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March 30, 2017

On This Day in 1918:

Sam Walton, founder of the huge and bitterly anti-union Walmart empire, born in Kingfisher, Okla. He once said that his priority was to “Buy American,” but Walmart is now the largest U.S. importer of foreign-made goods—often produced under sweatshop conditions.

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Updated: Mar. 30 (01:01)

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Consumers Don't Drive Health Care Costs
Updated On: May 13, 2011

It’s the Prices, Stupid.

By Richard Kirsch
New Deal 2.0

   Republican plans that shift costs to consumers completely misunderstand the United States’ health care system.

   Yesterday, Speaker Boehner issued what Robert Bob Borosage of Campaign for America’s Future correctly labeled extortion: “Give us trillions in cuts in Medicare and Medicaid or we blow up the economy.” Boehner’s threat to tie the lifting of the debt ceiling to trillions of cuts in spending would force huge cuts in Medicare and Medicaid.

   Actually, there are no health care cost savings in the Ryan-Boehner budget, just cost shifts. The Ryan budget cuts Medicare by shifting more than $6,000 a year to each senior who benefits from it. It shifts Medicaid costs to state taxpayers by cutting federal funding to states for the program.

   While the extremes of the Ryan-Boehner budget have been widely decried, the underlying assumption behind their Medicare privatization plan is too often accepted by a broad array of health policy advisers. The Ryan budget assumes that the problem with health costs is that consumers don’t pay enough out of pocket for care and that plans are too generous. Unfortunately, that’s also been the view of some Democratic health policy advisers. White House officials backed the taxation of higher cost health plans in the Affordable Care Act (ACA), and others like former Clinton OMB Director Alice Rivlin support a less draconian version of Medicare privatization.

   But the reason that health care costs so much in the United States is not that we consume too much health care; it’s that we pay too much for what we consume.* As Uwe Reinhardt and three other health economists summarized succinctly after comparing the prices we pay and the amount of health care we use in the United States with other developed countries, “It’s the prices, stupid.”

   For example, we make one-third fewer doctor visits a year than people in other countries but we pay an average of $59 for an office visit, compared with $31 in France. Our doctors make a lot more money than their colleagues in other countries. Adjusting pay across countries by purchasing power, U.S. doctors get paid about two times as much as in others. A Congressional Research Service analysis found that specialists in the United States are paid about $50,000 a year more than would be predicted, even considering the higher level of wealth in the United States.

   We go to the hospital a lot less, too, and when we’re there we don’t stay as long. But we pay a lot more. The average hospital stay costs us $3,181, compared with $837 in Canada. We do get a lot more MRIs in the United States, more than twice as much as other countries, and we also pay a lot more for each scan: an average of $1,200 compared to $839 in Germany. And as everyone knows, the price of brand-name prescription drugs is much higher in the United States than other countries.

   Why do we pay so much more for the same product? The biggest reason is that other countries understand that health care is a public good, not a commodity. Markets can’t control health care prices, since it is health care providers who decide what care is delivered. When providers determine both demand and supply, market economics don’t apply.

   Even in the United States, with all the political pressure from the doctor, hospital, and drug lobbies, we can see how a public insurance entity does a better job of controlling prices than private insurance. Medicare sets prices and pays $500 for an MRI, less than half the $1,200 U.S. average. Even with its older patients, Medicare pays $2,200 for an average hospital stay, almost 50% less than the U.S. average.

   Private insurance companies not only fail to control prices, they add costs. The private insurance companies that Ryan wants to hand Medicare over to are the primary reason that we spend more than four times as much on administrative and insurance costs in the United States as other countries.

   Which brings us to another market-driven argument that underlies the Ryan proposal and other conservative nostrums for controlling health care costs: that because Americans have insurance they are not prudent purchasers of health coverage. Again, the international comparison should put this to rest, as in all those other countries with much lower health spending everyone is fully covered. In these countries, the only prudent purchaser is the government, which is responsible for getting lower prices. As it is, the amount that Americans pay out-of-pocket for health care is already a lot more than consumers in other developed countries, even accounting for our higher incomes.

   The Obama budget plan begins to address the root causes of high health care costs by increasing the authority of a new public entity designed to control what Medicare pays for health care. The President contrasted his budget approach with that of the Republican budget in his April 13th budget address at George Washington University, saying: “Their plan essentially lowers the government’s health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government’s health care bills by reducing the cost of health care itself.”

   The centerpiece of Obama’s plan to control Medicare costs is to add additional powers to a new body established under the ACA called the Independent Payment Advisory Board (IPAB). The IBAP will function as a kind of military base closing commission for Medicare. If the growth in Medicare costs exceeds a target amount, then it would institute cost control measures that would go into effect unless Congress intervened. Since cutting eligibility and benefits are not part of the IPAB mandate, cost savings would have to come from the actual drivers of cost: the prices paid for services and the way health care services are delivered.

   Obama’s budget proposal would strengthen the IPAB’s current authority, although the details of how to do that have not yet been specified. As you can imagine, it is already a target of attack from health care providers who are finding a sympathetic ear among both Republicans and Democrats in Congress. It’s also a favorite target of the right, which calls it “Obama’s death panel.”

   The battle being fought over Medicare is, like every other economic issue that faces the nation, a matter of power and a test of our democracy. We can control health care costs and improve the quality of care by addressing the root causes: our market-driven health care system pays too much for care and rewards quantity over quality. But changing the way we finance and pay for health care will mean putting the interest of consumers over the power of the industry lobby. For the doctors, hospitals, drug companies, medical device manufacturers and insurance companies, a dollar saved is a dollar lost in revenue.

