Health Care Reforms on November Thesis

In the U.S., administrative costs are 31% of health care costs, compared with 19% in Canada.

The proposed health care reform is also expected to improve health outcomes. By shifting some of the focus of the system away from maximizing shareholder value and towards improving health outcomes, Americans should live longer, have better access to care, see improved quality of life and have lower mortality rates for a number of diseases.

In addition to providing better health care, the reform plan will have several positive economic impacts. The Boston Globe calculation (Bilmes & Day, 2009) determined that life lost due to inadequate insurance cost the U.S. economy $140 billion per year, less than the cost of the Obama health care plan. In addition, the high cost of health care insurance is a competitive disadvantage for American companies. It is one of the reasons why tens of thousands of automobile manufacturing jobs relocated from Michigan to Ontario, and now those jobs are starting to trickle to Mexico. It is estimated that the cost of health care for an American worker is now over $10,000 per year and this figure is expected to double within ten years (Arnst, 2009). Given that 99% of companies over 200 employees provide health insurance, it is clear that dropping coverage is not an option. A public health care option would help to lower the cost of employer health care, thereby reducing this competitive disadvantage (Dean, 2009).

These gains are not without cost. The $849 billion Senate plan represents an enormous amount of money. The U.S. economy is already struggling with the weight of deficit, thanks to the Bush Administration's overspending and the cost of the bi-party bailouts. While the current system is more costly than the reformed system will be, the current system spreads those costs out so that individuals affected pay a high cost and unaffected individuals pay no cost. The reformed system puts them on the American taxpayer, so that everybody pays some cost. This will almost assuredly require higher taxes. Insurance company profits will also decline, but that is less a concern for those who do not own stock in insurance companies.

There will also be backlash from a variety of industry groups. It is difficult to predict what form this backlash may take, but as Senator Tom Daschle (2008) explains, the current system benefits a wide range of entrenched interests, including hospitals, researchers, drug companies, doctors, patient advocates and insurance companies. The perception of negative impacts on some of these groups has led to intense opposition, and there may be some strong reactions if the bills are passed, resulting in health care reform. That said, that health care reform has support on both economic and health care fronts, and is resisted mainly by the uninformed and those genuinely opposed to higher government spending hints that health care reform will have a net benefit to America.

Works Cited:

Pear, R. & Herszenhorn, D. (2009). Senate health plan seeks to add coverage to 31 million. New York Times. Retrieved November 19, 2009 from http://www.nytimes.com/2009/11/19/health/policy/19health.html?_r=1&hp

Press Trust of India. (2009). U.S. Senate unveils $849 billion health care reform bill. Business Standard. Retrieved November 19, 2009 from http://www.business-standard.com/india/news/us-senate-unveils-849-bn-health-care-reform-bill/78744/on

Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine. Retrieved November 19, 2009 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

Bilmes, L. & Day, R. (2009). The cost of not enacting health care. Boston Globe. Retrieved November 19, 2009 from http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/11/07/the_cost_of_not_enacting_health_care_reform/

Farrell, C. (2006). it's time to cure health care. Business Week. Retrieved November 19, 2009 from http://www.businessweek.com/bwdaily/dnflash/jan2006/nf20060123_1965_db013.htm

Krugman, P. (2007). Conscience of a Liberal. WW Norton.

Arnst, C. (2009). Health costs: Steeper Still. Business Week. Retrieved November 19, 2009 from http://www.businessweek.com/magazine/content/09_42/b4151050123430.htm

Dean, H. (2009). Howard Dean's prescription for real health care reform. Chelsea Green Publishing.

Daschle, T. (2008). Critical: What we can do about the health care crisis. St. Martin's Press.