Healthcare costs are killing American business

Introduction
Factoring in costs borne by the government, the private sector, and individuals, the United States spends over $1.9 trillion annually on healthcare expenses, more than any other industrialized country. Researchers at Johns Hopkins Medical School estimate the United States spends 44 percent more per capita than Switzerland, the country with the second highest expenditures, and 134 percent more than the median for member states of the Organization for Economic Cooperation and Development (OECD). These costs prompt fears that an increasing number of U.S. businesses will outsource jobs overseas or offshore business operations completely. U.S. economic woes have heightened the burden of healthcare costs both on individuals and businesses. The Obama administration's first budget includes billions to overhaul health care, and despite the economic downturn, experts see a consensus emerging that healthcare reform should move forward.

Competitive Disadvantage
The United States spent 16 percent of its GDP in 2007 on health care, higher than any other developed nation. The nonpartisan Congressional Budget Office (CBO) estimates that number will rise to 25 percent by 2025 without changes to federal law (PDF). Employer-funded coverage is the structural mainstay of the U.S. health insurance system. According the U.S. Bureau of Labor Statistics, about 71 percent of private employees in the United States had access to employer-sponsored health plans in 2006. A November 2008 Kaiser Foundation report notes that access to employer-sponsored health insurance has been on the decline (PDF) among low-income workers, and health premiums for workers have risen 114 percent in the last decade. Small businesses are less likely than large employers to be able to provide health insurance as a benefit. At 12 percent, health care is the most expensive benefit paid by U.S. employers, according to the U.S. Chamber of Commerce.

Healthcare Costs and U.S. Competitiveness - Council on Foreign Relations

 

So ... how do you propose to lowering the costs?

 

tax the rich of course. It's the mental midget's answer to everything.

 

Oh ... you mean tax the people who already pay the high costs for their employees! Yeah ... that'll work

 

By providing national health insurance to compete with the private insurance.

I also think our medical schools should be free. Then we would have more doctors and the cost of care would go down.

 

So ... instead of the employers paying the high cost directly, you have to raise taxes and then have them pay it that way ... the costs will still remain the same.

 

No, they would not.

There are inherent cost savings in having one system instead of 150 different insurance companies.

 

Elsewhere in the world, healthcare systems are much less reliant on private sector support--and much less expensive. For example, the U.S. system costs 83 percent more per capita than the Canadian system, where public funds collected through taxes pay for up to 70 percent of healthcare coverage. A number of East Asian systems also enjoy high quality of care for a much lower cost. An article in Cambridge University's Journal of Social Policy looks at what it calls the "remarkable" performance of healthcare systems in Hong Kong, Malaysia, and Singapore, where the authors argue the legacy of British colonialism has encouraged a strong state role in the healthcare system.

Taiwan's system is commonly singled out as a model for cost-effectiveness. An article in Health Affairs examines Taiwan's National Health Insurance (or NHI) system, implemented in 1995, which provides comprehensive universal health coverage to Taiwan's roughly 23 million citizens. The authors conclude that savings from the NHI system largely offset the incremental cost of covering the previously uninsured. Taiwanese are assessed around $20 a month for full health coverage. In contrast, Americans pay roughly $500 per month, according to data in a report by McKinsey.

Healthcare Costs and U.S. Competitiveness - Council on Foreign Relations

 

It is difficult to quantify the precise effect high healthcare costs have had so far on the overall U.S. job market. Health care is one of several factors--entrenched union contracts are another--that make doing business in the United States expensive, and it's difficult to parse the effects of each factor. Moreover, economists disagree on the number of U.S. jobs that have been lost to offshoring--the transfer of business operations across national boundaries to friendlier operating environments. The Princeton economist Alan S. Blinder, in a 2006 Foreign Affairs article, says that judging by data compiled from "fragmentary studies," it is apparent that "under a million service-sector jobs in the United States have been lost to offshoring to date." Blinder goes on to predict that somewhere between 28 million and 42 million U.S. jobs are "susceptible" to offshoring in a future where technology allows the more efficient transfer of jobs. Many other economists, however, have shied away from making such estimates, and some have criticized Blinder's approach.

It is clear, however, that healthcare expenses affect every level of U.S. industry. For large corporations they mean the massive "legacy costs" associated with insuring retired employees. For small business owners they can be even more devastating. "In many places, you have small businesses that simply cannot afford to offer coverage," Sarbanes says. Often, he says, healthcare expenses make it impossible for small business owners to hire candidates they would otherwise desire.

Healthcare Costs and U.S. Competitiveness - Council on Foreign Relations

 

Really ... so in spite of the medical companies over charging for their services to cover fees which the government charges them ... this "inherent" savings will show up where?