Breaking News! Canadian socialism beats Southern ‘competitiveness’
By Bill Settlemyer
Executive Publisher
I knew a nerve had been struck when people started sending me e-mail links to a recent article by Paul Krugman, an economist and columnist for The New York Times.
The title of Krugman’s article was “Toyota, Moving Northward,” and it was about the company’s recent decision to build a new plant in Ontario, Canada. Competition for the plant also came from a number of Southern states, but Krugman said two factors hurt the Southern states’ chances: Canada’s government-sponsored health plan and the higher quality of workers available north of the border. Ontario got the nod despite much heftier incentives being offered by the competing Southern states.
The Canadian health plan takes the expense of covering workers off the table as a cost for Toyota. In contrast, U.S. automakers claim that health care costs for their workers often add well over $1,000 to the cost of every car made. That gives a Canadian factory a pretty dramatic advantage over a U.S. facility.
Of course, it’s a given that we’ll never have universal government health insurance in this country—that would be socialism. The word sends shivers up the spine, doesn’t it? Yet the reality is that we currently have a system of “semi-universal” public/private health insurance in this country. It’s a patchwork quilt of both accidental and deliberate efforts to provide health benefits to various segments of our population.
The accidental part was an accident of history. During and after World War II, a shortage of workers coupled with wage price controls led American companies to compete for workers by offering fringe benefits, including health care. Powerful labor unions also supported and bargained for the expansion of benefits as a part of a worker’s compensation.
The deliberate part of our health care “system” was the establishment of the Medicare and Medicaid programs, designed to provide health care for citizens who are elderly, disabled or low income.
To this day, our “system” leaves about 15% of Americans uninsured at any given time. And as employer group health premiums continue their rapid rise, more companies large and small are either dropping coverage completely or reducing coverage by pushing more of the cost onto their employees. In the meantime, the federal government and many states are planning to reduce funding for Medicaid, and a looming Medicare funding crisis won’t be too many years away either.
This, apparently, is the way we become “more competitive,” by backsliding instead of moving forward in efforts to provide a reasonable level of security for middle and lower-income workers and their families. We are, in fact, about the only Western industrialized nation that doesn’t guarantee health coverage for all its citizens. Are we smart, or is everybody else just dumb? (I know, I know…most of you think everybody else is just dumb; but bear with me.)
Got a good head of steam up? Now take a deep breath before you lob the “L” word at me. Remember, I’m a small business owner. That means that the amount my company contributes to cover my employees’ health care basically comes straight out of my own pocket. This is not an abstract issue for me.
The “system” being what it is, my intention is to provide the best coverage possible for our employees for as long as I can, both to attract and retain good people and because I think it’s the right thing to do. And I’ll wager most small business owners feel the same way, though the smaller the business, the tougher it becomes to provide coverage.
But the “system” is increasingly like a rubber band being stretched further toward the breaking point. Until it snaps, many will continue to think we don’t have a problem, but after it snaps, we’ll have one heck of a mess on our hands.
With others in the Charleston region—physicians, hospital executives, business leaders—I’m trying to encourage the search for strategies that can get us a leg up before things get a lot worse. By working collaboratively, we may be able to reduce the pressure on that big rubber band by finding ways to keep people healthier and deliver high-quality health care throughout the region.
If we work both smart and hard at this, we should be able to get better results from the same health care dollars. And if we are wise enough to step back and see the big picture, we may be able to provide at least a minimum acceptable level of care for almost everyone in our community.
Recently, Governor Mark Sanford made the pages of BusinessWeek magazine in an article that drew attention to his proposals to change the way Medicaid coverage is provided in our state. In my next column, I’ll take a closer look at his proposals and their possible consequences.
With all the funding problems we face with health care, there are some opportunities to be smarter about how to use Medicaid to maintain the health of a substantial percentage of South Carolina’s citizens, especially children. It doesn’t help that the Bush administration is focused on reducing federal financial support for the states’ Medicaid programs, but on the positive side, there is also a push for innovation and experimentation at both the state and national levels.
More to come in my next column. In the meantime, I recommend that everyone pay close attention to the Medicaid debate currently unfolding in Washington, D.C., and at the state level. Things are tough all over, and as always, they seem tougher in the American South. Will we slide toward third-world status, or get smart and find solutions that really make us more competitive?
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