High Healthcare Costs Has Also Caused Huge Damages To The Manufacturing Industry. Here Are The Details Of How It Works

The United States cannot compete with other industrial countries because our manufacturing costs of goods are higher than their selling prices of similar good. Our manufacturing costs have increase year after year during the past three decades because our national health care expenditures have increased during this same period, while the international competitors have maintained the low health care expenditures. The reason is they are on a single-payer health care system while we are not. Our country’s national healthcare expenditures are eighteen percent of the GDP on health care, while other industrial countries average about seven percent of gross domestic product. Our manufactures incur the costs of healthcare into the price of manufactured goods, while our international competitors do not.

In the United States the majority of health care costs are paid by employers. Employer health care costs come in two categories, direct costs, the costs paid for the employees’ benefits, and indirect costs, the health care costs included in products or services they purchase from others, and Social Security costs. All goods or services that are utilized have built into its price direct costs of health care for its employees and indirect costs.

All manufacturers must sell their products at a price above their cost break-even line. Any cost incurred by a manufacturer are marked up a reasonable amount to set the selling price, cover taxes, cover product over-runs, and make a profit.  For this discussion I am going to use a forty percent markup.

Our country spends eighteen percent of the GDP on health care, while other industrial countries only spend six percent. Our nation used to spend the same percentage as other nations but that was prior to the industry giving secret kickbacks to the insurance companies for referring their insured members to the providers. When you mark up the eighteen percent by an additional forty percent, the total cost of direct and indirect cost goes to about twenty-five percent of total manufacturing costs.

Since 1982 the health care industry increased its share of the GDP from seven percent to today’s eighteen percent. Correspondently manufacturing industry decreased it share of the GDP from thirty-four percent to twenty-three percent. The healthcare industry adapted restraint of trade practices, eliminating competition between parties. The actual competition was which provider was going to give the insurance companies the largest kickback in order for the providers to have access to the insured members.

 As the manufacturing marginal costs became greater than the competitive prices of similar goods due to increased health care costs increases the companies closed and filed for bankruptcy. The Federal Trade Commission and the Department of Justice were negligent in not recognizing the harm one industry was doing to another industry. Our antitrust laws are not only meant to protect us from one company becoming dominant in one industry but also to protect another industry from being damaged by a rival industry. The DOJ did not even recognize the price discrimination between private-pay patients, the actual difference collected from uninsured patients and the insured patients. The uninsured patients pay six times more to the providers than the insurance companies pay for the same services, BUT the insured pay more because the insurance premiums are based on the patients billed amount, the charges listed on the insured member’s bill.

The legislative branch of our government got into the health care business in 1965 but failed to control the costs spent on health care. There is an axiom that states: when the government goes into business it never fails but passes on its losses to the people by increasing taxes. This is what happened with Medicare and Medicaid. There was an early warning sign in 2006. The amounts listed on the beneficiaries’ bills were causing problems. The General Accounting Office was charged with determining the costs for Medicare Part B hospital out-patient services. In their report to Congress it noted that if it would be allowed to recompute the Medicare Part A hospital in-patient services, Medicare could save seventy-two percent for this program. This fact was never acted on and completely ignored. Today, they could save a figure that would be closer to eighty-five percent.