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U.S. Needs a Different Type of Bailout

By Kevin Osborne · October 1st, 2008 · Porkopolis

Even as reckless Wall Street investors ring the alarms and bellow about needing $700 billion in taxpayer money to avoid an economic meltdown, some of them are trying to pin the blame on lower- and middle-class homeowners.

It wasn’t their own greed and shady schemes involving mortgage-based securities that caused the financial collapse, these investors say. Oh, no. The real culprit is people who sought mortgages to buy homes they couldn’t afford.

There’s a smidgen of truth to the claim, as some homeowners did overextend themselves. But the primary reason many people default on mortgages is bankruptcy, and the leading cause of personal bankruptcy is medical bills — even among people who have health care insurance.

A 2005 Harvard University study found that illness and medical expenses caused half of the 1.45 million personal bankruptcies in 2001. The crunch was caused by high deductibles, co-pays and prescription drug costs as well as by people losing their jobs when they had to take time off to recover.

More than 75 percent of those people had insurance when they began the bankruptcy process, but 38 percent lost coverage at least temporarily. Most of the people filing for bankruptcy were middle class, and 56 percent owned their own homes.

Clearly, the current health care system is terminally ill, and it’s time to pull the plug.

If we want to use government intervention where it will have the biggest impact on everyday Americans, it would be to transition into a single-payer health care system, where prices are negotiated between the federal government and private providers. The idea is hardly new or radical.

Heeding the wishes of his recently deceased predecessor in the Oval Office, Harry S. Truman was the first U.S. president to try to implement universal health care insurance for all Americans, way back in November 1945. Some 60-plus years later, we still have 45 million Americans — about 15 percent of the population — without health care coverage, and the number continues to rise. As health care advocate Gerald Cavanaugh points out, the United States ranks 21st in infant mortality and 16th in life expectancy in the world, yet we spend 40 percent more per capita on health care than any other nation.

A sizeable majority of Americans want some type of universal health care insurance guaranteed to all citizens, according to a recent poll by the Pew Research Center for the People and the Press.

Nearly two-thirds of Americans (63 percent) favor a government guarantee of universal health insurance, even if it means raising taxes; 34 percent are opposed. As expected, Democrats are the most supportive of government-guaranteed health insurance, at 79 percent. But even a majority of independents (63 percent) and moderate Republicans (54 percent) say the government should guarantee health insurance for all even if it means higher taxes.

Majorities in all major religious demographics also favor a government guarantee of health care insurance for all. More than half of white evangelicals (53 percent) favor universal health care insurance, as do large majorities of black Protestants (66 percent) and Catholics (67 percent), along with 68 percent of the religiously unaffiliated.

Just as in the 1940s, the American Medical Association is a huge obstacle. Nowadays, the large pharmaceutical companies and insurance firms join the organization in lobbying against any major type of change to the current system.

Whoever wins the presidential election in November, it’s time for Americans to come together and demand universal coverage. It could be achieved at less cost than what we’re paying for the unnecessary Iraq War or the Wall Street bailout.

In this case, it’s vital for the nation’s long-term economic health that the system be overhauled and for Washington to put the greater public good above narrow special interests.

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