A big part of what led General Motors and Chrysler into trouble in recent decades were the huge costs they racked up providing health care for their workers — costs that made them less profitable and less competitive with automakers around the world. If we do not fix our health care system, America may go the way of GM — paying more, getting less, and going broke. When it comes to the cost of our health care, then, the status quo is unsustainable.
Er, yes. Which is why no one could understand why Barack Obama kept sinking tens of billions of taxpayer dollars into GM while its pension and health insurance obligations never got addressed. It’s also why we all wondered why Obama perverted the bankruptcy process in order to favor the unions, who insisted on those big, expensive pension/benefits packages that made GM uncompetitive in the domestic and global market.
While Ed makes good points, he misses the real problem with Obama’s statement: The claim that having “the government” “pay for health care” will improve US businesses competitiveness. This is an oft repeated claim. But it’s utter garbage. Let us consider this WRT GM. There are four ways things can happen WRT GM and ObamaCare:
- GM has a”gold plated” health insurance plan for its members, and ObamaCare will allow GM to dump the plan, and stick its employees with the national plan, instead.
- GM has a”gold plated” health insurance plan for its members, and since it is required by their contract, GM will continue to pay for that plan.
- GM has a”gold plated” health insurance plan for its members, and through the miracle of ObamaCare, the employees will get to keep that plan, subsidized by the rest of us taxpayers.
- GM has a normal and reasonable insurance package, and something similar will be extended to everybody.
So, now let’s consider each of these options:
- The only way this will happen is if the US bans all private insurance / health care, and forces everybody to be part of the National Health System, and, like Canada, forbids health care providers to do business outside of the government run health care system. If we were to do this, then GM would probably save money. But Obama swears up and down that he’s not going to do that.
- This seems to be the most likely option under the currently proposed ObamaCare. At best, GM is no better off than it is now. However
- Taxes will have to go up to pay for ObamaCare. Which means employees will be fighting for higher wages just so they can keep their standard of living the same.
- Taxes will have to go up to pay for ObamaCare. Which means that everything GM buys will cost more, raising the cost of its cars compared to cars made in Japan (where their taxes aren’t going up to pay for ObamaCare).
- We expect that ObamaCare will raise costs for the private health insurance companies. Those costs will be passed on to GM.
- I suppose Obama can try to do this. OTOH, I can’t think of a quicker way to destroy the Democrat majority in Congress than to announce that union health plans would get a special subsidy that the rest of us don’t get, and I can’t think of a quicker way to bankrupt the US than extend those subsidies to 50%+ of the country.
- the idea behind ObamaCare is to extend health insurance to those who currently lack it. Which is to say: to increase the amount of money we’re going to spend on health care, and thus increase taxes so the government can pay for all those people’s health care. Who’s going to be paying those taxes? Why, GM, and its employees. And its customers and suppliers. See #2 for the problems with that.
In short, one of the competitive benefits US Companies have is the smaller size of the US governments (Federal, State, and Local) compared to Europe, and thus the lower costs that government imposes on all of us. Making the US Government bigger is not going to make us business more competitive.