By 
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
national consensus.
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
ever seen.
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.
Categories: Uncategorized
People always hate to talk about when they are laid off. But as it has become every day’s news headline since Yahoo started it with cutting 1500 of its task force last year, now a need of platform has been in demand where people can express their selves in words how they are feeling about their company, whey the got laid off was that justified or not.
And every thing they want to tell anonymously.And http://www.layoffgossip.com is providing you that platform.
Getting back to David’s thesis: Rapid escalation of unemployment absolutely increases the pressure for universal health care. I just don’t see that it gives a disproportionate impetus for a single-payer version of universal health care.
Consider the major natural opponents of single payer:
1. Private insurers (obviously)
2. Republicans (obviously)
3. Hospitals (because the writing will be on the wall for dramatically lower payments across the board, and strong hospitals will lose most or all of their negotiating leverage compared to weak hospitals with private insurers)
4. Pharma and biotech (similar reasoning as hospitals)
The physician lobby is divided, though from what I can tell is on the whole more against than for single payer, and will continue to be. Primary care physicians may tend to support single payer more than specialists…but we all know which group has the greater clout.
Perhaps employers will soon become more open to single payer, but short of a prolonged collapse similar to the Great Depression it is really hard to imagine that they will become a net positive force for single payer. We’re heading for a big hurt, but even pessimists are not talking 25% unemployment and 10 years of negative or anemic growth.
So the impetus towards universal healthcare seems overwhelmingly likely to continue to be channeled into some version of a multi-payer system. Sadly, it’s also hard to imagine that the first version of multi-payer will be a well thought-out and comprehensive reform such as you have in The Netherlands, for some of the same reasons that we are very unlikely to get a single payer system. More likely we’ll have to go through one or two major subsequent reforms to get there.
The cost of the Iraq War, $10 billion per month. If this was ended then that $120 billion per year could fund healthcare. Is anyone worried about the deficit when fighting an unnessessary war? If there was a gas tax to cover the cost of the war, would it have been supported by citizens, especially when they found out they were lied to about the reasons for war?
http://www.reuters.com/article/newsOne/idUSTRE4AB67T20081112?pageNumber=1&virtualBrandChannel=10112
So basically PWC answered the question with their recent analysis on the Obama healthcare plan – $75 billion next year and much continued spending in the near-future with long-term savings.
So the question is this – does Congress come up with another $75 billion next year (and probably close to $100 billion in 2010) to expand enact the Obama healthcare plan?
If I was a betting man, I would be taking the “under” and that we don’t get something like the Obama plan enacted in 2009. Then again, Congress and the Fed are giving out money like it is going out of style. Maybe they won’t mind if we get to a point where the “AAA” credit rating of U.S. treasuries meets an improbable scenario and gets downgraded.
I just heard that 47% of Americans have postponed or cancelled healthcare. That includes the insured as they can’t afford the co-pays and deductibles. The economy, or fear of it, is causing this. Now we have the prospect of people dying or getting more expensive emergency care. Maybe single-pay is closer than you think – I hope at least. The question is can we just print money to get us out of this. The last time we had a depression World War II got us out of it, what will we do now?
http://www.forbes.com/home/2008/11/12/paulson-bernanke-fed-biz-wall-cx_lm_1112bailout.html
Make it $5 trillion that the Fed is on the tab so far for and the market is going to lead even more liquidity to keep it afloat over the next year. Plus, it is guaranteed that we throw in some various stimulus packages too.
There is no way we have significant expansion on healthcare coverage in the next year. The only thing that is going to occur is a reshuffle of the chips in the current healthcare system for the most part.
Now if things get bad enough, we might more towards a more dramatic resolution like a single-payer system for financing the American healthcare system but the dust is going to have settle from this crisis first. That isn’t happening until at least 2010 at the earliest.
