What is Health Care Reform? Depends on Who You Ask

What is Health Care Reform? Depends on Who You Ask

Health care reform is a big deal for U.S. businesses, including our electrical manufacturers.  Health care costs have grown steadily for more than a decade, and businesses — which bear much of the cost for their employers — have felt the strain on their bottom lines. (Of course, in that time medical diagnosis and treatment have also improved markedly, to the point that many formerly invasive diagnostic procedures are now painless and carry much-reduced risks due to dramatic progress in medical imaging.)

So to American business health care reform means bringing some rationality and stability to insurance costs.

Yet, as Catherine Arnst observes in a recent Business Week article, to many in Congress reform is less about cost and more about access.  And in order to ensure health care coverage to the 47 million uninsured, Congress will turn to business to pay the freight.  That will drive costs up, not down, for this nation's employers.  In an era where global competition requires that American business be as efficient as possible, this cannot be good for our economy.

So what's the final product going to give us, reduced costs or increased access?  Some politicians claim it can give us both.  And according to UC-Berkeley economist Phillip Cryan, in a study he just published for the liberal Institute for America's Future and Economic Policy Institute, Obama-style health care reform can also boost employment.  How? Under his rosiest scenario,

"New jobs would be created in health care; improved health would raise productivity; some employers who choose to pay rather than play would save money; and, again, the overall rate of health inflation would slow."

But I'm not drinking that Kool Aid.  This Rube Goldbergian description simply defies logic.  Let's start with the idea that new jobs would be created in health care.  It's almost certainly true, but not as a consequence of wealth creation — such new jobs will arise as a consequence of wealth redistribution. In other words, some businesses will shed jobs in order to pay for new health care mandates, while the health care industry gains jobs.  And while the congressional version of health care reform will provide access to more Americans, this doesn't necessarily equate to either better health or more productivity.  After all, while more Americans now have health insurance, more Americans also suffer from obesity as well. 

Interestingly, Arnst's article also notes an MIT study that suggests small business health care costs will drop if reform goes through.  This is because small businesses pay so much for health care coverage, and the pay-or-play system — as expensive as it will be for larger businesses — would presumably lower this group's costs.

Having worked in Washington long enough to see many congressional "fixes" that drove costs up rather than down, I'll believe it when it see it.

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