By on October 18, 2012

The Voluntary Employee Beneficiary Association, or VEBA, was initiated as a way to get retiree healthcare costs off the books of Detroit’s auto makers. While VEBA makes balance sheets look better, they are still an exorbitant legacy costs for the Big Three, and things are about to get a lot worse.

Reuters reports that a U.S. Department of Labor document shows that GM’s VEBA obligations were underfunded by 40 percent in 2o11, versus 26 percent in 2010. Ford didn’t fare much better, with a 37 percent deficit in 2011, up from 26 percent the previous year.

While VEBA was designed to safeguard the health benefits of 824,000 retirees if the Big Three’s fortunes go south, VEBA was forced to take payment in stock rather than cash, something the UAW was opposed to but ultimately complied with. The declining value of the shares is cited as a primary cause of the funding shortfall.

Increased health care costs are another giant disaster-in-waiting for the Big Three. As Reuters reports

“The GM VEBA trust said if the rate of health care cost increases moves up by 1 percent, its benefit obligation would increase by $6.4 billion. For the Ford trust, a 1 percent swing would increase the obligation by $3.8 billion.”

Given the rate of increases in health care costs in America, the automakers are in an extremely precarious position relative to their health care legacy costs – the very same costs that hurt them so badly in the first place, and the very same costs that were supposed to be shed post-bankruptcy.

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79 Comments on “VEBA Shortfalls And Rising Health Care Costs: A Recipe For Disaster...”


  • avatar
    Dr.Nick

    The automakers are contributing to the VEBA on some sort of negotiated basis. Does it affect them if the VEBA declines in value, or just the retirees? Are the automakers on the hook for more deductions?

    • 0 avatar
      Pch101

      “Does it affect them if the VEBA declines in value, or just the retirees?”

      It’s the retirees’ problem. They need the price of GM stock to go up in order to eliminate the shortfalls.

  • avatar
    doug-g

    I started to say something about health care in this country that was negative and then remembered that our own doctor in residence has high-end and collector cars stacked up like cord wood. I’ll just keep quiet.

    • 0 avatar
      rnc

      Remember this country would have had a national health care system if not for GM (People forget what a monolith GM was in the 50’s in comparison to today) so they were almost singlehandly able to block it.

      • 0 avatar
        msmitka

        I actually looked into that, assuming that tax preferences and wage controls introduced during WWII played a role in the overall growth of private healthcare. I also assumed that the auto industry and within the industry GM was in the vanguard. I concluded I was wrong at every point, covered in an article in the Automotive History Review and various posts on my blog at autosandecomomics.blogspot.com.

        It turns out that the auto industry followed the lead of other industries in the late 1940s, especially steel and coal, and that within the auto industry GM lagged others (Studebaker, Ford). Now GM was innovative with the COLA (cost of living adjustment) but that came from Cole and not from the union side. The UAW favored national healthcare from the start, and Reuther was unusually clear in forseeing the cost issues and also the incentives that “experience based” policy pricing would create for firms with older workforces to drop coverage.

  • avatar
    rnc

    My understanding is that the VEBA is what the VEBA is, they can sale the stock (+) whatever additional contributions the automakers are required to make as per the agreement and nothing more, if the UAW has to come back to the trough, they are going to have to make some sacrifices elsewhere (P.S. if not tied together Ford retirees are in alot better position than the other two, not just in terms of the VEBA, but pensions as well as Ford recently announced they will start funding with free cash flow and investment grade bonds vs. the imaginary 7-8% returns GM and Chryco use). (+) remember that even when the SAARs was at 17 millions, GM’s whole survival plan was based on making it 10 more years when the million (+) people they were supporting from the 60’s and 70’s heydays would begin dying in mass, that process will start soon so the underfunded pensions and VEBA’s will begin to correct themselves through natural selection.

  • avatar

    As a Canadian and not really part of this process, it’s better that I don’t comment.

    • 0 avatar
      doug-g

      Actually, it might be better if you did comment. Your input with personal experiences of Canada’s system could be enlightening. American’s have been led to believe that the earth would fall off its axis if we went to a national health care system. It seems we need to be correctly informed on both sides of the matter.

      • 0 avatar
        jjster6

        I’m Canadain so I’ll comment. I feel everyone is entitle to MY opinion.

        The earth will not fall off its axis with a US national health care system. The result will be very predictable. Taxes will increase substantially. Care will improve for those currently without health insurance. Care will become much worse for those currently with health insurance.

        Lines will form as a socialized system won’t be able to keep up with demand.

        With regard to the VEBA issue, the current value of an asset is being compared to the long term liability of the VEBA obligations. Nothing says the two have to match. Some day the assets may exceed the liability. Coverage will be increased. When the current value of the assets fall below the long term liability the sky will fall again.

        Repeat.

      • 0 avatar
        racer-esq.

        The United States has the single-payer private provider Canadian (any many other countries) system for everyone over 65.

        It is called Medicare.

