President Bush devoted a good portion of his State of the Union Address Tuesday night to the matter of healthcare costs.
To most folks, especially those running businesses, it’s no surprise as to why.
While the U.S. is far from alone in shouldering a massive financial healthcare burden – Europe and Japan know all about it – America is leaps and bounds ahead of the rest of the world in terms of how much it spends, according to Joseph Quinlan, chief market strategist at Bank of America.
Indeed, total U.S. healthcare spending reached $2 trillion, or 16 percent of gross domestic product, in 2005. In Germany, the figure was 10.6 percent of GDP, in France 10.5 percent. In both Japan and the UK, healthcare costs are about 8 percent of GDP. Meanwhile, these nations are providing healthcare service that is as good if not better than seen in America.
“There’s something wrong with this picture, and if you listen carefully, more and more American executives are hinting that rising non-wage costs in the U.S. are driving firms to shift more production facilities and service activities overseas,” Quinlan said.
A recent online poll conducted by Manufacturing.net found that healthcare costs are the second-biggest business concern heading into 2007, trailing only the challenge of finding enough skilled workers, and topping worries about a slowing economy and energy costs.
“Caring for the sick and elderly is a budgetary curse confronting the industrialized world and some developing nations, including China, which will be the first nation ever to grow old before it grows rich,” Quinlan noted.
In the U.S., meanwhile, rising healthcare costs are increasingly a competitive hindrance, which Quinlan notes could threaten to curb consumer spending, erode the global competitiveness of U.S. corporations, and undermine public sector finances at both the federal and state level.
“Mounting healthcare costs, in short, represent a clear and present danger to the United States,” Quinlan said.
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