Health Insurance, A Quagmire

There’s been a lot of talk lately about expanding health insurance coverage to those who don’t have any. Last year Massachusetts enacted Commonwealth Care a program that connects eligible Massachusetts residents – those with incomes below the poverty level – with approved health insurance plans, and helps them pay for the plans.

Two weeks ago California Governor Arnold Schwarzenegger launched an even more aggressive plan that would expand coverage to the uninsured, and tax employers, doctors and hospitals small percentages to cover the increased costs. This week a coalition of business, medical, insurance, and consumer groups proposed a national version of a similar plan.

People without health insurance have health care needs that are currently met when they end up at a publicly supported clinic or a hospital emergency room. Their unpaid medical bills are shifted to those who have health insurance in the form of higher premiums.
The good news is that everyone agrees there are benefits to helping the uninsured. The bad news is that the current funding for these plans is not adequate to meet the promise and the model builds on a healthcare system that needs a complete overhaul and not a quick fix of just one problem.
Studies estimate that there are nearly 20 million people in America, ages 19-64, who are underinsured. Helping pay the medical expenses of the uninsured will fall on the shoulders of these individuals. In 2006 the average cost of a family insurance plan that workers obtained through their jobs rose over seven percent. Over the past seven years medical insurance for the same individuals doubled, while incomes did not rise nearly as much. The stark reality is that medical expenses of the underinsured are a major contributor to U.S. bankruptcy filings.
For every vehicle that General Motors sells, $1,500 of the purchase price goes to pay for medical care for their employees, according to GM’s chief executive Rick Wagoner. Medical care for Starbucks employees costs the company more than the cost of all of the coffee beans the company purchases to make its product.
No one would argue that we need to work on the issue of universal healthcare and that the new plans address worthwhile problems. However, the solution is not to be found by increasing the burden carried by the rest of us.