G.M.'s announcement spoke volumes about the impact of the health care system on domestic manufacturers' competitiveness. John M. Devine, the chief financial officer, suggested that the company would increase its health care inflation projection to "double digits" annually from the current 8.5 percent, which would most likely reduce its 2005 earnings by hundreds of millions of dollars because of rising costs next year and larger payments to retirees in the future.
Mr. Devine also said that G.M. would probably have to pay more than the $5.1 billion estimated this year to cover health costs for workers and retirees.
G. Richard Wagoner Jr., the chairman and chief executive, said in a conference call on Thursday: "The health care cost trends in the U.S. are really out of control. It's a big issue for G.M.; it's a big issue for the U.S. economy as a whole."
Increasing health costs put domestic automakers at a considerable disadvantage to competitors in Japan and Germany. G.M. spends about $1,400 for each vehicle produced in the United States on health care, a figure it says is about $1,000 more than Toyota. It provides coverage to 1.1 million Americans, including workers, retirees and families. By contrast, automakers based in Germany and Japan have retirees who live mostly in countries with national health systems.
"This health care situation could get out of control," said Stephen Girsky, an analyst at Morgan Stanley.
nytimes.com
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An article in the NYTimes was referenced in a post by luv2earn yesterday which reported that:
In two reports, the Nordic countries bested some of the world's hottest economies. The countries dominate the top ranks of a list of most competitive economies in the world, and a new report of the best places to do business.
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So why don't people automatically mention Denmark and Finland when conversations turn to development success stories or good financial bets?
"It's that old myth that social protection requires more business regulations and hurts business," said Caralee McLeish, an author of the World Bank survey. "In fact, we found that social protection is good for business, it takes the burden off of businesses for health care costs and ensures a well-trained and educated work force.'
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Simeon D. Djankov, one of the authors of the World Bank study, said the governments' philosophies were to let businesses alone, taxing them at some of the lowest levels in the world so they can be competitive and efficient. The governments then put high taxes on personal incomes to pay for social services that underwrite their labor forces.
"You have to look behind the numbers," Mr. Djankov said. "Ignore the Nordic reputation for tax burdens and you'll see they have established a system that does not distort production, that gives people an incentive to invest in businesses and in stocks because the corporate taxes are so low.'
nytimes.com
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There seems to be a potential alliance between those that want universal government health care for altruistic reasons and US industry that needs to regain international competiveness. As someone who lives in a country that provides excellent universal health care, it's not just a question of who pays but recognotion that the US system is far too expensive and wasteful for what is provided. What is desperately needed for economic reasons is a restructuring of health care provision in the US. |
