Friday, February 26, 2010

Why we need health insurance reform

On February 25, an extraordinary event took place in Washington D.C. Prompted by President Barack Obama, leaders from both political parties appeared at a lengthy discussion of prospective elements and flaws of a health insurance reform bill. The so-called “summit” was extraordinary for its publicly televised nature and for the mere fact that the two parties managed to agree on certain aspects.

At the heart of the health insurance reform debate is a stark, almost-apocalyptic vision of America’s economic future. Eighteen percent of every dollar earned now goes to medical care. Over the last decade, the average annual premium for employer-sponsored family insurance coverage rose from $5,800 to $13,400, and the average cost per Medicare beneficiary went from $5,500 to $11,900. The current system has helped capsize the American auto industry, emptied state and federal coffers, and the ramifications only threaten to deepen. If the rate of increase is not slowed, the cost of family insurance is projected to reach at least $27,000 in a decade; such an increase will absorb one-fifth of every dollar earned.

And the money earned may well decrease as insurance costs increase. Businesses are predicted to see a rise in health-coverage expenses from 10 percent of their total labor costs to 17 percent. If left unchecked, healthcare spending will eviscerate future wage increases and stop economic growth.

How do we know this? Because it already has. From 2000 to 2006, health insurance premiums in Ohio grew 8.4 times faster than wages. WellPoint, Inc just announced a 39-percent rate increase in California. The company argued that the increases, set to take effect March 1, reflect soaring medical costs and an exodus of healthy consumers from its ranks.

And don’t look for these soaring rate increases to suddenly fall. In April, 2009, WellPoint’s CEO, Angela Braly, told investors, "We will not sacrifice profitability for membership." Essentially, the nation’s largest health insurance company argues that because healthy people are leaving its ranks, it has to raise rates, but it won’t lower rates to bring in healthier customers.

All of this argues for action, immediate action. If the projections prove correct, in ten years, a family currently making $100,000 will actually earn $73,000, post-insurance payments. That’s a family car, nine months of a mortgage, a year of college. Some have said that we can’t afford to change the current system, that our current economic situation won’t allow it.

Well, if the number discussed above are accurate, we can’t afford not to try. The alternative is a sinking American economy dragging employers, employees and the world economy behind it.

As the President said during the summit, in reference to a suggestion that anyone can get medical care at an emergency room, “When that happens, who pays for it? We do. We’re already ready putting the money in, it’s just in an inefficient way.”

It’s time to get efficient.

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