Cross-Posted at My Left Wing

The cost of health insurance and related expenditures is destroying US national competitiveness.  As a result, US companies are less competitive versus their international rivals.  This hurts the US’ ability to create good-paying jobs and improving the standard of living of all Americans.
On April 15, 2005, Business Roundtable President Larry Burton gave a speech to the Alaska World Affairs Council.  During that speech, he made the following remark:

In a recent survey, three out of five of our CEOs cited health care costs as their number one cost pressure.

General Motors CEO Rick Wagoner reports that his company spent over $4,700 last year on each of its 1.1 million U.S. employees, retirees, and dependents. That equates to more than $1,500 per car that GM sells. Not one of GM’s overseas competitors has to bear such a direct and onerous health care cost burden.

Mr. Burton’s key observation is no other international competitor has the same expense.  As a result, American companies are at a distinct disadvantage when competing in the international marketplace.  American companies most factor in a large and increasing cost that other companies do not have.  

These costs to business have risen for the last 4 years.  According to the Bureau of Labor Statistics, health insurance as an employer cost rose and average of 8.15% in 2000, 8.6% in 2001, 10.82% in 2002, 10.17% in 2003, and 8% in 2004.  These increases are similar regardless of the type of plan the employer uses to cover his employees.  

And these increases are from an already large base.  According to the Kaiser foundation, the “Average Annual Employer Health Plan Premiums for Covered Workers, Single and Family Coverage, by Plan Type, 2004 were $3695 and $9950 respectively.  

As a result of these increases in business costs, employees are paying a larger percentage of health care premiums. Employee contributions to health insurance payments have increased at a 10.5% compounded annual rate since 2000.  The average monthly employee contribution is currently $222, which has nearly doubled since 2000’s figure of $135.  In other words, employees are paying a larger percentage of the costs.

So, to conclude, health expenses are a major concern of CEOs.  Their international competitors do not have to worry about health care, making US companies less competitive in the international market.  Health costs are very expensive to provide for employees, and the cost in increasing almost 4 times faster than inflation.  As a result employees are paying a larger percentage of the cost to the tune of $222/month on the national average.