Health Care Costs, A Competitive Disadvantage

By May 9, 2008Health Care

From, its invaluable daily reports:

U.S. manufacturers that offer health insurance to employees spend an average of $2.38 per worker per hour on health care, substantially more than the amount spent by foreign competitors, according to a report released on Tuesday by the New America Foundation, the Los Angeles Times reports. According to the Times, the report “provides support for the now-familiar lament of employers — that rising health care costs are eating into the corporate bottom line.”

Not the way we’d characterize it. How about: “provides support for the reality employers face, that rising health care costs make it more difficult to compete in the global marketplace.”
In its materials, the Foundation summarizes:

A new model for health care that…

  • reforms the current insurance marketplace;
  • provides income-based subsidies; and
  • is individual, rather than employer-based,
  • …would enable us to finance our 21st-century health system in a more sustainable and competitive way.

    Again for the report and briefing paper, start here.

    Join the discussion One Comment

    • CJ Coolidge says:

      A plan that reduces the cost of health insurance won’t solve the real problems associated with profitability in America. International competition’s lower costs aren’t primarily based on lower benefit costs.

      America will need to focus more on increasing worker productivity simply because our infrastructure costs are so much higher than those in the developing world. Our companies, and our workers, will need to be able to provide higher value, higher impact, products and services in order to merit the revenues required to leve here. We can not be focused on cost controls when costs are not ours to control.

      Energy, healthcare, insurance of all kinds, taxation, and people costs are all rising. Each of these cannot be simply contained with the kind of external or internal controls that created the mere appearance of control characteristic of the past several decades. Technology and demographic models are vastly different from those that naturally kept those costs within acceptable limits during those previous decades. Those conditions no longer exist.

      America’s mechanical business models, which are primarily managed with attempts to tweak financial models will need to give way to organic ones, where innovation and creativity are freed to create high value/high margin products and services. Anything else borders on “protectionism,” which will prove counter productive given today’s competitive landscape.

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