Gerald Friedman Testifies to Massachusetts General Court About Healthcare

Gerald Friedman, professor of economics at UMass, testified in favor of a single-payer healthcare system at the Joint Committee on Healthcare Financing hearing held in Massachusetts General Court on December 15, 2011. He addressed the deficiencies of the current healthcare system, especially focusing on the fact that in our current system, the only profitable business model for healthcare companies is to provide coverage to fewer people and deny coverage to the sick. He also addressed the waste built into the current system: America’s average lifespan is no higher than countries that spend much less on healthcare. Despite the fact that we spend as much on healthcare as Canada, our average lifespan is 4 years shorter. Professor Friedman argued that a single-payer system would address these shortcomings and others. The full testimony can be read below.

Testimony to Massachusetts General Court, December 15, 2011

My name is Gerald Friedman.  I am a Professor of Economics at the University of Massachusetts at Amherst.  I have lived in Massachusetts since August 1978 when I moved to Cambridge to attend Harvard, where I was awarded a PhD in Economics in 1986.  Since 1984, I have taught at your state University at Amherst where I have specialized in Labor Economics, public policy, and Economic History.

Before studying Economics at Harvard, I was a History major at Columbia and my first book, State-Making and Labor Movements, is a historical study of the origins of the labor movement in France and the United States 1870-1914; my latest book, Reigniting the Labor Movement: Restoring Means to Ends in a Democratic Labor Movement, addresses union growth and decline in 16 advanced economies since the late 19th century.  I am a big picture guy and, as such, I do not envy your responsibilities because the big picture is grim: spending on health is swallowing the economy even while growing numbers are receiving inferior care.

This is not to dismiss your very real accomplishments, of which you should be proud.  With some help from Governor Patrick and former Governor Romney, you developed a health care program that has extended health insurance to most of our citizens even while insurance has become increasingly unavailable outside of Massachusetts.  Today, fewer than 5 percent of Massachusetts residents are uninsured, a rate barely a third that of the rest of the United States.  This is a signal accomplishment that dramatically improves life for hundreds of thousands of people.

Much of the expansion in health insurance coverage has been achieved through the Massachusetts Health Reform Law, Chapter 58 of 2006.  A compromise between reform advocates, Governor Romney, and various industry groups, the bill did less to reform health care in Massachusetts than to expand access by “plugging gaps” in existing insurance programs.  As such, it has done little to slow the seemingly inexorable rise in health care costs, and the resulting squeeze on the budgets of Massachusetts families, businesses, and governments.  Back in the days when Governor Dukakis tried to slow health care inflation, health care spending equaled 12 percent of the Massachusetts economy; today it is over 17 percent.  This increase, 5 percent of our income, is about $3,000 per person that we do not have to spend for other things because of rising health care costs.  If we continue the way we are going, we will be giving up thousands more over the next two decades.

While some of the increase in costs reflects improvements in care and is a consequence of rising life expectancy, most in Massachusetts, as throughout the nation, is due to waste within the health insurance and health care industries.  Compared with other industrial economies, the United States is peculiarly inefficient in our health care system. We spend more but receive relatively poor health care; compared with other affluent economies (members of the Organization of Economic Cooperation and Development), we spend thousands of dollars more per person to achieve life expectancy lower than 49 other countries (see Figure 1).  If we are only to have the life expectancy of Portugal, then we should be able to spend over $4000 less per person; or if we are to maintain such high spending, then we should have 4 more years of life expectancy (see Figure 1).

Figure 4.  Effect of single-payer financed with 7.5% payroll tax and 7.5% tax on unearned income.  Effect on income by quintile.