Contact:
Elizabeth Carpenter
New America Foundation
401-529-9379 (cell)
202-261-6585 (office)
carpenter@newamerica.net   

Washington, DC -- Rising health care costs undermine the ability of U.S. firms to compete internationally and threaten good American jobs, according to a report released today by the New America Foundation. 

The New America report, "Employer Health Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms," found that U.S. manufacturers spend more than twice as much for health benefits than their foreign trading partners. 

"At a time when our nation is thinking seriously about how to stabilize its fiscal future and fix our broken health system, it is important to consider the negative impact of rising health care costs on America's ability to compete in a 21st century global marketplace. This research shows that a more sustainable health system is linked to a more prosperous U.S. economy," said Len Nichols, PhD, an economist who directs the Health Policy Program at the New America Foundation, and is the lead author on the report.

"Our current system is economically unsustainable for both employers and workers.  Many have argued that health reform is a moral obligation.  I argue it is both a moral imperative and an economic necessity," Nichols continued.

"Employer Health Costs in a Global Economy: A Competitive Disadvantage for U.S. Firms"

• Health care costs cannot be fully shifted into wages in the short run.  Economists generally believe that it is workers-rather than employers-who pay for health care through lower wages. Although this proposition may hold true in the long run, employers face a variety of constraints that may make it difficult for them to fully shift health costs in the short run.
• Health care costs threaten international competitiveness. U.S. manufacturers spend more than twice as much for health benefits than their foreign trading partners.
• Health care costs are an economy-wide problem. In a 21st century global economy, U.S. industries must compete internationally.  Health care costs would not burden firms if they could be shifted to consumers through higher prices. But with globalization and increased competition in international markets, this is not feasible. Therefore, health care impacts the profitability of U.S. businesses and the stability of American jobs.
• Workers are spending more for health care. The average worker contribution for family health insurance coverage has increased by 102 percent since 2000.
• Transition to a more citizen-based health system.  A new model for health care that reforms the current insurance marketplace, provides income-based subsidies, and is individual, rather than employer-based, would enable us to finance our 21st-century health system in a more sustainable and competitive way.

On Friday, May 9th, Senator Deborah Stabenow (D-MI) will join Len Nichols and representatives from the business, labor, and economic communities to discuss this important nexus of health care and the economy. 

Information on the event: http://www.newamerica.net/events/2008/employer_health_costs_global_economy

Link to the full report: http://www.newamerica.net/publications/policy/employer_health_costs_global_economy

About the Health Policy Program
The Health Policy Program works at the national level and in California to achieve fully portable health insurance to all Americans while raising the average quality of care and lowering the rate of cost growth. More specifically, the Program promotes a mandatory, citizen-based approach to health insurance that, combined with credible cost containment measures, can ensure universal coverage and enhance America's long-term economic and social well-being. The Health Policy Program publishes the New Health Dialogue Blog, linked here. For more information please visit the Health Policy Program website.

The New America Foundation is a nonprofit, post-partisan public policy institute whose purpose is to bring exceptionally promising new voices and new ideas to the fore of our nation's public discourse. Relying on a venture capital approach, the Foundation invests in outstanding individuals and policy solutions that transcend the conventional political spectrum. Headquartered in our nation's capital, New America also has offices in California and New York. Pleave visit our website at www.newamerica.net.