The Healthcare Recession

When people think about a recession, they primarily identify with purely economic measures. Considering the current economic climate, it’s easy to understand why people are thinking about their financial future. But more and more people in this country are experiencing a “Healthcare Recession”.

What is a “Healthcare Recession”? It is the steady diminishing of the availability of services and the health of a populace due to increasing costs, restrictions, or loss of coverage.

The US spends $2.4t a year on healthcare, or 17% of our GDP, yet we have some 47+ million living with no insurance. Other nations, such as Germany, France, and Canada spend between 9% and 11% of their respective GDP and they still manage to cover everyone.

Healthcare expenses are, at least partly responsible for 50% of all personal bankruptcies in the US. That’s right, 50% of the people who declare bankruptcy aren’t the deadbeats some in government would paint them to be, they’re sick people.

Insurance premiums for employer-based health insurance have increased at least 5% in each of the past 3 years. Imagine the impact that expense must be having on employers as we weather this economic recession.

The average employer-based health insurance plan for a family of 4 is $12,000/year. Multiply that by 25 employees and that accounts for some $300,000 of either raises, or business expansion spending taken out of the economy, and put into a system that is retracting benefits at an alarming rate.

Employer-based health insurance premiums have increased 120% since 1999. This compares to a cumulative inflation rate of 44%.

A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses. My question is, how many have cut their insurance as the result of a receding economy?

All these statistics come in whole or in part from the non-partisanNational Coalition on Health Care.

As we contemplate the economic recession, we have to consider the impact it will have on the healthcare industry.

Since July 2008 there have been nearly 2.5 million new unemployment claims (Source). Think about how that impacts the healthcare system, and the health of those affected. We now have 2.5 million new people who have either lost, or are about to lose their health insurance. That’s 2.5 million more people who may lose their home, or their savings, or both, as the result of a catastrophic illness or injury. What impact will those losses have on the economy? What impact will those losses have on society? How much of that loss can our current healthcare system absorb?

The long hard truth is that we can no longer afford our current health care system. It was ill considered from the start, making healthcare coverage dependent on employment or affluence. Doing so neglects several segments of the population, including children, who through no fault of their own, may just happen to be the child of an unemployed, or uninsured worker.

What about Medicare or Medicaid? Both have been political footballs since the “Reagan Revolution”, subject to the whims of those who chose to demonize or vilify it for political gain. There’s a misguided sense that people who use these programs are somehow failures, or deadbeats, but that’s hardly the case. Most are retired workers who are no longer or were never covered under employer-based healthcare plans, or the working poor, who are also, by and large, not covered by private healthcare.

Consider this, a minimum wage earner makes $13,000/year, if they work 40 hours a week. What employer is going to double their employee cost to cover them and their children? One of my favorite responses to this “reality” is the retort, “No one only makes minimum wage.” Well, if that’s the case, then what was the big deal about raising it?

In talking to friends in the healthcare industry, they report that they have had to either take on additional costs or staff nearly every year since 1992 to manage the 3 dimensional puzzle that is our healthcare system. The US spends some $480b/year more than other Western nations with universal coverage on ADMINISTRATION ALONE.

The result is that the availability of healthcare and healthcare coverage has become a tool in a class war that is driving all of us further and further down the ladder, both economically, and medically.

I’m not demanding universal single-payer coverage, though some argue that’s the only real solution. I realize that at this time it may be a bridge too far for those politicians too weak to be bold, or to pompous to think beyond their narrow political future. I am asking for people in Washington to stop making the availability of insurance or healthcare a political football to be bandied about like as if it doesn’t affect anyone. I’m asking our elected officials to start treating this like the crisis it really is, instead of the “carrot on a stick” stupidity that it has become over the past 16 years.

Streamline the process. Take away some of the ridiculous hoops that our hospitals and physicians have to jump through to get paid. Take away the barriers to getting care. Build a system where all insurers use a standard form instead of creating their own standard, and by extension, raising the bar on receiving coverage or payment, and lowering the quality of care in the process. Most importantly, do something for God’s sake!

Any reform that may have come has taken a hit by the withdrawal of Fmr. Senator Daschle from his nomination to HHS. I’m not sure that he really was the right man for the job, but his withdrawal, at the very least, delays any progress on reforming healthcare, and at worst, makes the prospect of reform even more of a political football than it was at 8am this morning. I know there are a lot of people out there supporting Howard Dean for the post, but to be honest, I don’t care who it is, as long as they are an honest arbiter of positive change, and have the political skills to make some meaningful reform happen.

We can reform segments of our economy as much as we want to, but if we do not have a healthy populace to support these industries, both with labor and spending, our economy will neither recover, nor grow with any sustainability. It’s way past time to make some sense out of healthcare, and restore our place in the world both economically and medically.

Update:HR 676 The United States National Health Insurance Act. Co-Sponsored by our very own Steve Cohen

Paul Krugman

3 Replies to “The Healthcare Recession”

    1. Thanks ‘Coma,

      I crossposted at Kos, and a commenter there said, “It costs a lot of money to hide the fact that in the US, health care is rationed.”

      That pretty much sums the whole argument up for me.

  1. I like this site. Also, another site I’ve found that provides basic information for consumers is ( which I really like in terms providing basic helpful information.

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