If it ain’t broke don’t fix it, unless it is broke

I always knew I was lucky for many reasons, except that up until recently I overlooked one reason.  That reason is my medical insurance coverage.  I have had either good or excellent medical insurance ever since I had my first real job.

I worked at a company that had medical insurance where they paid the entire premium, covered almost everything, and had a very small deductible.   When my daughter was born she had to have a couple of eye operations as well as other medical issues.  Even though my wife and I had almost no money, I do not recall ever worrying about paying any of the medical bills.  Later on, at another company, I had similar coverage for a while.  Then, over the span of about five years the coverage started to deteriorate.  Now I have decent coverage where I have a reasonable deductible and I pay a portion of the premium.

A couple of months ago I was talking to someone I previously worked with.  During the conversation, my former co-worker complained about how bad the medical insurance was at our old company.  Seems that the company I once worked for kept modifying the medical plan to reduce costs.  Although the company I worked for is a “high-tech” company, the story is similar at many manufacturing companies.

For many years, manufacturing advocacy groups have listed the reduction of healthcare costs as one of the top issues in lowering the cost of manufacturing in America.  This is because; using 2008 number, the average cost for healthcare at U.S. manufacturers is $2.38 per hour.  This represents about 13 percent of their payroll cost.

The $2.38 per hour becomes alarming when it is compared to the average cost of $0.96 per hour for our trading partners.  The $1.42 per hour difference represents 7.75 percent of the payroll.  That is a large disadvantage to overcome.  The good news is that much of this added cost can be eliminated.

A McKinsey&Company report from December 2008, Accounting for the cost of US health care” A new look at why Americans spend more, documents that even as far back as 2003 Americans overspent $477 billion on healthcare.  That translates into over 28 percent of our nations healthcare cost being wasted.  Getting rid of the overspending would shrink the $1.42 per hour difference down to $0.88 per hour.  Imagine what that number would drop to if we could make the system more efficient along with getting rid of the current waste.

The United States spends about 16 percent of our gross domestic product (GDP) on healthcare, with about a third of that lost to wasteful medical spending.  With over 46 million uninsured, millions under insured, and millions more worried about losing their coverage our nation needs to act.   The dirty secret is that we are already paying for the healthcare of the uninsured.  What makes it worse is that the uninsured get their healthcare in the most inefficient manner possible, the emergency room.

I do not pretend to know what the solution is; I just know that we need to do something.  That something needs to address the waste and inefficiencies.  This can, as many analysts agree, be accomplished as we increase the number of people covered and improve the overall quality.  In the end, fixing healthcare helps everyone, not just manufacturers.  It would be counter-productive to not do anything.  So, do not let any group scare you into supporting no change.   In this case, if it is broke fix it.