Healthcare reform in the United States is making a comeback. President Barack Obama has made healthcare reform a top priority for his administration and has linked its success, rightly, with the long-term financial health of the nation. If things stay at the status quo, healthcare costs will hurt the American economy by draining public funds and make US companies less competitive globally. There is an additional hidden cost to the lack of healthcare access for individuals, a decrease in labor mobility towards entrepreneurship. As a society, we must realize that health care reform is not an option it is a necessity.
Health care costs are an increasing drain on the US Federal budget. In 2007, the Federal Government spent $760 Billion on Medicare and Medicaid[i]. By 2017, Medicaid and Medicare combined will make up 6.9% of the US’s GDP.[ii] The inclusion of Medicare part D, although a positive social change, only increases the overall costs of these programs. Without a way to increase the risk pool, negotiate prices with pharmaceutical companies, increase true competition, and lower overall administrative costs, the Federal Government will shoulder the burden of paying for an unsustainably expensive system. With exponentially increasing debt, the US Federal Government will have to make difficult decisions about where to cut costs and/or how to raise taxes unless the current system is fundamentally changed.
In addition to the cost of healthcare at the Federal level, soaring costs are cutting into the profitability, and even the survival, of large and small businesses. Even well established businesses are struggling to pay health insurance for their current, and often, past employees. In order to stay afloat, business often transfer the extra cost to the consumer. This may work in a domestic market, but it creates a disadvantage when competing in a global market where direct competitors do not have the extra costs. Further, as the price of health insurance continues to increase, more employers are requiring their employees to cover a larger portion of their premiums. Thus, even as salaries increase, the take home pay of employees stay the same and may even diminish. With costs going up, and wages staying flat, consumers are purchasing less and hurting the nation’s primarily service-based economy.
While the negative effects of healthcare costs to the Federal Government and businesses are commonly acknowledged, one outcome rarely discussed is the impact the current healthcare polices have on entrepreneurial activities. With the majority of people getting health insurance through their employer, the question remains how many people are staying with their employers rather than starting their own venture so they can obtain health insurance. With small businesses generating 60 to 80 percent of net new jobs annually over the last decade[iii] the question is not trivial. If the current healthcare system is decreasing the amount of entrepreneurial activity in the US, then the economic consequences could be much greater than otherwise thought.
With the economy of the nation so closely tied to healthcare costs, it is important that legislatures look at healthcare reform not only as an important social undertaking, but also as an economic necessity.
[i] National Health Expenditure Data Fact Sheet, Last Modified: 03/11/2009 10:33:47 AM http://www.cms.hhs.gov/NationalHealthExpendData/25_NHE_Fact_Sheet.asp
[ii] Medical news Today, Article Date: 21 Oct 2008 - 11:00 PST http://www.medicalnewstoday.com/articles/126123.php
[iii] The Small Business Administration, Advocacy Small Business Statistics and Research, Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf) and CHI Research, 2003 (www.sba.gov/advo/research/rs225tot.pdf); Federal Procurement Data System; U.S. Dept. of Labor, Bureau of Labor Statistics.http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24
No comments:
Post a Comment