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Health Careless
When I was in Detroit a few weeks ago, my parents, who live and work there, told me that half the cost of an American car goes to pay for workers' health insurance, negotiated by the unions. "The unions are breaking the car companies," my mother said.

Yes, but half? She's my mother, but I still "fact-checked her ass." Here's a figure I found -- $1,500 for health care, added onto the price of every new GM vehicle, according to their CEO, G. Richard Wagoner, Jr. Not half, but not exactly pocket-change, either. And, writes Ceci Connolly, in The Washington Post link above, it's " a cost that his foreign competitors do not bear."

Julie Appleby and Sharon Silke Carty write in USA Today:

At a time when the average American company requires workers to pay more than $2,000 a year toward family health insurance premiums, the auto industry is among the 4% of employers that offer free family health coverage. Retirees, who outnumber workers by more than 2-to-1 at General Motors and represent significant percentages at the other major U.S. automakers, get the same deal.

"The health benefits for unionized autoworkers are a relic from another era, one where large, prosperous employers did typically pay for the whole health insurance premium," says Paul Ginsburg, an economist at the Center for Studying Health System Change.

As GM recovers from its worst quarterly loss in more than a decade, $1.1 billion, executives have targeted health care as a top opportunity for cost cutting. And as GM is the nation's largest private purchaser of health care, what it does is being watched closely and could have ramifications beyond its own 1.1 million employees, retirees and dependants.

"It begins to call into question whether employers can continue to be the backbone of our health care system," says Drew Altman, who heads the Kaiser Family Foundation, a non-partisan think tank that studies health care issues.

Of course, health care costs aren't the only problem -- or the reason I drive a Honda Insight instead of a Ford or GM Insight. Appleby and Silke Carty continue:

Japanese automakers are more innovative. South Korean manufacturers offer less-expensive products. Sales of SUVs have helped prop up profits of U.S. companies in recent years, but high gas prices are putting a damper on customer enthusiasm.

"GM has focused on health care as if this were the only thing standing between them and major success," says Shaiken at Berkeley. "That is a distortion, which is not to say health costs are unimportant. But it's neither the root of their problem or the solution alone to what ails them."

Jacob Sullum writes for Reason about a situation I've always found strange -- and stupid...the fact that most Americans get medical coverage through their employers:

People do not, as a rule, expect their employers to pay for their car insurance, their life insurance, or their homeowner's insurance. Why should employers pay for their health insurance?

In a system based on employer-provided insurance, people lose their medical coverage when they lose their jobs, a problem that becomes increasingly serious as they get older and sicker. At the same time, the seemingly free coverage makes health care more expensive for everyone.

Not only are you unlikely to know or care how much your employer spends on health insurance, but the coverage may be more generous than you would choose on your own, which means you are unlikely to know or care how much particular services cost. If you were using your own money to buy insurance, you might opt for a cheaper policy with a higher deductible, in which case you would be more conscious of things like the fee for an office visit or the difference in price between name-brand and generic drugs. Indifference to such considerations contributes to escalating health care costs.

Bush's solution to these problems is straightforward. He would reverse the policy of excluding health insurance from taxable income. To avoid an overall tax increase, he would give taxpayers with health insurance a standard deduction of $7,500 for individuals and $15,000 for families.

The White House estimates that 80 percent of taxpayers who get health insurance through their employers would receive tax cuts as a result of these changes because their coverage costs less than the deduction. (The average cost of employer-sponsored medical coverage last year was about $4,200 for individuals and $11,500 for families.) The other 20 percent would pay higher taxes, which might encourage them to seek less generous coverage and get more of their compensation in cash.

Everyone who buys his own health insurance would pay lower taxes under Bush's plan. Some people who currently cannot afford coverage might be able to swing it as a result of the tax break, which (in the example favored by the Bush administration) would amount to $4,500 for a family of four earning $60,000.

The complaint that changing the tax treatment of health insurance would encourage employers to stop providing it misses the point: If employers are offering medical coverage instead of extra pay purely for tax reasons, they should stop. Eliminating the pernicious preference for employer-provided insurance would promote a greater diversity of options and help people choose the coverage that makes the most sense for them.

Posted by aalkon at February 6, 2007 1:41 PM


I'm paying $8,190 per year for medical coverage. Sure would be nice to get the tax break that's being kicked around. Presently, my only choice is to write the check or not.

Posted by: Roger at February 6, 2007 4:42 AM

I'm 42, and I pay $3096 a year through Kaiser. I've had my own direct pay (as opposed to employer-paid) health insurance since the late 80s -- and had it even when I was too struggling writer to own a bed. I always thought it wouldn't be fair to possibly break my parents if I got sick -- if they would even pay for me (even worse, I'd be stuck in some government hospital). It's just one of those things you do as a responsible adult.

