Universal Health Care Can Save Our Economy and Keep 1.7 million Jobs in the U.S.: Part III

06/11/2009 05:12 am ET | Updated May 25, 2011

In the first article of this series, I wrote that a universal health care system "can save more in one year than what we spent on the Iraq and Afghanistan wars since 9/11, i.e. a trillion dollars." I was wrong. There is more to it than that. Let me explain: The proposed nonprofit, single payer, people-funded and people-managed system described in my book, Universal Health Care System for the United States of America, has many more economic and social benefits. You may be surprised if I tell you that those benefits would dwarf the importance of one trillion dollars in savings per year.

It was just in the news that GM laid off 21,000 workers and plans to close all its U.S. plants this summer for at least 9 weeks. What if GM, Chrysler and Ford moved all their operations to Canada? In 2007 General Motors spent $4.6 billion on health care for its employees. Ford and Chrysler each spent $2.2 billion as well. If those companies moved to Canada they would save all that in health care costs ($9 billion per year), and the United States would lose 240,000 jobs and $156 billion in tax revenue. Of course, that loss doesn't include the ripple effect that the move would have on the 974,000 people in the automotive supply industry, or the 1.7 million jobs created by the money those people spend. The health care cost is a major factor in the near bankruptcy and competitive disadvantage of our auto industry. Let's look at the example of Toyota. In Japan, Toyota enjoys the economic benefits of universal health care. Because of universal health care, Toyota's production costs are $1,400 lower per vehicle than the cost for American manufacturers.

That translates directly into competitive advantage, as Toyota makes $2,400 more per car than its U.S. counterparts. Back in the United States, GM has said that the cost of providing health care for its workers adds between $1,500 and $2,000 to the price tag of every vehicle it sells. Alan S. Blinder, an economist at Princeton, has estimated that between 28 million and 42 million American jobs are at risk of being moved "offshore" in the near future, as technology reduces the friction of moving abroad. What can we do to keep U.S. automakers and other manufacturers in the country? Could instituting universal health care help?

Now let's extrapolate this approach to other sectors of the economy. As of 2008, annual health care spending in the United States reached $2.1 trillion or 16 percent of the GDP. Most of that money -- about 54 percent -- comes from the private sector. That's $1.13 trillion dollars that American companies are spending on health care each and every year. This is more than the national budgets of France, Canada and the UK combined. If that isn't a drag on our competitiveness, what is?

With a universal health care system, companies would keep that money and would have a healthier and more productive work force. If we implement the universal health care system, other economic benefits would also ensue. For example, job lock occurs when people stay at their current job solely for the health care benefits paid by their employers. One study showed that, in California alone, in 2002 job lock affected 179,000 people, with $772 million in foregone productivity.

Some objectors to the universal health care plan say: "Wait a minute. What about the job losses in the multiple health care insurance companies? They will all be out of business." O.K. Let's look at this. The entire health care industry employs 470,000 people. If we gave all the individuals who were laid off by the health insurance industry $100,000 per year for the rest of their lives, it would cost $47 billion dollars per year. That would amount to less than 5% of the one trillion dollar savings per year that would have resulted from instituting a universal health care system. Bear in mind that most of these people would get retrained and obtain other jobs. However, if they chose to remain unemployed they would have a comfortable life. And our country would save a minimum of $950 billion per year. This is equivalent to one third of our national budget.

In summary, the non-profit, single payer, people-funded, people-managed insurance agency proposed in the book, Universal Health Care System for the United States of America, saves our economy and keeps 1.7 million jobs in the U.S. and results in savings of at least $1.3 trillion per year for our manufacturing and other businesses. This is how we can have an even playing field for our industrial base and provide good jobs for our hard-working work force. At the same time we will have healthier people who are free from anxiety regarding their health care.

The non-profit element is essential to this proposal. It will keep the conflict of interest between making money for the providers and the health of the patients out of the system. This conflict of interest is a major contributor to the present high cost and suboptimal quality of the current health care system in our country. In addition, the universal health care system suggested will once again restore integrity to the delivery of health care and medical research and education in our country.

This privately run insurance agency is not "socialized medicine" and it avoids the inefficiencies of government bureaucracy.

Now let me ask my readers, does such a non-profit single payer universal health care system make sense to you? If it does, what is holding us back? Let's get moving on it. We should give our leaders the support they need to get it done. We should also clearly tell our business leaders about its benefits. Please read my book at -- it's free -- and make your views known. In the next article I will respond to your comments and write on the issue of incentives for doctors and other health care providers to do a good job for the people and be rewarded accordingly. I will also address how the profit motive in medicine has increased the cost and decreased the quality of our health care.