Health costs swamping U.S. economy

Today, alone among industrialized democracies, the United States has no national health insurance system. And yet we spend more on health, some 14.6 percent of Gross Domestic Product, than other industrialized democracies. Germany spends 10.9 percent of GDP; France spends 9.7 percent; Canada, 9.6 percent; Italy, 8.5 percent; United Kingdom, 7.7 percent and Japan, 7.8 percent, according to the Organization for Economic Cooperation and Development

The failure of former president Bill Clinton's national health care plan to win approval in Congress stigmatized the idea of a government-run health care system. In his recent State of the Union address, President Bush laid out his health care agenda.

The solution, he said in that speech, includes “tax credits to help low-income workers buy insurance; a community health center in every poor county; improved information technology to prevent medical error and needless costs; association health plans for small businesses and their employees, expanded health savings accounts, and medical liability reform”

The approach is consistent with Bush's larger concept of an “ownership society.” But experts say some features of his agenda — such as giving low-income individuals a $3,000 tax credit to help buy insurance — could have unintended consequences.

“They are not enough for most uninsured Americans to go out and buy health care coverage with,” said Aaron at the Brookings Institution. “But they are enough to induce some employers ... to say ‘I’m out of here.’ … This financial incentive could give them cover to drop their sponsorship.”

But corporate America says its time for health care consumers to take a greater share of responsibility for their care.

“One of the things that we as a country and as a health care system [need] is more transparency and making this more-consumer centric health care system,” said GM’s Williams.

“We simply don’t have the demographics to support an employer-based health care system forever,” said Sullivan-Hare at the U.S. Chamber of Commerce. “We don’t now live in a society where someone goes to work for one company for forty years. It’s a much shorter period, you change jobs more — and people feel like, ‘It’s my own health plan, it’s my own personal choice and I would rather make that choice on my own.’”

One thing business leaders, public policy makers and researchers agree on is that there’s too much waste in the health care system.

“About 30 cents of every dollar is spent on overhead costs,” said Kansas governor Sibelius. “On administration, filling out paperwork, credentialing providers, chasing down insurance company reimbursement, having 14 different kinds of plans in the marketplace. In Kansas, we are trying to tackle that overhead cost.”

“The challenge is squeeze out as much as we can of the health care that is wasted, catch the savings in a bucket and recycle the savings to finance the care that uninsured or under insured patients need,” said Boston University’s Sager.

One thing is for certain: rapidly escalating medical costs are putting lawmakers under pressure from the business community and the public to do something to fix our health care system.

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