Single Payer Healthcare - Effect on Medical Industry

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From December 2014 - and we still have a problem.

5,300 viewsDec 29, 2014, 01:00pm
How Rising Healthcare Costs Make American Businesses Less Competitive



By Natalie Burg

Reliable Production Machining and Welding has survived recessions, strikes and rising fuel prices since opening some 70 years ago in the basement of a casket maker.

But according to a report in business publication Inc., the Indiana-based company didn't face its toughest crisis until 2008, when health insurance costs for its 162 employees rose 25 percent to $750,000 in just two years.

Reliable's story is not an isolated one, and the days of leaving healthcare reform solely to the public and healthcare sectors are over. According to a Harris Poll commissioned by Castlight Health, approximately 90 percent of chief financial officers surveyed agreed they could invest more in their businesses if their company’s healthcare costs were lower. The effect on the American business sector is clear: Rising healthcare costs are hurting the enterprise.

That's not just the opinion of a few executives. A 2009 RAND study found U.S. industries with the highest level of employer-sponsored healthcare showed slower growth between 1987 and 2005—in both employment and contribution to GDP over time—than industries where health benefits were less common.

"This study provides some of the first evidence that the rapid rise in health care costs has negative consequences for several U.S. industries," said RAND senior economist and lead author of the study Neeraj Sood.

Though nearly a decade has passed since the period studied by RAND, a 2014 Altarum report shows that healthcare spending as a share of GDP has continued to rise since 2007. So it’s no surprise that Business Roundtable found healthcare spending to be the third top cost pressure facing CEOs in 2013.

Rising Costs for Employers

Just how much are healthcare costs rising for employers? Premiums for workers rose 114 percent over the decade preceding 2008, according to a report by the Robert Wood Johnson Foundation, and small businesses are less able to provide health insurance to employees than large businesses. Healthcare, the report said, is the most expensive benefit for U.S. employers.

Not all of those costs can be passed on to the consumer. U.S. businesses spend more than $620 billion each year on healthcare, and more than 80 percent of CFOs surveyed by the Harris Poll said healthcare costs drain company resources that could be better used elsewhere—including the wages and salaries of their employees, and investing in better technology.

This could be why 93 percent of respondents to the Harris Poll agree that the high cost of healthcare in the U.S. gives foreign companies a competitive advantage. They also agree about who's responsible for a coming up with a solution. It's not government. It's not the healthcare sector. Instead, nearly all respondents acknowledged that employers must help fix the system.

That the U.S. healthcare system is greatly troubled is no news to anyone. Just how high the costs are to businesses, however, may come as a surprise to some and as a rallying cry for others: from the public to the private sectors, we're all in this mess together—and everyone must take action to heal the wound.

A former downtown development professional, Natalie Burg is a freelancer who writes about growth, entrepreneurialism and innovation.

https://www.forbes.com/sites/castlight/2014/12/29/how-rising-healthcare-costs-make-american-businesses-less-competitive/?fbclid=IwAR1EH9uNt-qsSH_TD6AxkJgVQBmb8G4K-wImww-8qJBJEyNAUmB3UINfLYs#181962674f5f