        The people on Medicare love it. Threaten any changes, and they will storm town halls demanding that the government stay out of the Medicare.

        There is a big difference between single-payer private provider systems like Canada’s and Medicare, and socialized systems like the UK’s. Single-payer private provider systems, like Canada’s and Medicare, have the government act as the insurer, making payments to private hospitals and doctors. Socialized systems, like the UK’s, have the government own hospitals and employ doctors.

        The single-payer private provider system, where the government acts as the insurer, but makes payments to private hospitals and doctors, is much better than both what people under 65 in the US, stuck with private insurance or no insurance, and what people in the UK have. Private insurers are actually incredibly inefficient, with 20 – 30 of premiums going to overhead, compared to about 3% for Medicare (for every dollar into private insurance 70 to 80 cents go to benefits, for every dollar into Medicare 97 cents go to benefits). But obviously there are huge advantages to retaining competition between private hospitals and doctors.

        All we have to do to have single-payer private provider Medicare coverage for everyone in the US is remove “over 65″ from the law.

      • 0 avatar
        onyxtape

        “Taxes will increase substantially.”

        I’m in the 28% bracket, and had to juggle 2 job offers recently between Canada and the US. The difference in total living costs (excluding housing) was a few hundred dollars a year.

        “Lines will form as a socialized system won’t be able to keep up with demand.”

        I’ve had Canadian family members come down to the US to get services deemed medically necessary but where the wait is longer than what the doctor deemed medically appropriate. And the BC government (where they live) fully paid the bills for that. No hassle other than a doctor’s referral. And we’re talking only half a percent of Canadians who ever go to the US to get health care. I think it’s a higher percentage of Americans who go to Latin America for health care.

        Not a perfect system, but it certainly leaves a lot fewer people falling in the cracks and bankrupt (that’s expensive – jails and welfare costs a lot) and is less expensive to boot.

      • 0 avatar
        th009

        That’s a good point — the long waiting times apply mainly to operations or procedures that or not judged to be medically critical or urgent (e.g. elective surgery).

      • 0 avatar
        jjster6

        Not sure where you people live in Canada but my dad lives in Northern Ontario. He had to have a kidney removed. When removed they found it was cancerous. Took 4 months from diagnosis to surgery. Yes kidney cancer is very slow growing, but the wait was unacceptable.

        As for BC sending people to the US for treatment, you are making my point. The BC system can’t produce enough health care so they have to send people to the US for care and pay the bill. When the US has a socialized system (or single-payer) and can’t produce enough, wher is BC goineg to send their patients.

      • 0 avatar
        jjster6

        For a moment there I forgot this site was about cars. Maybe I should be reading and posting on the AARP site. My bad.

  • avatar
    DC Bruce

    This article implies, incorrectly, that rising healthcare costs are the companies’ problem. With a VEBA, they are not . . . that’s why the companies wanted them. This situation forces the UAW to manage the shortfall, by reducing benefits, increasing co-pays, etc. or, in a continuing display of the UAW’s “screw the young” philosophy, have the companies transfer to the VEBA the 10 percent profit-sharing contribution that now goes to the workers.

    It’s easy to say — and true — that retired auto workers have a much sweeter deal than just about any other group of retirees. But the tough thing is, for people in their 60s, 70s and so on, it’s not so easy to go out and work to generate some more income, even if they are physically and mentally in good shape. Somewhere in the mix, people’s reasonable expectations — and the financial planning that was done based on those expectations — has to be counted.

    I’m not saying retirees need to be totally protected from financial risk, but what I am saying is that they are the least able to deal with it because their future earning potential is generally pretty low, if not zero.

  • avatar
    Darkhorse

    Tried this earlier but my post went in the bit bucket. I’m an American but I lived in Canada from 1994-2000. We participated in OHIP (Ontario Health Insurance Plan). It reminded me of health care when I was in the US Army. Facilities were spartan but the doctors and nurses first-rate. If you had a serious problem requiring leading edge diagnosis (CAT scan, Pet scan, etc.) you might have to wait for some time to get in. Otherwise I found the system worked for 95% of most people’s medical needs. And they spend half of what we do as a percent of GDP.

    I’m an Adam Smith capitalist, but I think the US needs to go to a single payer system. It’s obvious that the free market system does not apply to heath care because there’s no “market”. Where’s “medicalprocedure.com” where I can find the cheapest knee replacement?

    • 0 avatar
      GS650G

      About 2/3rd of health care costs are paid by insurance or government in the US now so it’s hard to remember a time when we had a real free market in healthcare.

      Since the market is distorted beyond recognition the debate about healthcare isn’t access but who pays. Clearly only a few percent can pay for top notch care themselves so we are left with a problem: How do we cover sick people with money from the healthy?
      And how do we convince them it’s in their best interest to pay for others or better yet how do we leverage the bribe which is free care?

