Save the lives instead of bankers’ bloated pay3 min read . Updated: 28 Sep 2008, 10:28 PM IST
Save the lives instead of bankers’ bloated pay
Save the lives instead of bankers’ bloated pay
Now that the US government has proposed bailing out the pin-stripe and Gucci crowd, it’s about time it adopted a universal health programme for the common folk.
Saving someone’s life is more uplifting than preserving Morgan Stanley chief executive John Mack’s bonus. That’s right, saving a life. An estimated 22,000 people aged 25-64 in the US died in 2006—and 137,000 from 2000 through 2006—because they lacked health insurance, according to an Urban Institute study in January. About 41 million people in the US will be uninsured throughout 2008, according to the Henry J. Kaiser Family Foundation. For various reasons, an additional 36 million will go without health insurance for part of the year. That 77 million total represents a quarter of the US population and 94% of Germany’s. It is also 33% larger than Italy’s.
In 2006, US health care spending amounted to 15.3% of gross domestic product (GDP) and $6,714 per capita (more than Rs3.1 lakh at current exchange rate), according to the Organisation for Economic Cooperation and Development (OECD). That compares with 11.3% of GDP and $4,311 for Switzerland, and 11.1% and $3,449 for France. The OECD average was 8.9% of GDP and per-capita expenditure of $2,824. Although the US spends more on health care than other developed countries, it’s the only major industrialized nation that doesn’t offer comprehensive coverage to all. Twenty-seven of the 30 OECD members offer universal, or near-universal, coverage. Besides the US, only Mexico and Turkey don’t.
Now for a brief summary of the numbers. The uninsured will pay $30 billion out-of-pocket for health care this year and receive an additional $56 billion in so-called uncompensated care provided by hospitals, community organizations and physicians, according to the Kaiser Family Foundation. Federal and state funds will indirectly cover about $43 billion of that, private charities the rest.
If all uninsured people were to gain insurance coverage and use similar amounts of care as the currently insured, overall costs would rise by $123 billion, the foundation says.
Meanwhile, the US treasury and the Federal Reserve are on the hook for $29 billion of dodgy mortgage securities relating to JPMorgan Chase and Co.’s acquisition of Bear Stearns Companies Inc.; $85 billion for the rescue of American International Group Inc.; and as much as $200 billion to shore up Fannie Mae and Freddie Mac. In addition, there is treasury secretary Henry Paulson’s proposed $700 billion bailout fund and whatever losses may result from insuring $3.4 trillion of money-market mutual funds.
Thus, in current dollars, the finance industry’s aggregate bailout package could theoretically fund the incremental $123 billion increase needed to achieve universal health coverage for more than eight years.
Other ways the financial services industry could contribute to a US health system include an increase in the capital-gains duty, a turnover levy on securities transactions and a more progressive income tax that raises charges on the wealthy. And instead of relieving banks of their ailing mortgage securities, the government should get ownership stakes for taxpayers’ contributions, which could later be sold. Then there’s the Iraq fiasco, which may eventually cost US taxpayers $1 trillion to $2 trillion. That’s eight to 16 times the annual $123 billion incremental figure.
A health programme also makes good business sense for three reasons. First, the lost productivity associated with the poor health and shortened life spans of the uninsured cost the US economy $102-204 billion in 2006, according to a March report published by the Health Policy Program of the New America Foundation. “The economic cost imposed on the nation by the uninsured is as much as, and perhaps greater than, the public cost of covering them," the authors said.
Two, a health system would help the US attract investment because it relieves companies of a costly direct expense. This was one motive behind Toyota Motor Corp.’s 2005 decision to build a vehicle plant in Canada, instead of the US.
Three, after adjusting health care spending to reflect America’s higher GDP per capita, the US in 2005 spent more on health care than peer countries with comprehensive health insurance, even though Americans aren’t any sicker than others, according to a study last year by McKinsey and Co. “Despite higher costs, the United States does not deliver objectively better quality and access for US citizens as a whole, relative to peer countries," it said. Still, if taxpayers are expected to bail out Wall Street, they ought to demand something for themselves and their fellow citizens.
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