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Study: Health Costs, Lack of Value Put U.S. at Disadvantage in Global Economy

Ben Cole, for HealthLeaders Media, March 17, 2009

As if the United States economy (not to mention its healthcare sector) didn't have enough problems, a new study says the costs and performance of the U.S. healthcare system is putting its companies and workers at a significant disadvantage in the global marketplace.

The study was conducted by Business Roundtable, an association of CEOs of leading U.S. companies, and said exorbitant healthcare costs are inhibiting job creation and hurting our ability to compete in the global marketplace.

"In many important respects, the American healthcare system is among the best in the world," said Business Roundtable President and CEO Harold McGraw III during a teleconference last week announcing the study's findings. "But our country's healthcare system is also becoming increasingly expensive, which is having a direct negative impact on American competitiveness."

The first annual Health Care Value Comparability Study used 19 internationally reported measures to weigh health spending and workforce health, and assigned value to the U.S. healthcare system in comparison with global competitors. It compared the United States with two sets of countries: the "G-5 group" consisting of Canada, Japan, Germany, the United Kingdom, and France; and the "BIC group" of Brazil, India, and China.

The results showed that workers and employers receive 23% less value from the U.S. healthcare system than the average from the G-5 group, and 46% less value than the average from the BIC group. The study also found that as a group, the G-5 countries spent approximately 63 cents for every dollar the United States spent on healthcare, and the gap is even wider in comparison to the BIC countries, which spent 15% of what we do on healthcare.

"Today's economic challenges span the globe, but companies in other countries may be better able to weather the storm because of the value that their healthcare systems deliver," McGraw said. "As a nation, we simply cannot maintain the status quo when it comes to healthcare."

To reverse the trend, the collection of business leaders said the U.S. is on the right track—although it remains in the very early stages—by moving forward with bipartisan healthcare reform. Increased use of information technology, empowering consumers with more information about healthcare, and providing more affordable health insurance options are all steps in the right direction, they said.

The U.S. also needs to engage all Americans to take an active role in healthcare, not only to search for the best deals to increase competition, but also to engage in disease prevention, wellness, and chronic care programs to keep costs down. In short, sweeping federal reform efforts need to continue to get more "value" out of the U.S. healthcare system by delivering higher quality care for less money.

"We need a model that puts customers at the center, and uses the power of the market to lower cost, improve quality, create more consumer choice, and expand accessibility," said Ivan Seidenberg, chairman and CEO of Verizon Communications and chair of the Business Roundtable Consumer Health and Retirement Initiative, during the teleconference.

Without fixing the problem of cost relative to quality with health reform, the U.S. economy could be dragged further into the economic quagmire, Seidenberg said. On our current path, the cost of healthcare will in turn continue to raise the cost of other products and services and divert resources from needed investments, he added.

"Our world-leading system fails to deliver on its tremendous promise because the business model supporting it doesn't meet everyone's needs," Seidenberg said. "When our healthcare system fails to deliver value, it does not just affect individual companies and their workers, it harms our nation's ability to compete in the global economy."

And right now we need all the help we can get.


Ben Cole is an associate online editor with HealthLeaders Media. He can be reached at bcole@healthleadersmedia.com.
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