P.S. Poor people without coverage cost us much more than providing poor people with preventive care. No, I don't like paying for other people, but I'll end up paying for them one way or another, and I'd rather pay less than more.

Posted by: Amy Alkon at February 6, 2007 4:54 AM

To avoid an overall tax increase, he would give taxpayers
with health insurance a standard deduction of $7,500 for
individuals and $15,000 for families.

The White House estimates that 80 percent of taxpayers who
get health insurance through their employers would receive
tax cuts as a result of these changes

What misleading junk! What the above means is that
most people would come out ahead *the first year*.
Remember the "soak the rich" tax (the alternative minimimum
tax)? Over the years, inflation has brought more and more
of the middle class into the defined "soak the rich" range.
I see no reason to suppose that the health insurance figure
would be immune to this effect.

Posted by: Ron at February 6, 2007 5:32 AM

Shit Ron, when you buy a car, do you complain about the need to change the oil regularly? Government requires maintenance too. No fear though, the D's hold the legislature, and their union masters will not allow this great idea that's been around for decades, to come to pass. William F. Buckley has been writing about this for at least twenty years.

Posted by: Casca at February 6, 2007 8:15 AM

Yeah, but my car's maintenance is under my control.

Also, we don't achive nirvana by removing health insurance
from employers. Once you're not in a group, you need to worry
about insurability. Way back before employer-sponsored
health insurance, membership in fraternal groups was far
higher than it is today. One of the big deals about being in
one of those groups was that they able to get health insurance
deals for their members.

Posted by: Ron at February 6, 2007 9:05 AM

"What misleading junk...Once you're not in a group, you need to worry
about insurability"

Perfectly put, Ron. (And "misleading junk" is admirably restrained, too!)

Posted by: Jody Tresidder at February 6, 2007 9:19 AM

The problem is that individuals have to be rated as individuals, and it's cheaper to rate a group. There are factors that can make an individual's insurance cost less, but they cannot be grouped accordingly, like the employees at XYZ Company, which are considered a group. It's not just that those employees are getting their costs subsidized by their companies, their overall rating is cheaper, and they have lots of protections when it comes to getting new insurance with a new employer.

All the talk of socialized medicine makes me sick. It's all the government meddling in the insurance business that has created the mess we have now - the last thing we need is MORE government meddling.

Posted by: Pirate Jo at February 6, 2007 10:30 AM

I agree Jo,

Nationalized health care would be a huge problem in the US. It was easy for western Europe in 2 areas:

1. They have smaller populations than the USA.
2. US led NATO forces provide a huge bulk of the defense costs for Europe (1947 to 1991) Thus allowing other nations to divert money to cradle to grave welfare programs.

Since the end of the Cold War, various European nations have been reforming their welfare programs. Extending retirement ages and reducing benefits in the last 10 years. France, Spain and Italy come to mind. I'm sure there are others.

The UK was the exception, because they have a more dynamic economy than the other nations in Europe. Especially, under the deregulation policies under Thatcher, Major and Blair.

Posted by: Joe at February 6, 2007 11:29 AM

If you happen to live in the Kingdom of NY, you won't be buying the healthcare you want, because your betters have decided what you will have.

Rampant medicaid fraud, and spending far higher than any other state, skyrocketing property taxes (Albany has decided that the counties can pay for 25% of the costs) and industry fleeing the state result.

Their intentions were good, so it's OK, right?

Initiative, referendum, recall? Not in NY state.

The government is here to help you. Hold on to your wallets.

Posted by: MarkD at February 6, 2007 12:29 PM

Amy, this is almost completely unrelated, but

I'm 42, and I pay...

YOU'RE 42?! Tops, I thought you were, maybe 35.


Posted by: may at February 6, 2007 12:47 PM

Mark D and Joe, unfortunately a non-governmental approach is never going to be popular if you embrace the idea that individuals are at least partially responsible for the state of their own health. How sad is it that we think "health care" is provided by a doctor. Cat brother, feel free to chime in on how much proper diet and exercise (both freely chosen) can improve a person's health.

If health care insurance worked the same way car insurance or health insurance do, you'd expect people to pay for basic repair and maintenance on their own bodies. Insurance would only be needed in the event of a disaster, like a bad disease or a serious accident. In the case of pregnancy and childbirth, people would have to pay for their own costs, unless there were unexpected complications.

I've had a tubal and will never incur expenses related to pregnancy or childbirth. If my long-term disability or health insurance rates could be adjusted accordingly, I'd save a bundle. Do you have any idea what medical malpractice insurance costs the doctors who perform deliveries? It's driving some of them right out of the market. My health insurance premiums have to cover the end result of this, even though it doesn't otherwise affect me.