Have you taken a look at the Fed ledger sheet lately? That $1 trillion estimate is going to get blown out of the water and more likely to end up $2 trillion or more next year as the Fed remains the only game in town to keep the economy afloat awash a deluge of economic problems on several fronts. Fed can always print more money but somebody has to be willing to purchase those dollar-dominated assets that the U.S. Treasury has been dumping on the market left and right.
My perspective is that of a retired physician in the individual health insurance morass. Even my “group” catastrophic plan through my professional association, combined with an HSA, leaves us paying out of pocket for everything so far (the HSA would be gone in a couple years otherwise) and with steadily rising catastrophic premiums. Let all the laid-off people join me in the hunt for affordable individual insurance, and maybe something positive will happen. Creating only two options, however, as commenters above note, only causes hardened “for” and “against” positions. We need compromises.
David, my feeling right now for those lossing jobs and health insurance in the financial/real estate industry is, “Let then eat cake”. Let them see what it’s like in the trenches of main street every day. Let them see the cost of greed and self interest. We won’t get single-pay though until much more of a crisis – even then the cost for action at this late date will be tremendous given the years of burying our heads in the sand while we lived on the fruits debt.
tcoyote, we’ll get those massive layoffs anyway if we don’t do anything. Single-pay will still need workers from the insurance industry. You are right though, if it’s done properly we won’t need as many of them – that’s part of the greater efficiency of single-pay. Look at how many docs office staff will also loss their jobs because of less insurance paperwork and greater efficiency – but when have we critized lost jobs in the private sector for down sizing to produce the same outcomes, haven’t we called that “progress”.
When the debate is single-payer vs. current system, everyone tends to organize around political party lines. We all know how difficult it is for politicians to get things done. Politicizing healthcare is not a good scenario. When I say that, I’m not suggesting that gov’t shouldn’t have any role in healthcare. I’m suggesting that we can’t tie up reform efforts because we can’t agree on the financing model. Too many people are getting sicker while we debate this, and many of them have good insurance!
I keep hearing stuff like this and think: sure, why not? Let’s shut down Kaiser and Blue Cross and Humana lay off hundreds of thousands of workers and take on another $1 trillion or so in ANNUAL financial obligations. Don’t forget we already have trouble
affording the $500 billion in Medicare spending and cannot manage the “industry” politically. We did a great job with Fannie Mae and Freddie Mac, after all. And that puts Nancy Pelosi and Harry Reid in charge of our health system?
LOL.
“Socialism” is such a hot button that it can blind people to the range of options that are used in other countries and it is useful to actually study them. NPR ran a great special last spring comparing the various systems. http://www.npr.org/news/specials/healthcare/healthcare_profiles.html and there are plenty of options that include 100% coverage, cost 1/2 what ours does, have better outcomes and aren’t socialized.
France for example loves to mock the Brits for having “socialized medicine” since France relies on both private and government insurance, with most people getting insurance through their employers (paid for via taxes versus our method of hiding the costs from employees).
In a ranking of 19 industrial nations, France is at the top of the list for health care quality, while the United States ranks last.(Canada and GB use a different model then France, Germany and Denmark)
As to the cost difference between France and the US? France: Coverage: Universal coverage. All citizens and legal residents. Average annual per-person spending: Health spending as part of GDP: 8.3% Total: $2,723. Breakdown: $2,371 by government; $352 on supplemental private insurance, OTC drugs, direct payments to doctors (most doc’s are in private practice)
US – Health spending as part of GDP: 15.3% Average annual per-person spending: Total: $6,402. Breakdown: $2,884 by government; $2,676 for private insurance, with 52% paid by employers, 48% paid by employees; $842 by consumer out-of-pocket*
So lets see, better outcomes, no one goes ever goes bankrupt (45% of all US bankruptcies are due to medical debt) or without care, 1/2 the cost, and the only reason we don’t like it is the word socialized? Talk to any expats and they will tell you which they prefer – the EU model. Most people feel that the Swiss model (Everyone in Switzerland is required to buy government-regulated health insurance, with subsidies for the poor.) is the one we will end up with but they also struggle with rising costs.
Sherry Reynolds
Alliance4Health