraq still to be reckoned with, there is simply no money for the kind of sweeping healthcare overhaul that is needed.
Longer term, the outlook is even more miserable. Writing in the latest issue of the Milken Institute Review, an economic policy journal, Boston University economics professor Laurence Kotlikoff warns that the gap between the federal government’s future expenditures and future receipts stands at about $51 trillion -- an amount far larger than all the private wealth in the nation.
“Unfortunately,” Kotlikoff says, “coming up with $51 trillion will be extraordinarily unpleasant.” One option: raising personal and corporate income taxes “immediately and permanently” by 78%. Another: “to eliminate all federal discretionary spending for all time, starting today.” Yet another: Whack all Social Security and Medicare benefits in half.
In this context, the specifics of Kerry’s healthcare plan actually start to look quite ambitious. Kenneth Thorpe, a professor of public health at Emory University who helped shape President Clinton’s ill-fated (but much grander) healthcare reform initiative, figures that Kerry’s proposal would cost the federal Treasury more than $650 billion over 10 years.
One of his key ideas is to lower expenses for employers that provide health insurance by having Uncle Sam absorb 75% of catastrophic claims exceeding $30,000 in a single year. This plank is aimed, in particular, at spurring more small businesses to offer coverage.
Meanwhile, by using federal funds to expand state Medicaid and children’s health insurance programs, Kerry says, he would bring medical coverage to 27 million people now uninsured.
But even if he was able to hit that number -- and history suggests it would be extremely difficult to do so -- that would still leave quite a gulf: More than 50 million folks could be uninsured during certain parts of the year.
President Bush’s plan is less ambitious (though it’s more popular among some business owners who fear that Kerry’s proposal could lead to government mandates). Among other things, the president supports legislation that would allow small companies to pool their buying power so they could purchase insurance at the lower rates larger firms tend to enjoy. Bush’s blueprint also calls for tax credits to help lower-income workers buy health coverage.
But, sadly, all of these things are little more than a Band-Aid.
At a major conference of big companies in New Jersey last week, the future of healthcare was high on the agenda. What emerged, said Schumarry Chao, a Los Angeles physician and benefits consultant who attended the session, was a rather bleak consensus: About all that can be expected for now, she says, is to “keep on muddling through.”
James Flanigan can be reached at jim.flanigan@latimes.com. For previous columns go to latimes.com/flanigan.