      The danger in a single payer lies in the implications. It will be irreversible as insurance goes away, leaving us with a system that will have no competition. Once healthcare is the business of the state, our lives will become the business of the state. And eventually more aspects will become single payer since the excuse about there being no free market for health could be applied to plenty of daily needs.

      And who is going to make a counter argument to that?

      • 0 avatar
        psarhjinian

        “And eventually more aspects will become single payer since the excuse about there being no free market for health could be applied to plenty of daily needs.”

        Except that this hasn’t happened **anywhere else** where single-payer exists. It’s fear-mongering, plain and simple.

        The US system is a trainwreck where almost as much money is spent deciding who shouldn’t get mediocre care than other countries spend on giving comprehensive.

        Oh, sure, a few rich people might jump the queue, as a handful of rich Canadians do with the US. But where do poor Americans go? I mean, other than to the emergency room, vertiable debtor’s prison and/or the grave?

      • 0 avatar
        lurker

        Single payer is not in the least bit “irreversible”. Look at Britain, where there is a healthy market for private health insurance for those who can afford it and who want more than the gov’t program provides.

      • 0 avatar
        lurker

        Single payer is not in the least bit “irreversible”. Look at Britain, where there is a healthy market for private health insurance for those who can afford it and who want more than the gov’t program provides.

      • 0 avatar
        motormouth

        I live in the UK, but I’ve not had a lot of experience with the NHS. What experience I have had concerns dental, where the NHS is a pretty poor performer. I have waited up to three months for an appointment (though most average about a month), but with a new job I’ve got dental insurance. My wife called the dentist this morning and she has an appointment tomorrow AM.

        Let them eat cake, eh?

      • 0 avatar
        danio3834

        My thoughts:

        Should it not be the right of the individual to refuse a sevice he does not want?

        I equate it to mafioso “protection” (extortion). Pay us for your protection or something bad will happen to you.

        Where is the freedom in that?

      • 0 avatar
        th009

        @motormouth, that’s exactly how the system should work. The single-payer system guarantees basic care for everyone (such as a dentist within a month), but you can choose to pay extra to get better, faster or more advanced service.

      • 0 avatar
        Darkhorse

        Good points. Then maybe we should go full “free market”. Abolish all private insurance and make each of us pay for our medical care all tax deductable. Then watch the hospitals and doctors scramble to advertise their lowest costs.

    • 0 avatar
      danio3834

      “I’m an Adam Smith capitalist, but I think the US needs to go to a single payer system. It’s obvious that the free market system does not apply to heath care because there’s no “market”. Where’s “medicalprocedure.com” where I can find the cheapest knee replacement?”

      It could work. I have a cousin who is a medical student. I asked her what her plans for her career path were and it went something along the lines of brain, heart, or whatever big money surgeon.

      I spun her this idea: Start a chain of fast service, low cost clinics and treatment centers like what Jiffy Lube is to car maintenance or McDs is to the fast food industry.

      Your old lady cut you up? $2 per stitch
      Gun shot wound? We have a 2 for 1 special on those today.
      Buy now and get a discount on a melanoma service contract!

      Of course regulation would be extremely prohibitive in operating this type of business, but THAT is the only way costs will come down.

      Forcing someone else to pay for it won’t cause costs to fall, it will just unfairly distribute the burden. The free market could work and you could easily choose to get what you pay for, but the regulatory barriers in place prevent this.

      • 0 avatar
        aristurtle

        Sure, yeah. If I fall off my motorcycle, I should be able to go around to several emergency care clinics, get price estimates on the work that needs to be done, and make a rational economic decision on which one provides the level of care I need at the price I can afford. Because, after all, I make my very most rational economic decisions while suffering from a concussion.

  • avatar
    Bowler300

    “Once healthcare is the business of the state, our lives will become the business of the state”. Substitute “education” for “healthcare”.

    • 0 avatar
      indi500fan

      That’s the unsaid mission of the “Death Panels”.
      If you can cut the life expectancy enough, the mega-trillion funding shortfalls of Medicare and Social Security magically go away.

      • 0 avatar
        onyxtape

        You do know that private insurance companies operate by giving you the least possible amount of health care, right?

        You’ll be subject to a “death panel” no matter what. Whether you want the panel to be staffed by doctors and medical professionals or by cost-cutting business consultants is no choice at all.

      • 0 avatar
        doug-g

        @indi500fan Perhaps we could get Germany to design the showers in nursing homes? J/K!

  • avatar
    doug-g

    This has been a good discussion so far. I come to this debate with ignorance. I can see the train wreck coming, but have no idea what to do. Arguments for both sides are always enjoyable when they advance the dialog and provide pros and cons to be weighed.

    If you had told the average person as few as 30-35 years ago that GM would go through bankruptcy and emerge a shell of it’s former glory, they would have either stared at you as a crazy person or laughed at your “joke”. Many of the problems that brought GM down are mirrored in the US economy, only on a much larger scale. Bottom line is that we can’t continue to borrow nearly 40 cents (I’ve been told it’s closer to 47 cents) of every dollar we spend.