Posted by: Pirate Jo at February 6, 2007 3:32 PM

I'm just curious, Amy, had you become sick while you were struggling economically, how would you continue to pay for health insurance when you actually needed it. Most of us lose our income pretty quickly if unable to work, and there goes our ability to continue to pay for insurance. Then there are the insured who still get a trip to bankruptcy court because of medical bills not covered by insurance.

There are many indicators of adulthood, but paying for insurance isn't one of them. The insurance industry, with its consequent view that health care is a business opportunity to be exploited, is the primary cause of our health care problems, not the solution.

Bush's tax schemes, like all his schemes where the needs of humans are concerned, are not even relevant to a solution. It will simply happen that some will be favored by it, and others not. Those who will be especially favored will be those whose income comes from somewhere other than employment, as they can continue to pay the premiums in period of illness. Surprise! Those are the people the rest of us call the rich.

The only sensible way to treat medical care is to stop viewing it as a business issue and view it as a commons. When you need care, you should get it. Period. The government as the single payer of needed health care services is the only valid model for a civilized society.

Screw any economic analysis.


Posted by: Machida at February 6, 2007 3:41 PM

I'd like to know exactly why The Advice Goddess drives an Insight.

Posted by: Jay J. Hector at February 6, 2007 3:44 PM

Machida, "Screw any economic analysis?" I would personally love it if no one had to work and we all had everything we ever wanted and robots (that didn't have to be built by anyone, but materialized out of thin air) provided it all. But until then people are stuck having to support themselves, and I'm pretty sure you don't expect doctors, scientists, or surgeons to work for free.

But I suspect what you really think is that everyone's medical bills should be paid for by "everyone else." What level of medical care is the average person entitled to? The latest, greatest cancer treatment that cost $3 billion to develop and just came out yesterday?

No one wants to see anyone go without adequate medical care when they need it. But the free market could commonize those needs well enough, without the government being involved. Everything else the government has touched - Medicare, Medicaid, Social Security - have proven to be enormous boondoggles that cripple the economy with the taxes and debt they impose. The insurance industry pools risks as it is, and if an insurance company makes too much money, one of its competitors will happily come along and take a share of it. Or at least it would work that way if we had LESS government, not more.

Posted by: Pirate Jo at February 6, 2007 4:08 PM

Oh, and P.S. - disability insurance.

Posted by: Pirate Jo at February 6, 2007 4:09 PM

I'd like to know exactly why The Advice Goddess drives an Insight.

Simply to lure Jay J. Hector into leaving a comment on my site!

Posted by: Amy Alkon at February 6, 2007 4:21 PM

Pirate Joe, I thought "Screw any economic analysis" covered all this.

Posted by: Machida at February 6, 2007 4:24 PM


Pirate Jo, not Pirate Joe.

My apologies.

Posted by: Machida at February 6, 2007 4:36 PM

Amy, Amy, Amy. Don't you know that anything that George W. Bush proposes is eeeeeeevil and designed to hurt The Children? Eeeeeevil! Clearly you've been brainwashed. I shudder to think what's next.

Oh wait, that's right, you don't care about The Children(TM) so you can think what you want. Carry on.

Seriously, good for you for buying health insurance despite what you're paying for it. I actually think that Bill Bradley had one of the better ideas I've heard for dealing with the issue of the uninsured - allow them to become part of the giant pool of government workers buying insurance. I'm not sure either that or Dubya's solution is exactly, precisely the right one, but I do think the current system needs work, yet I'm not in favor of a socialized system (which I don't think would work here - Americans like medical intervention too much and doctors fear the outcomes of not ruling things out through expensive tests too much), so I'm open to all truly creative solutions.

As for "Screw all economic analysis"...well, that's pretty much what the current system does, aside from a few aspects such as HSAs, and that hasn't worked out all that well, in fact. Our current system provides incentives to use lots at the lower end and then craps out at the higher end. It's as though we could get near-unlimited oil changes, tire rotations and transmission fluid flushes for $1-$5, but if our cars actually crashed, we'd be on the hook for most of the bill. Totally perverse from an economic POV. We won't get in to the vicious current cycle for self-insurers - it's expensive, so the healthy ones who don't feel they need doctors often tend to stay out, thus taking the risk-lowering candidates out of the pool, thus driving up the price, thus making the insurance more expensive, thus driving more of the healthy ones out....Please, someone, stop the madness SOMEHOW.

Posted by: marion at February 6, 2007 10:40 PM

I don't particularly like the role of employers in accessing health insurance, but I will say that guaranteed coverage at a group rate is a beautiful, beautiful thing. I was diagnosed with migraines six years ago, while employed, and alas, my doctor wrote that diagnosis in my file.

Now? As a self-employed writer, I can't even GET coverage for migraines--or anything, really, that might go wrong with my brains, up to and including stroke--for any price. The last three policies I've had specifically EXCLUDED coverage for brain problems. Yeah, that's awesome.

