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We’ve Got a Health Care Crisis
Edward M. (Ted) Kennedy, Jr.
Marwood Group, LLC
The health care crisis in this country must be addressed soon or many Americans will see the quality of care decline, the cost for premiums and out-of-pocket costs skyrocket and mortality rates equal those in third world countries, according to Ted Kennedy, Jr. A leading advocate for health care reform, Kennedy was the keynote speaker at the final day of the 2004 conference.
 Kennedy reviewed the factors driving the health care crisis. They include a growing uninsured population, an aging population and medical inflation. As a result of the crisis, approximately 43 million people, or 15% of all Americans, are uninsured.
Today, employer-based health insurance coverage covers nearly 3 out of every 5 Americans. The size and type of employer, however, often dictates the presence and quality of coverage. Nearly 45% of firms with fewer than 50 employees offered insurance in 2001; however, 96.9% of firms with more than 50 employees offered health care coverage. The number of covered individuals continues to decline every year.
A significant recent development is the rise of uninsured working people—8 out of 10 uninsured Americans are from working families. The problem is growing among blue collar workers, who make up the majority of U.S. workers. They now constitute an even larger share of uninsured workers. From 2000 to 2001 roughly 1.3 million individuals lost employer-based coverage.
There are several reasons why costs are rising. As one example, the cost of prescription drugs increased from $140 billion in 2001 to 162.4 billion in 2002. For the past 10 years, the pharmaceutical industry has been the single most profitable in America. HMO profits also are increasing—73% in the first 6 months of 2003.
“Health insurance inflation is accelerating,” Kennedy said. Premiums rose six times faster than inflation and four times faster than wages in 2002. The costs also are shifting. The average premium for a family plan offered by employers increased 41% from 2000 to 2003.
Some states have used radically different approaches to the problem. California’s “play or pay” mandate, for example, requires employers to pay for health insurance coverage. If they fail to do so, they are taxed, and the funds deposited into a state account that helps pay for the medical costs incurred by the uninsured.
The cost of declining coverage involves more than dollars, Kennedy stressed. Uninsured Americans suffer much higher mortality and disability rates. In recent years there have been roughly 18,000 unnecessary deaths in this country.
Kennedy said other countries offer models for health care reform because many spend one-half to two-thirds as much as the U.S. does for health care, yet they offer universal health care. Despite the money spent on health care in this country, we rank 48th in life expectancy and 42nd in infant mortality. Infant mortality rates are lower in most developed countries, such as the United Kingdom, Canada, Australia, France, Germany and Japan.
“We’re not getting our money’s worth,” Kennedy said. “One-third of what was spent on health care is wasted on duplicative systems, unnecessary operations and excessive bureaucracy.”
If nothing is done, Kennedy believes the consequences in the next 5-10 years will be substantial:
- As much as 22% of the population uninsured.
- Managed care plans will be unable to contain costs.
- Large employers will not get price breaks on coverage.
- Small employers will drop insurance completely.
- Out-of-pocket costs for the insured will rise dramatically.
- Public hospitals, the safety net for many of the uninsured or poorly insured, will be forced to close.
Kennedy reviewed a number of potential solutions that have been discussed, and in some states implemented. They include expanding Medicaid eligibility and coverage, creating a Medicaid buy-in program for people who are poor but above Medicaid’s income threshold, and employer mandates for coverage.
Kennedy urged Americans to adopt the following set of principles for a healthier America:
- Guarantee health care for all Americans until they reach age 18.
- Provide catastrophic health insurance coverage to all who face a significant health crisis.
- Ensure that critical preventive services are available for every child and adult through public and private sector initiatives.
Kennedy is a founding partner and president of the Marwood Group LLC. He assists companies in identifying and executing key business opportunities and strategic partnerships. Before starting Marwood, Kennedy was in a law practice that focused primarily on state and federal regulatory and reimbursement issues affecting hospitals, home care agencies, long-term care providers, physicians and mental health providers.
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