  • avatar
    rnc

    To answer question about those without healthcare getting better care and those currently with getting less, why do you think health care costs so much in this country, the county (public hospitals have to take in anyone), those with insurance end up paying for the difference (thus) higher insurance premiums for less care to make up for difference. I am self insured right now, even though I’m not required to be (high paying contracts are hard to turn down). ist $1k is mine 20% of the 1,001-10,000 is mine, 10,001 – 10,000,000 is on them, that’s the idea of making people buy insurance, it’s short-term major medical, I have $3k in a seperate savings account (but I can promise you without that insurance what would cost me $3,000, the hospitals would charge 3-4x as much as they humanly possibly could.

    Why does public health work in the nordic eu copuntries, ever visit? notice that they all look quite healthy, ride bikes, etc. Another daydream related to the end of WWII is that the US focused on disease cure, while the broke euro countries focused on disease prevention.

    And in terms of Canada, I always here this argument that it would take months to get a hip or knee implant. what do people beleive that in the US you walk into the orthopedic and say “Hey, need a new knee” and you’re on the table a few minutes later?

    I just finished as auditing assignment for one of MC’s private contractors, unless that tax rate is probably quadrupled, were screwed, b/c the ER/EE tax contributions come no where close to covering those costs (the greatest generation has fleeced thier grand, great and great great grand kids.)

    • 0 avatar
      danio3834

      “And in terms of Canada, I always here this argument that it would take months to get a hip or knee implant. what do people beleive that in the US you walk into the orthopedic and say “Hey, need a new knee” and you’re on the table a few minutes later?”

      As a Canadian with multiple family members who go to the States for medical care, I can tell you this is pretty much the truth.

      I have many examples, one being my grandmother who needed hip replacement (very painful) and was told the wait was well over a year in Canada, plus would need to travel several hours away to have it done.

      She said forget it, getting rid of the pain is worth any price and went to the Henry Ford and was done in a month.

      The biggest problem with the system that I can see is the lack of any accountability or controls. If you think insurance companies mismanage health care, just wait until apathetic under-achieving bureaucrats take over.

      • 0 avatar
        racer-esq.

        “If you think insurance companies mismanage health care, just wait until apathetic under-achieving bureaucrats take over.”

        The people at insurance companies are apathetic under-achieving bureaucrats. That get bonuses for denying claims.

        The US single-payer, private provider Medicare system covers hip replacements for people over 65, and I have yet to hear a complaint. Did the Canadian system cover your grandmother, or it was completely out of pocket? It’s hard to believe out of pocket because hospitals completely screw out of pocket payers, charing them 3 to 5 times what private insurers or Medicare pay.

      • 0 avatar
        danio3834

        racer, she paid out of pocket. I don’t know what the costs were, but I didn’t hear her complaining about the cost afterwards, she was just happy to have it done and have the mobility back.

        My other grandmother had her knees done similarly.

        I guess it really just comes down to what are you willing to pay for quality of life. If the answer is “nothing” then you get what you pay for.

  • avatar
    AJ

    Side story, but I’m not surprised that hospital care costs are so large (31%). My mom last winter was checked into a hospital on a Friday evening. They wanted to keep her there through Monday, as they said, to do some tests on Monday that weren’t available over the weekend. But Saturday she was much better and wanted to go home, so we checked her out. Glad we did as the bill for just 20 hours was over $8k! No wonder they wanted to keep her in until Monday. A nurse had commented to her that the hospital beds had been on the empty side lately.

  • avatar
    motormouth

    “Given the rate of increases in health care costs in America, the automakers are in an extremely precarious position relative to their health care legacy costs…”

    Not with regards to VEBA.

  • avatar
    Omnifan

    Now that the union is running the show on health care, it will be interesting to see how they convince their members to cut back on the $2 co pays for prescriptions, etc.

    Didn’t Caterpillar’s VEBA go broke because the union couldn’t corral the costs?

  • avatar

    I have to think that this is why so many “American” cars are actually made in Canada. Like my Acura MDX :) The companies don’t have the albatross of private health care, a parasite that sucks up a full third of the money in administration and profits.

    I have relatives in Canada and Germany, so I’ve seen socialized health care in action. It is not perfect…there is always the story of the guy who goes to the States to get an MRI (and pays for it) instead of waiting four months, but overall, those systems are way better than our private health care debacle. Private health care is set up to select well people and avoid all others-too sick to work, your insurance IS gone shortly thereafter.

    One of my jobs was in a collection law firm. About 2/3 of the folks we called were not deadbeats, but they had crushing medical problems and huge bills.

    Worst is the multi tiered pricing. My knee doctor repaired an ACL, and billed me $24,000 for the surgery. My insurance paid him $4600. If I was uninsured, what price would I have paid ?

    • 0 avatar
      danio3834

      Socialized medicine can help people.

      However, should someone who does not want to pay for this coverage be forced to against his will? Should he not have the choice?

