Aug 02, 2002
Will Society Allow Baby Boomers' Health Care Savings to Go Bust?
Foundation for Taxpayer & Consumer Rights
by Jamie Court - Executive Director (FTCR)
Children born in the wake of World War II could now be facing the battle of their lives, simply affording their health care.
The stock market's bust may take its greatest toll on baby boomers ability to pay for escalating health care costs. An aging population facing withering health and skyrocketing costs can least afford to lose such a massive amount of wealth.
What Wall Street took Washington seems unlikely to restore, as evidenced by this week's failure to reach agreement on a Medicare prescription drug benefit on capitol hill. Now it's up to California.
The reason health care stocks have remained one of the best bets on Wall Street is that as baby boomers get older and sicker, and medical technologies improve, there will be a huge demand for expensive health care services. Absent a government policy to protect patients until they reach Medicare age, health care costs could be the death of the baby boom.
Health insurance premium costs for the elder generation not yet eligible for Medicare have soared annually as much as 80%, particularly if the patient is unable to work and cannot take advantage of a group discount.
Many pre-Medicare boomers have not retired specifically to retain their health care benefits. The move in the 1990s from retirement plans that typically included health benefits to 401(k) accounts that did not has made matters significantly worse.
In addition, the evolving ethos of the new health care economy is cost-shifting from employers and insurers to patients. Patients are forced to pay greater co-payments and deductibles for hospital stays, prescription drugs, diagnostic tests and doctors' visits. The government currently has no say on such matters.
While the unregulated costs of medical technology and services are soaring, those without insurance are asked to pay the heftiest price since they do not have the negotiating power of an insurer or employer. Unlike with other essential services such as telephone, water, and electricity, those who can afford to pay the least are charged the most. A three day hospital stay that costs an insurer $4,000 can cost an uninsured patient $25,000 or more.
Then there is the cost of long term care, in nursing homes or in private homes, that is not covered by the government unless all of one's assets have evaporated.
While Governor Davis signed significant new HMO reforms in 1999, the statehouse has been silent on the cost crisis in medicine. The governor should call a special session of legislature to address the issues. Since baby boomers are the most reliable voters, such a move would be both good politics and policy.
A special session could focus policymakers on recent developments that merit creating a California Medicare program that brings cost controls and access guarantees to medicine.
- A recent Davis Administration study of extending universal health care options through a variety of mechanisms found significant savings for the health care system, in the tens of billions of dollars, if all Californians were insured. Now legislators should debate the options without other matters to distract them.
- Annual double digit premium increases for small and mid-size businesses, thirty percent for many, has created an unprecedented desire among businesses for state regulation over health insurance premium increases, similar to state approval systems for auto and commercial insurance.
- Budget short falls threaten to devastate County hospitals, emergency rooms, trauma centers and clinics. Now is the time for talk about a comprehensive solution rather than face more piece meal crises.
- Discontented physicians, nurses, hospitals, patients, and employers never had greater common cause to make the health care system more cost effective.
Governor Davis has an opportunity to lead nationally on an issue with salience for a voting block facing tremendous fear.
In Life Before Medicare, a Canadian woman described her mother's battle with ovarian cancer before universal health coverage was enacted in Canadian provinces during the 1940s, ironically when the baby boom was born. "After she had been in the hospital for a week, we went to visit her after supper and found her crying almost inconsolably. Some idiot in the business office had left her bill for her surgery and first week on her bedside table. My parents' savings of twenty-two years were gone."
It's a story that could be repeated in California today with a working family. The generations born into a great promise of prosperity deserve better. As one province, Saskatchewan, led the Canadian health care revolution, one state can lead America's.