With Benefits

The Christian Science Monitor reports that the recent massive GM layoffs of 25,000 employees reflect their inability to pay for promised benefits packages such as pension and retirement plans and skyrocketing healthcare costs.

An increasing part of production costs in America comes from the price of promises.

There are corporate commitments to provide a pension - some 44 million Americans get a monthly check - that add up to as much as $124 billion a year. There are also healthcare benefits that many companies have agreed to provide, either voluntarily or by union contract, at a cost of billions more each year.

Now, even with the economy far from a recession, the cost of these promises is becoming a drag. On Tuesday, the size of the drag became more apparent for General Motors, which said it would eliminate 25,000 jobs by 2008 - in part because of the cost of its healthcare commitments, now amounting to about $1,500 per car.

The problems go well beyond GM and the other automakers: Some of the nation's steelmakers, airlines, and old-line manufacturers - and even some municipalities - are also carrying large "legacy costs" - and may face similar layoff decisions.

And interestingly enough, today the news broke that healthcare costs for the insured have risen massively in part to cover the costs of the uninsured:

Families that are insured for health care would have to shell out an average of US$ 922 in additional premiums in 2005 to make up for the cost of treatment of those without insurance, a report published by consumer group Families USA has said.

The study, conducted by noted economist Kenneth Thorpe who is an Emory University professor, said that about US$ 1 out of every US$ 12 spent on paying premiums for health insurance goes into the treatment of the uninsured. He said that this amount would increase to an average of US$ 1,502 within the next five years if the increase in insured patients were not curbed.

This was because the cost of healthcare for the uninsured was being subsidized by the insured. Thorpe’s report found that uninsured Americans took care of only one-third of the health care costs. This resulted in hospitals footing a bill of around US$ 43 million, an amount that was subsequently passed on to the insured.

“The large and increasing number of uninsured Americans is no longer simply an altruistic concern on behalf of those without health coverage but a matter of self-interest for everyone,” said Ron Pollack, executive director, Families USA.

According to US Census Bureau estimates, around 45 million Americans did not have health-care insurance in 2003. This figure is increasing on a year-on-year basis.

But hey, it's all their fault, right? Those bottom-dredging sleaze-buckets who just aren't working hard enough to secure health-insurance. If they can't afford insurance, they don't deserve it, isn't that the thinking?

Can we not see that we've fallen dangerously into a narcissistic, self-feeding trap in the healthcare crisis? It is a catch-22 of classic circularity: Companies can't give healtcare insurance among other traditional benefits because the costs have skyrocketed [and, due to the tort reform bills that the Repos have always wanted to pass, suing health care providers and insurers to secure what is owed even to those who are insured will become even more difficult]; the costs have skyrocketed because the uninsured population still seeks healthcare but can't pay, which drives up premiums; corporations have to lay off masses or slash benefits because they can't meet these premiums... And the vortex begins.

This is the most fascinating truth of all; and in the end, the only one that will work in America:

“The large and increasing number of uninsured Americans is no longer simply an altruistic concern on behalf of those without health coverage but a matter of self-interest for everyone,” said Ron Pollack, executive director, Families USA.

It is not until your self-interest has been utterly threatened that you feel the need to do something about these problems. Well, folks, healthcare in America is in shambles. In a country where 15.5% of the population [and growing!] has no healthcare to speak of, in the wealthiest nation where we've abondoned up to 10 million children [but what about "No Child Left Behind...?"], this stands as a shameful problem.