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Health Care Costs Put U.S. Workers at Significant Disadvantage

American workers receive far less bang for their buck than foreign contemporaries

March 16, 2009
The costs and performance of the U.S. health care system have put America's companies and workers at a significant competitive disadvantage in the global marketplace, according to the first Business Roundtable Health Care Value Comparability Study.

"Health care costs are one of the top cost pressures facing American businesses today, inhibiting job creation and hurting America's ability to compete in global markets," said Harold McGraw III, Chairman of Business Roundtable and Chairman, President and CEO of The McGraw-Hill Companies. "This study helps us understand the relationship between spending, quality and competitiveness, while enabling us to track progress as we push forward with health care reform."

The report combines internationally reported measures covering both spending on, and the performance of, national health care systems to assign a value to the U.S. health care system compared with important global competitors.

On a weighted scale, the results show that U.S. workers and employers receive 23 percent less value from the health care system than the average of five leading economic competitors — Canada, Japan, Germany, the United Kingdom and France — and 46 percent less value than the average of emerging competitors Brazil, India and China.

"This study shows a significant health care value gap," said Ivan Seidenberg, Chair of Business Roundtable's Consumer Health and Retirement Initiative and Chairman and CEO of Verizon Communications. "While, in many respects, the employer-based health care system in the United States is the best in the world — we have groundbreaking scientific advances, cutting-edge medical technology, and exceptional doctors and medical institutions — the business model supporting it doesn't meet Americans' needs.

"When we spend more to get less, we all lose — workers, employers and the government. The study points to a serious need for health care reform that puts customers in the center and uses the power of the market to lower costs, improve quality, create more consumer choice and expand accessibility," he added.

The study also shows that, as a group, the G-5 countries spend approximately 63 cents for every dollar the United States spends on health care — yet the health of the U.S. workforce lags by 10 percent in a composite measure.

The gap is even wider in relation to rising economic powers: the three BIC countries spend just 15 percent of what we spend on health care, yet the health of the U.S. workforce trails that of BIC countries by five percent.

The Health Care Value Comparability Study weighs 19 separate measures of health spending and workforce health, chosen for their relevance to employers and their workforces and cross-nation comparability.

To measure health care spending as it relates to economic competitiveness, the study embeds two sets of data: employer-paid benefits per hour in manufacturing (the U.S. industry most exposed to exports), and a broader measure of GDP-adjusted per capita health care spending, which encompasses spending financed through taxes paid by both employers and employees.

"The CEOs of Business Roundtable believe true reform of the health care system must emerge from the uniquely American principles that drive our economy: competition, innovation, choice and a market that serves everyone," said Seidenberg.

Business Roundtable has created a health care reform plan rooted in these principles. Designed to put the United States on the path to a competitive health care system, the plan rests on four pillars:

• Creating greater consumer value in the health care marketplace by using health information technology and empowering consumers with more information about quality health care.

• Providing more affordable health insurance options for all Americans by creating an open, all-inclusive private market for health insurance and replacing today's fragmented state-by-state market with multi-state markets.

• Engaging all Americans in taking an active role in their health care. First, this means placing an obligation on all Americans to obtain health insurance either through their employer or the private market. Second, we must encourage all Americans to participate in employer- or community-based prevention, wellness and chronic care programs.

• Offering health coverage and assistance to low-income, uninsured Americans to create a stable and secure public safety net.

"We've already taken a huge step toward the goal of comprehensive health care reform with the passage of health IT in the stimulus bill," said Seidenberg. "This research shows it is more important than ever to build on that momentum. We must bring together a broad coalition of interests from across the political spectrum to achieve the kind of systemic reform we need. Business Roundtable is committed to being part of the solution, and we’re working with groups such as AARP, SEIU and the National Federation of Independent Business in the 'Divided We Fail' coalition to see this through to the finish line."

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