Competitive Disadvantage: Health Care Costs Spell Trouble for U.S. Companies

March 13, 2009
Health care costs in the United States are putting companies and workers at a significant competitive disadvantage in the global marketplace, according to a new study released by the Business Roundtable.

The business CEO group looked at 19 internationally reported measures of health spending and workforce health, and compared U.S. data to both the G-5 group (Canada, Japan, Germany, United Kingdom and France) and the BIC group (Brazil, India and China). On a weighted scale, researchers found that U.S. workers and employers receive 23% less value from their health care system than the G-5 group and 46% less than the BIC group.

"This study shows a significant health care value gap," said Ivan Seidenberg, chair of the Business Roundtable's Consumer Health and Retirement Initiative and chairman and CEO of Verizon Communications. While noting that the employer-based health care system in the United States is the "best in the world" with its medical technology, physicians and medical institutions, Seidenberg said the system's "business model supporting it doesn't meet Americans' needs."

The Health Care Value Comparability Study also revealed that, as a group, the G-5 countries spend approximately 63 cents for every dollar the U.S. spends on health care, yet the health of the U.S. workforce lags these countries as a whole by 10%. For the BIC countries, the study found that those three nations spend 15% of what the U.S. spends on health care, yet the health of the U.S. workforce trails these developing nations by 5%.

Seidenberg called for health care reform built on four tenets:

  • Create greater consumer value in the health care marketplace by using health information technology and empowering consumers with more information about quality health care.
  • Provide more affordable health insurance options for all Americans by creating an open, all-inclusive private market for health insurance and replacing the state-by-state market with multistate markets.
  • Engage all Americans to take an active part in their health care by obligating them to obtain health insurance through either their employer or the private market, and by encouraging them to participate in employer- or community-based prevention, wellness and chronic care programs.
  • Offer health coverage and assistance to low-income, uninsured Americans to create a stable and secure public safety net.

Asked how quickly the nation should be acting to put these reforms in place, Seidenberg said it "should have been done yesterday" and warned that a family of four in 5-6 years will be facing health insurance costs of $15,000 to $18,000 annually unless reforms are enacted.

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