February 11, 2004

Health care 101

If you want to understand the American health care system and its impact on the country's economics, you should read this. It's a succinct summary of a study commissioned by the Manufacturers Alliance and the National Association of Manufacturers. Curb your cynicism, though; it appears to be a relatively accurate description of the problem, despite the inherent self-interest of the study's backers. We've all seen stories about companies trying to cut or shift the cost of retirees' health benefits; one gets a better feel for why the firms feel it's necessary after reading this.

In Canada, the private sector spends 2.8 percent of gross domestic product on health care; in the United States, the private-sector figure is 7.7 percent. And American private-sector spending falls disproportionately on big employers like manufacturers. Some 97 percent of members of the National Association of Manufacturers provide health care coverage for employees. In 2002 alone, General Motors, which covers 1.2 million Americans, spent $4.5 billion on health care.

These two trade groups seem to be advocating something traditionally anathema: a form of (gasp) socialized medicine! I suspect the Congressional Republicans and their allies (Yo! Grover!) who've read the study are cursing the names of the Alliance and the NAM, for this knocks some of the underpinnings from their long-standing hatred of "big government."

Don Johnson has some questions about how big a bite of GM's SGA expenses that $4.5B really is, and Matthew Holt (from whose page I found the article) agrees with him in the comments. Their argument is that while the $4.5B is a huge number, it's relatively small as a percentage of sales and/or expenses compared to what small business incurs for health care. That's true (I pay roughly 25% of my income for an individual health plan), and I think the use of the word "disproportionately" is a false modifier in that quote, but having the manufacturer's trade groups advocate for government health insurance is far more likely to be heard in Congress than my lonely sole proprietor's voice, so I think Don and Matthew are missing the larger picture.

Posted by Linkmeister at February 11, 2004 11:03 AM

Okay, fine, so you beat me to the story. It's still a great one!

Posted by: Graham at February 13, 2004 10:03 AM