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Minnesota 2020 Journal: Irony or Hubris?

September 30, 2011 By John R. Van Hecke, Executive Director & Fellow

The Alliance for Healthcare Competitiveness announced a trade policy proposal to export the American healthcare model to the world. AHC advocates for healthcare reform through expanding global free-trade, arguing that what’s worked here should work wonderfully anywhere, especially in developing nations.

Now, if I were a rapidly developing nation with a sizeable emerging middle class, I might be more interested in Norway’s experience of the past 50 years than in America’s. But, the AHC still proposes an interesting solution and it’s worth contemplating as much for what it reveals about the US healthcare industry as the likelihood of its implementation.

The only constant in the American healthcare experience is discontent. Nobody’s satisfied with what we have and no one can agree on what should replace it. Underscoring both points, healthcare costs continue to rise as benefits dwindle, access contracts and payment burdens outpace families’ financial resources.

And we want to export this experience to the world? That’s either an uncharacteristic gesture of corporate irony or an astounding act of hubris.

First off, we can dismiss the notion of corporate irony. It’s an oxymoron. While individuals within large business organizations may express irony—implying a meaning that’s the opposite of what’s stated, used as a literary or rhetorical device—organizations don’t do that. Except, maybe, on TV shows like NBC’s “30 Rock” which employs a fictional version of General Electric for laughs.

Consequently, contemplating the AHC proposal, we’re left with hubris.

Hubris means pride or arrogance, anchored in a certain disconnection with reality. The Bush Administration’s belief that invading Iraq, toppling Saddam Hussein and establishing a democratic government, all within a very short time-frame, is an excellent example of hubris. I’d also include former Minnesota Governor Tim Pawlenty’s assertion that Minnesota’s state budget was balanced when he left office in 2011. That’s good hubris, too.

The AHC counts Medtronic and United Health Group among its members. These are successful companies headquartered in Minnesota. They provide very good jobs to a great many Minnesotans. Minnesota is a much better place because these two companies are here. They also embody the challenges facing global healthcare.

Medtronic makes medical devices. UHG is an insurance company. Medtronic needs people to buy their products. UHG needs people to make insurance claims within the cost structure that they predict. It’s much more complicated, including the scope and activities of both companies, but, in a nutshell, that kind of covers it.

American healthcare is an insurance-driven process. We purchase health insurance to mitigate the cost of receiving healthcare services. Left to our own finances, few of us could pay, on a fee-for-service basis, for most procedures beyond a physician’s physical examination or setting a broken bone. Consequently, we participate in insurance and healthcare services pools that, through their numbers and diversity, lower members’ risks while increasing members’ collective market bargaining power. In our country, we’ve organized these pools through employers rather than through other mechanisms, such as government.

This isn’t, however, entirely true. Between Medicare, Medicaid, the Veterans Administration, and health insurance plans for government employees, the US government is a major healthcare market force. A central thrust of healthcare reform seeks to create larger risk and service pools to better control rising healthcare costs. Parties who’ve profited from present systems oppose these shifts as they’ll tend to limit profit while increasing costs.

As I understand it, the AHC isn’t proposing the wholesale export of America’s present service and insurance systems so much as they want their members to have greater access to emerging markets. For Minnesota, that means Medtronic and other medical device manufacturers—and, it’s important to remember, Minnesota is the medical device manufacturing center of America—want to sell their goods in China, India, Brazil, etc, without worry about foreign governments giving preferential treatment to local competitors.

Healthcare is as essential to a nation’s well-being as access to food, water and economic growth. Countries are unlikely to allow control to slip away. However, American and Minnesotan innovation has created sophisticated, highly-sought healthcare products and services. The world, not just Americans and Minnesotans, want these products’ and services’ benefits.

Healthcare innovation is not a cheap process nor is high-quality healthcare service. How, then, does anyone, bear the cost of this system?

The short answer is that we have to do it together. This means using the power of government to expand access to affordable healthcare rather than protecting large players’ interests. It means real market competition not some ginned-up, look-a-like. It means recognizing that Minnesota has a fundamental economic interest in a healthy workforce.

I don’t know if the AHC’s proposal will work or even if it’s realistic; I wouldn’t wish American healthcare’s complexities on anyone. I do know that healthcare costs in Minnesota and America are going to surpass most families’ capacity to pay unless something changes. I’m not crazy about certain aspects of the federal healthcare reform but it is a start. We must stop pretending that the problem is something other than what it is.

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