      I would think that any country the prides itself so much on freedom would not want to so readily take it away.

      • 0 avatar
        th009

        Do you have a choice of paying for education? Social security? The roads? The military? The congress? Shouldn’t you have a choice for all of those, then, by the same argument?

      • 0 avatar
        ClutchCarGo

        If you choose to forgo coverage and take ill, should you be denied treatment that you can’t pay for? Would that be moral or ethical? Should your family be forced to decide between your treatment and going broke? If you then beg for assistance should the rest of us turn our backs on you, or can you count on our human decency to help relieve the suffering of our fellow man when possible?

      • 0 avatar
        psarhjinian

        “However, should someone who does not want to pay for this coverage be forced to against his will? Should he not have the choice?”

        In a simple society, yes. In a modern nation-state? No.

        Individualist solutions to problems like health, education, environmental regulation, defense and so-forth don’t scale up to that level. In all honestly, central planning doesn’t scale, either. You need a hybrid of both, and you need it to be fairly uniform or else dealing with all these exceptions of who does/doesn’t qualify for or choose to get services eclipses the cost of delivering the service itself.

        Put it this way: would you trust a private military? I know I certainly wouldn’t (and we have a word for private military: “mercenary”). Imagine if insurance companies offered you mercenary services, or corporations had private armies?

        Now, substitute in “health care” for “military” and you’ll see what’s wrong with the current American healthcare model.

      • 0 avatar
        racer-esq.

        Single-payer, private provider insurance, like Medicare or the Canadian system, is not socialized medicine. Socialized medicine is when the government actually owns hospitals and employs doctors, nobody is advocating that.

        Private health insurance is a massive scam that wastes billions of dollars for people living in the US. The private insurers take a 20 to 30% cut of premiums for overhead and profit, compared to Medicare, which runs on 3% overhead. Then the uninsured people end up going to the hospital for minor issues, instead of the much cheaper clinics that a single-payer insurer would direct them to, since hospitals have to treat them. The hospitals then shift that expense to other hospital patients. Then the people that went to the hospital they could not afford get shoved into the debt collection and bankruptcy industry.

        The real reason that the US cannot get single-payer healthcare is that the parasites in the private insurance, pharmaceutical, debt collection and other industries profiting off inefficient US healthcare system do not want to let go of their cuts, and have a lot of lobbyists.

      • 0 avatar
        Darkhorse

        In Canada, I was never forced to rely on OHIP. There are many private medical facilities in Canada and there’s always the US option

      • 0 avatar
        danio3834

        th009,
        Yes. Yes you should.

        Darkhorse, the unfortunate part is that even though you never used it, you were still forced to pay for it.

        I have no issue with public health care, just give those who don’t want it an option to opt out.

        Of course that can’t happen with the socialized model because that’s not how the ponzi scheme works.

  • avatar
    GS650G

    “Single payer is not in the least bit “irreversible”. Look at Britain, where there is a healthy market for private health insurance for those who can afford it and who want more than the gov’t program provides.”

    Look at Canada where it’s banned. Once OUR government owns health care forces will make sure it doesn’t have any competition.

    • 0 avatar
      psarhjinian

      “Once OUR government owns health care forces will make sure it doesn’t have any competition”

      Which isn’t a bad thing.

      • 0 avatar
        28-Cars-Later

        Because the US gov’t has such a great track record of administering industries under its control.

      • 0 avatar
        psarhjinian

        “Because the US gov’t has such a great track record of administering industries under its control.

        You mean like the military? That works very well, and it’s under far tighter discipline. The problems with cost only become rampant when the private sector is engaged.

        It’s only when the government half-asses it that it goes very, very badly.

      • 0 avatar
        28-Cars-Later

        How is the military even applicable in comparison? Defense contractors may be in it for the money, but I am pretty sure division commanders are not worrying about next quarter’s profits or making Friday’s payroll.

        I really don’t know much about the healthcare issue other than all of the propaganda I hear from both sides, but having worked with healthcare for five years I can tell you its a thankless, overworked, highly competitive industry handicapped by expensive rules and regulations. Whats the solution? I really can’t offer one. But what I can tell you is gov’t on the whole couldn’t find its own ass with both hands. My first job out of college was with a small CAD company and most of its clients were gov’t agencies, specifically state DOT’s. It was a real eye opener working with (or hearing about) $40/hour Cadillac health plan, pension drawing, GED educated, state employees who came to work late, drunk, or not at all at times. Rhode Island DOT alone spent $117,000 in 2007 on AutoCAD license renewal (software) for some kind of internal archive center two years after they have outsourced all CAD development/usage to my then employer. Boss wanted an excuse to hit a CAD trade show in Vegas later in the year from what I was told. Sure stuff like that happens everywhere, but in the private sector there *could* be some level of accountability, I don’t think there is in gov’t. Do some research on British NHS and see what happens when you take accountability out of the equation.

    • 0 avatar
      racer-esq.

