The May 30, 2009 issue of The Economist says in a paragraph pretty much everything I wanted to say about the bankruptcy of General Motors and healthcare costs.
In an article titled “Life is Expensive,” The Economist reports: ”Many Americans think of soaring healthcare costs as a burden on companies. And it is true that some high-profile ones, such as carmakers, have come unstuck by promising health benefits that subsequently became too expensive. GM spends more on health insurance than on steel. It is also true that small firms find the bureaucracy of health insurance hasslesome. However, in general the real victims of healthcare inflation are not businesses but ordinary Americans. As the cost of coverage rises, their wages are squeezed, or coverage is dropped altogether.”
The question is whether the right kind of healthcare reform can make U.S. business more competitive and put more spending money in the pockets of consumers.
Whether and how we get there are open for debate. I lean (left) toward more government involvement; you can choose your own poison. Either way, Americans are already paying for the failing U.S. healthcare system in more ways than one: lower wages, rising out-of-pocket costs, inadequate coverage and care, and heightened anxiety.
Here’s something else. We often hear about the potential impact of reform (especially an expanded government role) on innovation in healthcare. But how much innovation in the broader economy is stiffled when would-be entrepreneurs are afraid to strike out on their own (or workers are afraid to leave dead-end jobs) because they don’t want to lose their employer-sponsored healthcare coverage?
The GM debacle shows how out-of-whack healthcare costs (along with myriad other failings) can play a role in the demise of a company. Just remember that’s not an argument to further squeeze benefits. It’s an argument that the current system needs fixing.
Subscribe in RSS Reader
