U.S. Health Care's Competitive Disadvantage


A study finds that American workers and employers get less bang for their medical buck than people in other nations

U.S. workers and employers get 23% less value from their health-care spending than those in Britain, Canada, France, Germany, or Japan, and 46% less value than in Brazil, China, or India, according to a Business Roundtable study that examined the cost and performance of the U.S. health-care system.

That value gap exists even though the U.S. spends far more on health care per worker than the other countries examined. The study, released on Mar. 12, found that for every dollar the U.S. spent on health care, Britain Canada, France, Germany, and Japan spent 63¢, yet the health of the U.S. workforce lags by 10% on a composite measure. As for Brazil, China, and India, they spend just 15¢ for each U.S. dollar spent, yet the health of the U.S. workforce lags behind those three by 5%.

The Business Roundtable, an influential association of CEOs of large U.S. companies, is actively lobbying Congress for health-care reforms, but it wants to maintain the current employer-based insurance system. Most business leaders say they see health insurance as a valuable recruitment benefit. Also, "companies know they are going to end up paying the bill somehow or other, so they want to have an influence on how those benefits are designed," says James A. Klein, president of the American Benefits Council, a trade association for employer-based benefit plans.

A Drag on Business

But business leaders also desperately want the costs of the current system brought under control, since most of their global competitors operate in nations with government-subsidized, universal care that is far less onerous. "Health-care costs are one of the top cost pressures facing American business today, inhibiting job creation and hurting America's ability to compete in global markets," Harold McGraw III, CEO of The McGraw-Hill Companies (MHP) (which publishes BusinessWeek) and chairman of the Business Roundtable, said at a news conference releasing the study. On that point the Business Roundtable is aligned with President Barack Obama, who at last week's health-care summit at the White House called exploding health-care costs "one of the greatest threats, not just to the well-being of our families and the prosperity of our businesses, but to the very foundation of our economy."

The study was led by Dr. Arnold Milstein, a consultant with Mercer Health & Benefits. To calculate the measure of value, the study weighed 17 separate measures of workforce health, chosen for their relevance to employers and employees, and how effectively each nation's health system addressed them. These issues included life expectancy, mortality rates, deaths from heart disease, injuries and communicable diseases, blood pressure, cholesterol levels, medical errors, and work absence due to illness. Spending calculations were based on each nation's employer-paid health benefits in manufacturing, and health-care spending that is financed through taxes paid by employers and workers. The researchers noted that in 2006, the U.S. spent $1,928 per capita on health care, compared with $1,100 in Britain, Canada, France, Germany, and Japan; and $274 in Brazil, China, and India.

The Business Roundtable said it plans to update the study annually in order to track U.S. competitiveness on health-care spending.

Arnst is a senior writer for BusinessWeek based in New York.

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