   The firestorm of popular opposition to the Ryan Medicare plan is because he chose to side with industry over seniors. But with Boehner threatening to hold the economy hostage, and a health industry that has enormous lobbying clout, the future of our nation’s national health insurance system for seniors and the disabled remains in grave doubt.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, whose book on the campaign to win reform will be published in 2012. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

*In 2000 the United States spent considerably more on health care than any other country, whether measured per capita or as a percentage of GDP. At the same time, most measures of aggregate utilization such as physician visits per capita and hospital days per capita were below the OECD median. Since spending is a product of both the goods and services used and their prices, this implies that much higher prices are paid in the United States than in other countries. But U.S. policymakers need to reflect on what Americans are getting for their greater health spending. They could conclude: It’s the prices, stupid. ~ HealthAffairs.org

 


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  • The ‘Let’s Get America Working!’ campaign seeks to restore a dynamic and prosperous middle class to drive economic growth by helping to advance policy decisions that create and maintain good middle-income jobs, guarantee retirement security, expand access to the American Dream, and ensure that the benefits of the ongoing economic recovery are felt by the many, not just the few.

  • We Are eXPOsing XPO’s Global Greed

    XPO Logistics is a top ten global logistics and transportation company with annual revenue of $15 billion and 89,000 employees, another 10,000 workers classified as independent contractors, and thousands more working for firms that subcontract with XPO. We are the REAL workers at XPO Logistics worldwide exposing the truth about the company’s global greed, illegal wage theft, unsafe conditions, and abhorrent and vicious anti-worker, anti-union tactics. 

    This greed includes mistreating former Con-way Freight workers in the United States who are being kept in the dark about terminal closures and layoffs, and the company’s illegal refusal to bargain contracts and denying their workers’ federally protected right to organize. It also includes port, rail and last-mile drivers around the country and in Southern California fighting wage theft in excess of $200 million because they are misclassified as independent contractors and denied the right to form their union. This greed has caused numerous lawsuits and strikes.  Greed also means an unsafe workplace and mistreating its warehouse employees.

    XPO’s greed extends to Europe beginning with breaking its promise to not layoff any workers for at least 18 months. French workers and the unions have been fighting back against XPO’s disrespect, lies and attempts to slash jobs. Similar struggles are taking place in Great Britain, Spain, Belgium, the Netherlands, and across Europe.

    Join the worldwide struggle now! Get involved with this campaign by joining the Facebook group “XPO Exposed.”

    Together, we can eXPOse the company’s global greed and win fairness, respect and dignity for tens of thousands of XPO employees around the world!

  • This webpage provides information on the Teamsters Union’s legislative advocacy at both the federal and state level as well as our field activity to support those policy positions and to get strong labor candidates elected to office.  Among other resources, you will find our federal legislative scorecard, formal statements of policy position and communications to Capitol Hill,  a weekly update on federal legislative happenings, an overview of bills we are tracking at the state level, and quick links to take action on priority issues.

  • Negotiations for the National Master Automobile Transporters Agreement (NMATA) recently concluded and a tentative agreement has been reached. On Thursday, Feb. 16, 2017 representatives from carhaul local unions met in Detroit to endorse the National Agreement and the Central-Southern Supplement, paving the way for members to vote. The Eastern and Western Supplements were approved in 2016, and will not be re-voted. However, all carhaul members will get to exercise their right to vote on the National Agreement and General Monetary Changes.

    Ballots will be mailed out on or about March 10 and are tentatively scheduled to be counted on March 30.

    The tentative agreement is from September 1, 2015, until May 31, 2021.

  • The IBT-Airline Division has established this page as a place to get up-to-date information about the Republic Airways Holdings (RAH) bankruptcy.  Please check here for the latest information about the bankruptcy.

  • Workers’ pensions are being endangered by both Congress and those charged with overseeing them. The Teamsters and our members are standing united to say “No!” to cuts and “Yes!” to greater retirement security!

  • The Teamsters Union represents more than 250,000 members at UPS and UPS Freight. UPS remains an active member of the American Legislative Exchange Council (ALEC) despite the organization’s anti-worker and anti-union agenda that seeks to undermine and weaken worker protections.

  • This web page provides information on our fight against fast-track legislation. The measure requires Congress to take only a quick up-or-down vote on secret trade deals like the Trans-Pacific Partnership and does not allow such agreements to be amended. It limits Congress’ constitutionally mandated oversight of such trade deals and lets others decide what’s best for America. The result is fewer good-paying U.S. jobs and unsafe food and products for Americans. Read more to find out why fast track is the wrong track for Teamsters and America.

  • Workers across the country at FedEx Freight and Con-way Freight are standing shoulder to shoulder to form their unions with the Teamsters to win a more secure future. Momentum is building with a first wave of victories with many more to come.

    There is growing worker resentment toward the companies after years of being treated unfairly. While the companies have suddenly made improvements since workers began to organize, workers know that without a legally binding contract the company can take these things away at any time.

    The unfulfilled promises that have been made to drivers and dockworkers over the past decade are coming back to haunt management.

    But now workers are taking action and standing up for themselves by forming their union. It's a different era now. It's Teamster Time! LIKE our Facebook page, here.

  • Teamsters are been standing together to protect good jobs at Sysco and US Foods. Our solidarity on many fronts helped to defeat the mega-merger of the two companies, which would have put thousands of jobs at risk. But challenges remain as both companies refine their plans. Join our campaign to ensure these foodservice giants honor their agreements with 11,500 Teamsters and help us bring more Sysco and US Foods workers into the Teamster family. LIKE our Facebook page, here.

     

 
 
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