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February 9, 2005

GM's big problem

Alan Murray's column today in the Wall Street Journal ($) reports on the subject of General Motors CEO Rick Wagoner's speech tomorrow to the Chicago Economic Club.

What do you think it would be? International trade barriers? GM's bonds being rated at junk levels? Declining GM profits?

None of the above.

Instead, [Mr. Wagoner will] focus on fixing the U.S. health-care system.

[Mr. Wagoner] runs not only the world's largest auto maker (a position threatened by Toyota Motor), but also the nation's largest private health-care purchaser (a position threatened by no one.) He's responsible for the health of some 1.1 million people, most of them retirees and their families, and paid $5.2 billion last year for the privilege. The cost of health care now adds more than $1,500 to every vehicle sold, and is rising at double-digit rates. . . To cure what ails General Motors, he has to cure what ails America: a very sick health-care system.

Mr. Murray then frames the issue nicely:

The U.S. spends a fortune on health care -- 15% of its total output, compared with 10% in Germany and 8% in Japan. But it gets a lousy return on that money. Forty-five million Americans lack health insurance. . .

Curing the problem won't be easy -- which may be why the White House has put it on a back burner. . . fixing health care ultimately is more important to the nation's future than overhauling Social Security, rewriting the tax code or cutting discretionary spending. But Mr. Bush wrestled with health care in his first term, and has decided to give these other issues top billing in his second. That means there's little chance he'll have the time or energy to give serious attention to health care again before leaving office.

If costs continue to rise at their current pace, however, you can expect Mr. Wagoner and his business buddies to join forces with beleaguered state governors and insist that health care become the issue of the 2008 presidential campaign.

Meanwhile, Harvard Law and former University of Texas law professor Elizabeth Warren pens this Washington Post op-ed today in which she addresses the recent Harvard study that found that half of the nearly 1,800 study participants interviewed admitted that medical costs had been the primary cause of their bankruptcy filing. As Professor Warren notes:

The problem is not in the bankruptcy laws. The problem is in the health care finance system and in chronic debates about reforming it. The Harvard study shows:

? Health insurance isn't an on-off switch, giving full protection to everyone who has it. There is real coverage and there is faux coverage. Policies that can be canceled when you need them most are often useless. So is bare-bones coverage like the Utah Medicaid program pioneered by new Health and Human Services Secretary Mike Leavitt; it pays for primary care visits but not specialists or hospital care. We need to talk about quality, durable coverage, not just about how to get more names listed on nearly-useless insurance policies.

? The link between jobs and health insurance is strained beyond the breaking point. A harsh fact of life in America is that illness leads to job loss, and that can mean a double kick when people lose their insurance. Promising them high-priced coverage through COBRA is meaningless if they can't afford to pay. Comprehensive health insurance is the only real solution, not just for the poor but for middle-class Americans as well.

Without better coverage, millions more Americans will be hit by medical bankruptcy over the next decade. It will not be limited to the poorly educated, the barely employed or the uninsured. The people financially devastated by a serious illness are at the heart of the middle class.

As noted in this post on the funding crisis in Medicaid, the failure to address the true crisis in this country -- i.e., the broken down system of financing health care -- is not only a daunting failure of the Bush Administration and the Republican Party, but a huge political opportunity for the Democratic Party.

If the Dems can resist their normal temptation to address the problem through nationalizing the entire health care finance system, then the Democrats could establish a political foothold that could cut across normal party lines and provide the party with the basis for a comeback in the 2006 and 2008 elections.

Posted by Tom at February 9, 2005 6:58 AM |


Excellent point, Tom. Maybe you should run for something on this platform. I'd vote for you.

Posted by: TP at February 9, 2005 9:30 AM

TP, I'm staying strictly "behind the scenes." ;^)

Posted by: Tom Kirkendall at February 9, 2005 9:37 AM

The puppetmaster approach. Wise.

Posted by: TP at February 9, 2005 5:30 PM

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