Monday, May 31, 2010

ObamaCare and America's Global Competitiveness

As part of my ongoing examination of the effects of American healthcare "reform" (aka ObamaCare) on the United States' global economic competitiveness comes this interesting news out of Raleigh, North Carolina:
Blue Cross and Blue Shield of North Carolina is testing a plan that would outsource some information technology work to India.

The state's largest health insurer is looking for ways to reduce costs as the recession has slowed membership growth and health reform looms. This week, Blue Cross started a "small pilot project" with Keane, a Boston-based information technology firm, to extract and analyze data from the insurer's massive electronic repository. Some of the work will likely be handled at a Keane facility in India, said Blue Cross spokesman Lew Borman.

"It does not affect any current jobs, but I can't speak to down the road," Borman said. "We're looking at a variety of ways to operate more efficiently and keep premiums affordable. It's about costs and cost savings for North Carolinians."...

Outsourcing or offshoring has been a trend in corporate America for years, but has come under fire from lawmakers and other critics as unemployment remains stubbornly high. When any company does it for the first time, there's the potential for a backlash from consumers and others, said Jim Johnson, a professor of strategy and entrepreneurship at UNC's Kenan-Flagler Business School....

[H]ealth reform is forcing many medical companies to find ways to cut costs, Johnson said. Reform will also bring a host of data-management challenges. Last year's federal stimulus bill included billions of dollars to entice physicians, hospitals and others to adopt electronic medical records, which can improve efficiency and reduce errors.

As some companies hire outside firms to handle that work, they have to look to global information technology providers with operations in cheaper countries. "The cost differential is just too wide," Johnson said....
What's most interesting about this news is that, unlike those billions in new tax costs that US companies were forced to incur (and report) after ObamaCare became law, the moves by BCBS are not in response to actual higher costs, but only the threat of such costs in the future.  Yet each demonstrates a clear pattern: ObamaCare is placing more artificial burdens on American companies and workers - already some of the most heavily burdened in the world.  These tax and regulatory burdens reduce America's global competitiveness and, where those costs outweigh the benefits of staying onshore (i.e., the "tipping point"), companies and/or jobs are forced offshore.

Of course, one of the biggest criticisms of the US healthcare "reform" legislation was that it would actually increase costs for health insurers and American businesses, so BCBS' response here is totally and utterly expected - it's what good businesses do to, you know, stay in business.  Nevertheless, you really must wonder how many other insurers and other companies are already researching and or/employing similar cost-saving measures in order to absorb ObamaCare's current or future burdens and remain operational. 

And it's all to the detriment of American companies, workers and the overall economy.


Thomas A. Coss, RN said...

Leading us out of the last recession in 2001, was healthcare employment, which accounted for 56% of job growth from 2001 through 2007. You're quite correct, thanks to Obama care we will not have to worry about such growth anytime soon.

In addition, I have a question. I'm not seeing a sever-ability clause in the legislation. In the haste of getting this signed, could this have been a fatal oversight?

I look forward to your thoughts.

Scott Lincicome said...

Hi Tom,

Thanks for the stats - very interesting stuff. I must admit, however, that I'm unfamiliar with the severability issue. Happy to opine if you'd elaborate, but it's certainly not my specialty.

Thanks, as always, for commenting.

Thomas A. Coss said...

Apparently, as I am told, similar large legislation often includes a clause that if any part of the legislation is deemed to be unconstitutional, that that portion alone can be severed from the legislation, leaving the rest. Absent a specific severability clause, one could argue that should any aspect of the legislation be held unconstitutional, i.e. payment mandate, that the rest of the legislation becomes moot.

Not being an attorney, I'm way over my ski's on this.