Posted by: Harriet at February 7, 2007 12:21 AM

First, we kill all the lawyers...

marion, the condescending use of "Amy, Amy, Amy" is my copyrighted work. You are hereby warned NOT to copy, or you'll get the shingles.

Posted by: Casca at February 7, 2007 8:24 AM

"Screw any economic analysis."

Let's enslave the doctors and nurses and make them work for free. OK, we'll just draft them.

Let's steal everything the drug companies make and give it away. I meant nationalize them.

Then, when there are no more doctors or nurses or medicines, we can just die. Because life is a series of economic analyses.

Governments can distort markets, in the short run. In the long run, the markets always win. Why do Canadians come here for expensive health care? Because they'd die waiting for the cheap health care at home.

Posted by: markd at February 7, 2007 1:52 PM

Good question markd - why is it if you have enough money you can jump to the front of the line in the american medical system?

Heres another one, why do so many americans smuggle in cheaper drugs from canada and mexico? and given that the drugs are often made by the same company no matter which counrty it is sold in, why does it cost so much more in america?

Posted by: lujlp at February 8, 2007 1:47 AM

The R&D costs for pharmaceutical companies in the US are incredibly high. An unbelievably small number of drugs actually make it to market, and money is lost in the development and research of all those drugs. The patents for new drugs last only 20 years. 15 of those years are commonly spent in development and clinical trials, giving the drug company only 5 years to recoup their expenses. The FDA requires extensive testing (to ensure the safety of the American public). The whole idea of this big, expensive process is to protect Americans from disasters like Thalidomide in the 60's (thanks to Frances Kelsey of the FDA). And, truth be told, many Canadians WOULD rather take out loans and go on payment plans with US doctors than risk dying waiting for their treatment.

Posted by: Brit at February 8, 2007 11:37 AM

There should be a basic level of insurance that all citizens are covered for by the government. This would include checkups, immunizations, generic drugs, basic tests, long approved standard treatments and basic emergency treatment. These are generally fairly cheap, and often cost much less if caught early. No-one should be dying of pneumonia, or need to go to the emergency room for a rash.

There should also be private insurance, for catastrophic illness and diseases requiring long-term treatment. Diabetes treatment, cancer and the like would be covered by these private policies. This would be less expensive than current insurance, since in an average year, the majority of people are free of major episodes. Similar to the current system, the cost would vary depending on what was covered. If folks choose not to buy that insurance, they can pay for it out of pocket, or go without treatment. Everyone has to die sometime.

It’s not perfect, but it seems much more reasonable than what we have now. It may increase taxes a little bit, but not much, when you consider what is wasted by the current system.

Posted by: Arianne at February 9, 2007 9:55 AM

"There should be a basic level of insurance that all citizens are covered for by the government."

The problem is keeping it "basic". I recall a case in New Hampspire, where an uninsured girl required a liver transplant. This would have to be paid by the state, and the health authorities had the courage to say "no, that's for private insurance - public money is better spent elsewhere". That was absolutely the right decision, but nationwide negative publicity pressured them into paying for the operation anyway.

There is no way to set hard and fast limits, and to make the stick. Better not to even try. Anyone who is a fan of government-paid medicine need only look at the UK, to see what a mess it is. If you need anything treated that is not life threatening, you will wait months or even years.

We have an employee who lives in the UK. She has *three* slipped disks, and can only stand upright for brief period of time. This happened last April. Next week (10 months later), she has her first appointment with the surgeon - not for surgery, but to set an appointment for surgery, which will probably be sometime in the summer.

Take out the competition, make it "free", add governmental bureaucracy - and this sort of systemic failure is inevitable. What currently exists in the USA, as flawed as it is, remains far better for most people.

Posted by: bradley13 at February 9, 2007 12:22 PM

I don't know how many times I've heard most if not all of these argument at Ezra Klein's personal blog.
You will need medical treatment and when you do your income will be interrupted. Fine. Insurance can cover loss of income.
Meantime treatment could be provided without sending the providers through the hoops of fighting for the payments from scores of companies trying to escape paying. The high cost of U.S. healthcare isn't just high prices for drugs : it's for makework paperwork and litigation in a hodgepodge that doesn't provide lifetime coverage for everyone.
Really. How different is it from a basic provision that people should not starve in the richest country in the world ? Or a pension plan that actually has worked for decades.
There have to be worse things in the world than unfortunates getting a break. Stupidity that hurts most everyone is a poor choice.
Single payer ( to private institutions ! ) can work much better than no plan at all. If you can't effectively make an insurance scam over optional treatments it says volumes about the virtues of covering essentials.

Posted by: opit at February 10, 2007 8:45 PM

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