U.S. Manufacturers Spend Twice As Much As Foreign Competitors On Health Care, Report Finds

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health
Article Date: 08 May 2008 - 11:00 PDT

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U.S. manufacturers that offer health insurance to employees spend an average of $2.38 per worker per hour on health care, substantially more than the amount spent by foreign competitors, according to a report released on Tuesday by the New America Foundation, the Los Angeles Times reports. According to the Times, the report "provides support for the now-familiar lament of employers -- that rising health care costs are eating into the corporate bottom line."

Len Nichols, policy director for the foundation and author of the report, said that foreign manufacturers have lower health care costs because they operate in nations with more efficient health care systems that are financed by the government.

Economists typically argue that manufacturers can pass health care costs to employees through wage reductions or to consumers through higher prices. However, according to the report, U.S. manufacturers do not have the ability to take such actions fully in the short run because of factors such as minimum wage laws, union contracts and competition in international markets.

Nichols said, "There's no question that if employers could push this into wages, they would," adding, "But every single year, health care costs rise faster than productivity and wages. Thus, they try to push it into prices. But with China and India competing against you, you can't do that" (Girion, Los Angeles Times, 5/6).

The report is available online.

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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