Cal Berkeley Democrats

The Need for Health Reform

“America’s health care system is broken.”

Though one might expect such a statement to come from a politician or a patients’ rights advocate, it actually originated with a broad coalition known as the Better Health Care Together campaign.  The campaign, which included AT&T, Intel, and Wal-Mart, found the status quo unacceptable and called for “achieving a new American health care system by 2012”.

The idea of overhaul, once rejected in 1993, is now supported by formerly hostile groups such as the American Medical Association, the American Hospital Association, PhRMA, and even Wal-Mart. The fact that all these stakeholders recognize the problem shows how bad our crisis really is – from both a moral and economic perspective, it is an unacceptable blight on our country’s promise.

The rising cost of health care has been a concrete fact, backed by conclusive and unambiguous data. Between 2000 and 2007 premiums rose 98%, while wages rose much more slowly by only 23%. This year average costs are expected to rise to $3,826, 8.9% above 2008 levels. As a result, health care is now the leading cause of bankruptcies, accounting for approximately half.

Rising costs have been accompanied by declining coverage, and today a record number of Americans are uninsured. Over 46 million lack coverage, and another 16 million are underinsured. Even the middle class is being hard hit – 80% of the uncovered are employed or have a family member who is employed.  The Institute of Medicine estimates that because of holes in our insurance system, we suffer 18,000 unnecessary deaths per year. In a country as rich and prosperous as our own, such statistics are unacceptable. Health care should remain affordable, and, consistent with the “Life, Liberty, and…pursuit of Happiness” enshrined in our Declaration of Independence, no one should die from lack of coverage.

Though some argue that high costs are justified by the quality of our care, such claims depend on a narrow and selective interpretation of data. Our per-capita costs are two times the industrial world’s average, and fifty percent more than those of the next highest country, Switzerland. Thirty-one percent of our fees to go administrative costs, three times higher than the proportion in France, Finland, and Japan. Despite these exorbitant expenses, our life expectancy and infant mortality rank the worst among “high income” OECD countries (24 total, from Portugal to South Korea). Only 56% of Americans “have confidence” in our health system, compared to 73% of Canadians and Britons. We clearly need reform. While we pay more our system is still fractured, and millions of people slip through the cracks.

While health care is unquestionably a moral issue, it is also an economic one, as well. Coverage puts unacceptable costs squarely upon businesses, which we need to be robust in today’s economy. In the past decade per-worker costs have risen 140%, and in 2008 they averaged $8,331. To examine the deleterious effects of health care upon businesses, one only needs to look at our auto companies (many of which recently required bailouts). They pay $1,500 in health costs per car, compared to only $150 in Japan, and as a result the United States is at a clear competitive disadvantage. In total, the Institute of Medicine estimates that due to untreated illnesses and employer costs, our broken system drains our economy of as much as $130 billion per year.

IBM’s Senior Vice President for Human Resources J. Randall McDonald claims that, “five years from now this problem will have to be cured, or the competitiveness of the United States will be dramatically affected.” Offering an even worse prognosis, in 2007 the Business Roundtable noted, “Our members consistently name health-care costs as the number-one cost pressure facing them in their leadership of America’s largest companies.” Rejuvenating our ailing system will not only save lives, but also provide an economic lift to businesses.

The government, too, is being hurt by health costs. In fact, the Congressional Budget Office calls such costs “the single greatest challenge to balancing the federal budget”. In just ten years, government spending on Medicare will double, from $720 billion to $1.4 trillion. By 2040, Medicare and Medicaid will eat a whopping 15% of GDP. Only one-quarter of this increase will be due to more beneficiaries, compared to three-quarters for rising costs. Put simply, health care is a budgetary time bomb. Reform is far from irresponsible; it is the fiscally prudent path.

Our health care system is riddled with problems: coverage problems, cost problems, business problems, and fiscal problems. The status quo is unacceptable.

Thankfully, reform is within our grasp. We must face the realities of our broken system–tens of millions are uninsured, tens of thousands are dying, and tens of billions are disappearing from our economy. Other countries prove we can do better, and the facts suggest we must. Health care reform, from every conceivable perspective, makes common sense. In the words of Thomas Jefferson, “Without health, there is no happiness.”