Health-care costs outpace workers' pay


WASHINGTON -- Health-care costs rose more than twice as fast as the earnings of working Americans in the past decade, and the current medical insurance system has been increasingly unable to keep pace, witnesses told a Senate committee yesterday.

While medical costs rose 10.4 percent, annual average pay increased just 4 percent, the witnesses said, noting that health-care costs are now gobbling up almost 12 percent of the gross national product.

"The system is bankrupt -- and its consequences are literally bankrupting many American families," said Sen. Edward M. Kennedy, D-Mass., chairman of the Senate Labor and Human Resources Committee.

A diverse group of witnesses -- including health-care consumers, policy-makers and physicians -- agreed that major reforms were needed to address what was described as a national crisis. An estimated 37 million Americans have no insurance, while an almost equal number are underinsured.

Gail Shearer, a policy analyst with the Consumers Union in Washington, said middle-class Americans were being squeezed.

"Spiraling health-care costs are leading to high premiums that force the middle-income consumer -- both employees of firms and the self-employed -- to drop coverage in too many cases," she said.

The Consumers Union has proposed a national health-care plan modeled after the Canadian system, which would ensure that all Americans receive comprehensive health insurance coverage. Canada spends 8.5 percent of its GNP on health care -- about 40 percent less per person than the United States, she said.

House Majority Leader Richard A. Gephardt, D-Mo., told the committee it would be wiser to continue reform efforts already under way -- such as controls on physician payments and hospital costs for Medicare. But he emphasized that the United States "can do better" at providing greater access to health care and promised that health-care reforms would be high on the House leadership's legislative agenda.

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