Only a few months ago, Goldman Sachs was touted as an incredible
bastion of strength in the face of the credit crunch. Sure some other
institutions might have been suffering, but Goldman was savvy enough to
earn record profits in 2007. The average bonus was a whopping $600,000 per employee.
Then very suddenly Goldman and pretty much the whole industry
collapsed. The federal government has stepped in, and a partial
nationalization of the financial industry is underway. That’s not the
free market, it’s socialism.
While actual socialism was being carried out by the Republican
Administration in Washington, out on the campaign trail, McCain and
Palin were bashing Obama for allegedly socialistic policy proposals,
namely rolling back the Bush tax cuts for high earners. Obviously the
voters didn’t buy it.
Thanks to the credit crisis, companies and non-profits are starting
to lay people off. My inbox is filling up with messages from people
who’ve been given the sack and are searching for their next gig. Today
I received such a notice from a close friend at Goldman Sachs itself.
The unemployment rate is going to go through the roof, in my
opinion, and a lot of talented people in the prime of their careers are
going to have trouble landing good jobs anytime soon. Many people in
their fifties and early sixties are going to be forced into early
retirement. The way the system is set up now many of them are going to
get screwed on their health insurance. They’ll find COBRA coverage
available but costly (they’ll pay what their employer paid plus another 2%)
and individual coverage less available –or unavailable– and also
costly. The depletion of retirement/rainy day savings from the
financial meltdown will make this problem even more acute. Even if
people do manage to come up with the premiums COBRA eligibility expires after 18 months.
In the midst of all this, health insurance companies are likely to try to boost premiums. They’ve suffered massive losses on their investment portfolios, which is hurting earnings, and they’ll need to make up for it with higher premiums.
At the same time, state programs will suffer from an increase in
demand and a decrease in tax revenue. Private programs are already
being hit; pharmaceutical company patient assistance programs are
seeing an unexpected impact as middle class patients try to get in.
I know that the consensus view is that the Obama Administration will
put off health care reform for a couple of years, settling instead for
modest changes such as increasing funding for children (through the SCHIP
program) and regulating insurance companies. In fact, that’s what I’ve
been expecting. After all, there are bigger fish to fry and health care
reform would require the development and nurturing of a fragile
However, in this environment I’m starting to change my mind. I think
it’s quite possible that a consensus may emerge from the grass roots
level in favor of a single payer health care system. Health insurers
aren’t that popular anyway, and as business owners, the unemployed, and
the underemployed lose confidence in their ability to afford premiums
and start worrying about losing access to health care, I wouldn’t be
surprised to see people coalescing around a government solution. And
don’t forget about health care providers. Hospitals and doctors don’t
want to deal with uninsured people either –or insured people who can’t
afford their co-pays and coinsurance—and they may actually be open to
the idea of the government taking over.
I don’t want to see single payer and it probably won’t happen, but
conditions in this country are more favorable for the idea than I’ve
David E. Williams is co-founder of MedPharma
Partners LLC, strategy consultant in technology enabled health care services, pharma, biotech, and medical
devices. Formerly with BCG and LEK. He blogs regularly at Health Business Blog.