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Car Maker Spends $60 Billion for Health Care

Health care costs continue to rise. American companies are facing yet another hurdle: many of them have post-employment health plans that are underfunded, even more so than pension plans. The cost of post-retirement health care coverage is revealed, and overall it's a $284-billion bill and it is proving to be more than many companies can handle. General Motors, the largest automaker in the world, also has the largest health care obligation. Yesterday GM said that its future health care obligation for retirees rose last year to $63 billion, from $57 billion in 2002.

There is good and bad to this news. The bad is that it is bankrupting our economy and in the short run we are all going to suffer by the abuses induced by the drug companies. However, I believe that this is a necessary pain if we are going to change. Large corporations are not going to be sufficiently motivated to shift their behavior until they have serious financial incentives. Fortunately, there are some practical alternatives like health savings accounts. I will be meeting with one of the most prominent economists in the United States, Paul Pilzer, in two weeks to review how we can facilitate this change. I will be writing much more about this topic in the near future.

New York Times March 12, 2004

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