      The government allows people on the single-payer private provider Medicare system to get private insurance to cover deductibles and co-pays, so you are empirically wrong.

      • 0 avatar
        dolorean

        As a 20 yr military vet, I find it amazing the level of ignorance the American people has of the military. I won’t go into the levels of vast Bureaucracy, instead sticking to the lovey level of Socialized medicine every Active member enjoys.

        In short, I get full medical and dental care, regardless of where I am, as do all active duty Soldiers. I and my Soldiers are not just encouraged, but ordered to perform regular phsyicals, mental assessments, and vision and dental readiness. My imediate family is covered for medical and I pay a small stipend for their dental. My three girls, one born in a German hospital, cost me less than $500 to have. Immunizations are covered and expected. Tri-Care is the perferred insurer but others are used on occasion. And when I retire, I’m allowed options from paying to keep my full benefits to replying on the VA.

        It’s a good system that all Soldiers and their families rely on, though it may not always be perfect. It’s simple for Soldiers and veterans, but can be painful at the outset for our families to deal with. A voucher system has been talked about and researched and found wanting on several issues, but mostly along budget lines and the acceptance of a voucher in all 50 states and overseas.

        @28Cars, I know that not every state and local gummint is the same and that many could use a good shakeup, but there are many who work very well. Your comment that the gummint can’t find its ass with both hands just doesn’t hold water with this issue.

      • 0 avatar
        el scotto

        @ dolorean +1000

      • 0 avatar
        geeber

        There is a considerable difference between providing health care to a select group of people whose habits and lifestyles can be more tightly controlled by their employer, as opposed to providing it to the population as a whole. The military experience isn’t really relevant to the general population.

      • 0 avatar
        el scotto

        @ Geeber Not exactly, the the government has little or no control over a military member’s spouse and children that fall under the same insurance. Military members also get discharged for medical reasons and receive a disability pension. Military members are usually in better shape than their civilian counterparts. Supermen and Superwomen? No.

  • avatar

    I said before I was not going to comment on this item about Health Care Run by the Union in the USA, but after seeing a few comments about Health Care here in Canada I had to reply a little, our system here in Ontario is not perfect, each Province has there own system like Ontario, but I can’t speak for them, only here, you don;t have to wait long for a MRI if needed for your Medical condition, as well as a Cat Scan, most smaller hospitals like the one I use has a Cat-Scan that is well used as well as a active ER Department that can do X-rays that do not cost anything at the time, we pay thru a special payment to OHIP yearly , as well as General Taxes,any Health care is not cheap and someone has to pay for it.
    Here in Ontario OHIP does not cover Dental items, some Company plans do, if you are working or even retired.
    Tks.

  • avatar
    Pch101

    For all of the talk about free markets around here, there seem to be quite a few of you who know absolutely nothing about them.

    The US already has, by far, the highest per capita healthcare costs in the world. Nobody else comes close.

    Anyone who understands free markets should intuitively know why this is the case, but just in case you missed it, here it is:

    -In most of the world, patients are put into a large actuarial pool. The government then uses that pooling to achieve pricing power, and effectively negotiate a group discount. (The government isn’t necessarily paying out the medical costs directly in other nations, but they do establish the price list that everyone uses.)

    -In the US, we do the opposite. Insurers have to compete with each to add doctors and treatment facilities to their networks. In order to land these semi-exclusive arrangements, they bid up the prices. Those costs are passed on to us, and the excesses are used primarily to pay doctors.

    It’s as if the world does its shopping at Costco, while the US only shops at Bob’s Ripoff Liquors. We have some of the world’s most expensive doctors. They aren’t necessarily any better than anyone else’s doctors, they just cost more.

    We are paying Porsche prices for Toyotas. There’s nothing wrong with Toyotas, but why would anyone think that “freedom” is at stake when we pay 911 prices for a Camry?

    • 0 avatar
      danio3834

      You’re mostly right about the cost argument. The problem comes when the Government attempts to control costs by capping doctor’s salaries and devaluing what they do.

      In Canada, there are some great medical schools and a lot of medical students. You’d think there’d by a doctor on every corner advertising $19.95 checkup specials, but there’s not.

      Instead, they turn to less regulated trades like plastic surgery where they can make their biggest buck instead of running a family practice or doing heart surgery. The free market works no matter how the Government tries to tweak it. Just the more they play with it, the more convoluted the results.

    • 0 avatar
      ClutchCarGo

      It’s also necessary to recognize how difficult it is to apply normal consumer market forces to the healthcare world. If you need a car you can easily research the wide range of vehicles available, new and used, at a wide range of prices. You can test drive vehicles until you make a choice. If that choice doesn’t work out for you, you have a reasonable chance to change your mind by selling the vehicle and trying again. If you need medical care it’s often extremely difficult to research options. Of the limited options available it’s difficult to research prices. Test drives are not often a possibility, and if your choice is wrong you may have little recourse to try something else.

      Since the inefficiencies largely stem from the tension between providers (who are incentivised to do as much work as possible) and payers (who are incentivised to limit work done as much as possible), the best way to use market forces is to bring these 2 parties into a coordinated incentive structure. Accountable Care Organizations (ACOs) are one of the best ways to do this. Payers reimburse providers based on headcount and how well the patients fare. This is what HMOs were supposed to do but didn’t inclde the measure of how well the patient fared.

  • avatar
    el scotto

    Has the CBO or GAO done a study of how much Obamacare will cost? When it was expediently sent/rammed through congress, no one could tell us the real cost. A friend of mine is a Physicians Assistant(PA) and I asked him if he would make more less money under Obamacare. He told me he didn’t know. Can you get insurance in Canada other the state mandated insurance?
    I’ve recommended a military type triage system. You’re sick or feel sore? Take this and come back in three days if you don’t get better. Still sick or sore after three days? You get to see a Nurse Practitioner or a PA. Still sick or sore after a week? You get to see a real doctor, some contract, some military. People would riot in the streets if we tried this, too many demand a doctor for every visit.

    • 0 avatar
      jimboy

      You can always buy additional private insurance in Canada, to supplement public health care. I buy additional insurance @$65.00 per month which covers dental and prescription expenses, which I consider to be very reasonable. Remember that many Canadian provinces do not charge directly for health care premiums, it comes out of our taxes. I used to pay a monthly fee for public health care, but we are no longer billed directly. While no system is perfect, I certainly would prefer to be a Canadian if I contracted a major illness; At least I wouldn’t be bankrupted by astronomical medical expenses.

      • 0 avatar
        danio3834

        Correct that the system doesn’t pay dental or vision. The employer I now work for covers dental and vision, however when I didn’t work for them, I paid out of pocket.

        While some people prefer the insurance route, during that whole time, I had 1 checkup and 2 fillings done at a cost of about $550. This was a span of about 5 years where I self insured, I saved $3350 at your rate.

        I would prefer to treat my medical expenses similarly as I have no issues putting that would be insurance payment aside and managing it myself.

      • 0 avatar
        ExPatBrit

        Several weeks ago on a Friday evening, I had abdominal pain took some over the counter stuff and felt better. Following night ended up in ER and had my appendix removed early the next morning.

        If I had continued to self medicate my physician said I might have ended up dead if the appendix had ruptured.

        Bills are $75-100,000 with insurance probably negotiated rates and deductibles making me pay $3000-7000 I guess. If the appendix had ruptured add 2-3 days in ICU plus 3-6 week recovery at the hospital or at home. Figure $500,000 or so.

        We all moments away from this type of situation, I had never been in ER for medical care in my 58 years.

        Danio, you must be a younger person, your certainty that you can control your life and save enough money like that is totally unrealistic. 5 minutes before I went into the operating room my pain level spiked from 3 to 20 . You don’t get to negotiate medical pricing from that viewpoint. And if you have family you will OK what ever it takes.

    • 0 avatar
      danio3834

      ExPat
      I’m old enough to have experienced some of that and know better. I frequently weigh the costs and benefits of all my expenditures.

      It’s for the unforseeable big things like that that I do carry some insurance. But I’m very careful not to over insure. I have critical illness coverage through my employer and through my mortgage company at very reasonable rates. I chose it and manage it myself.

      For everything smaller, I can pay cash. If there were more options to freely shop, you could easily do that ahead of time just as you would when choosing insurance.

      The bottom line is whatever you choose to do, should be that, your choice.

      • 0 avatar
        Pch101

        You’re very naive. If you need a heart transplant or treatment for a serious case of cancer or a long-term chronic condition before age 65, then you’re going to find out the hard way how naive you’ve been.

      • 0 avatar
        danio3834

        Thanks for the judgement Pch. Rest assured I won’t need to come crying to you.

      • 0 avatar
        Pch101

        I frankly don’t care if you cry or not. You’re still incredibly naive and unable to connect the dots of what should otherwise be some rather basic arithmetic.

      • 0 avatar
        danio3834

        Don’t claim to understand my individual situation. My financial house is in order. If my choices don’t work for you, tough.

        Freedom of choice is something I pride myself on and would defend that to the death, whether by heart attack or being stoned to death my libcon neo republicrats.

        The inability to respect others’ opinions and their personal decisions is a disease that no medical procedure can cure at any price.

      • 0 avatar
        Pch101

        You are, despite your protestations, incredibly naive.

        Your dependency upon employer-provided coverage supports the point. If you become unable to work and can’t afford the associated costs of illness plus the premiums, then you can say goodbye to your healthcare coverage.

        Virtually every American who is reading this would be hosed in such a circumstance. I highly doubt that you are an exception. You simply have no idea how exposed you are to extreme circumstances. Even if you’re insured, you can be hit with costs that well exceed the typical resources of an average middle- or working-class household. It’s just math.

      • 0 avatar
        geeber

        Calling it “health insurance” is part of the problem.

        True insurance is designed to cover catastrophes that MAY happen, but will not necessarily happen. For example, your car insurance doesn’t cover oil changes or even parking lot door dings. Otherwise, premiums would go through the roof. It provides coverage if the car is stolen or wrecked.

        In the same way, homeowner’s insurance doesn’t cover the cost of a new furnace or having the house painted. It covers catastrophic loss when the house is destroyed by a fire, flood or other disaster.

        Today people expect health insurance to cover everything from a visit because of the flu to treatment and follow-up care for serious cancers.

        The federal government should provide coverage for CATASTROPHIC illnesses or accidents. That way people who survive cancer would not then be faced with $100,000 in unpaid bills. People can purchase private coverage for the more mundane stuff (check-ups or even hospitalization for, say, gall bladder surgery), and even other extras (pay more for a no-wait policy when you visit the doctor).

      • 0 avatar
        ExPatBrit

        Hey I believe in personal responsibility too, I have a high deductible policy thru work with added HSA plan, but unless you are extremely wealthy there is no way anyone making seven figures or more could pay their potential healthcare costs if the dice rolls the wrong way.

        My wife works in a local world renowned cancer treatment , trust me she says even the “macho, I got it covered guys” break down and cry when they find out what is going to happen clinically and financially.

        I don’t wish that on anyone.

      • 0 avatar
        Pch101

        “The federal government should provide coverage for CATASTROPHIC illnesses or accidents”

        While I believe that a catastrophic approach would ultimately prove to be inadequate, that alternative would be vastly superior to either what we’ve had in the past or what we’re about to have.

        We could control private insurance premiums if the insurer’s maximum exposure was capped. One reason that health insurance is so costly is because it has to cover the worst case scenario. Combine that with the pooling benefit of having a couple of hundred million people having the same primary carrier (Uncle Sam), and you might actually be able to address aspects of the cost problem while still getting everyone covered.

  • avatar
    dolorean

    What I find amazing about this issue is that 100 years ago, Ford had a lock on it. Old Henry made sure of three things: One, that his work force was paid well-enough to afford to buy a Ford vehicle. Two, that adequate housing and education systems were established to alleviate the worry and the commute. Third, to provide 100% health coverage to its full time work force at a locally subsidized hospital. All done IOT provide a happy worker who performed at a high level of enthusiasm and dare I say it? Esprit d’ Corps. Something long lost on the rabid, profit mongering Executive class and board members lost in want of profits only in the short term.

    • 0 avatar
      Zackman

      Remember, Oddball, that Henry also tried to implement a moral standards board that didn’t go over so well – the “Social Department”. He discoverd that trying to legislate morality was a losing proposition, however well-intentioned and even beneficial to the individual it may have been.

      I know, I know, negative waves…

      BTW, FWIW, I’m an air force vet – 1969-1973.

    • 0 avatar
      geeber

      And yet, with all of that, the workers still chose to unionize.

      Henry Ford paid his workers more to reduce turnover, not ensure that they could buy a brand-new Ford, regardless of his public statements on the matter. He was faced with horrendous turnover, as workers had a very difficult time adjusting to the repetitive nature of work on the assembly line.

      Not all Ford workers automatically received the $5-a-day wage. They had to be supporting a family (either children or elderly parents) and had to pass muster with Ford’s “Sociology Department” (no spending paychecks in saloons, gambling dens or brothels).

      Are people pining for the “good old days” ready to submit to that level of scrutiny by their employer? I highly doubt it.

  • avatar

    This all comes down to “if you opt for no insurance, what happens when you are dropped by EMS at the front door of the Hospital with a real emergency ?” At one of the primary debates, this was put out clearly…and some folks cheered at the concept of grandma left at the door.

    This becomes a question of societal morality. I read about huge prices for cancer drugs recently, and the hospital admitted marking up $8000 worth of drugs to $45000, and they said they needed to do this to cover the uninsured/charity care. The patients had insurance so mostly it was a cross subsidy from the privately insured patients to charity care. This too makes no sense.

    I don’t want to leave grandma on the steps…can we get back to cars ?

    • 0 avatar
      danio3834

      The Government shouldn’t be in the business of morality. That’s the business of society and the individual to decide for themselves.

      I would encourage anyone who wants to help grandma to actually do so. Get involved, give money to organizations that help people, volunteer. Of course this doesn’t bode all to well with modern society’s “can’t someone else do it” attitude.

      I donate to worthy organizations that don’t receive direct Government assistance, this year it is the United Way. If I was somehow able to keep more than 50% of my income from being consumed in taxes, I could certainly give more.

  • avatar
    geeber

    Of course people like the coverage they receive through Medicare…someone else is paying for it (their contributions through taxes don’t come close to covering the cost of care they ultimately receive).

    They conveniently forget that Medicare is also rapidly going broke. Forget the alarms about Social Security…the real problem is Medicare.


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