Vital Signs - May 2007

Rising Healthcare Costs

Hurting Pockets of Businesses and Individuals

by Carla Sloan

The business community is up against the wall. Predictions are that the average Fortune 500 Company will spend as much on employee healthcare benefits as it makes in profits by 2008. General Motors (GM) already spends more on healthcare than it spends on steel. We’re losing our edge to global competitors in countries with lower costs and universal healthcare services.

GM’s story is instructive. In testimony before the U.S. Senate Special Committee on Aging this past July, Richard Wagoner, chairman and CEO of General Motors, stated that GM spent $5.3 billion for employee healthcare coverage in 2005. And it’s not just GM. In a business roundtable survey of member CEOs, 58 percent cited rising healthcare costs as the greatest pressure point for their businesses.

Small businesses are also feeling the pinch. While premiums rose 7 percent between 2005 and 2006 in firms with more than 200 employees, they jumped 8.8 percent across firms with fewer than 200 workers. The share of small employers offering health insurance to their workers fell to 60 percent from 68 percent between 2000 and 2006. Among the smallest employers, the offer rate is even lower, 48 percent in firms with three to nine workers.

Americans spent nearly $2 trillion on healthcare last year – more than $6,000 for every man, woman and child. That’s far more than any other industrialized country, and costs continue to grow at more than twice the general inflation rate. Yet, we rank well behind other advanced societies in life expectancy and infant mortality.

Today, an alarming number of Americans are unable to afford health insurance – not just the poor, but the middle-class is increasingly affected, as well as premiums, deductibles and co-pays continue to climb, so too, swell the ranks of the uninsured. Too many have trouble paying their medical bills; too many have gone bankrupt trying; and, consequently, too many skip needed treatment, tests or prescriptions.

The American Association of Retired Persons (AARP) believes that affordable, high-quality healthcare should be available to all Americans. Our nation must find a way to improve the quality of care, excise wasteful practices, and focus its resources where they are most effective in order to provide value for each healthcare dollar.

America is reaching its tipping point. Businesses, workers and retirees are worried about the growing cost of healthcare. People are concerned about the future for their children and grandchildren. It’s not too late to turn the tide, if we begin addressing these issues now. AARP has launched the most ambitious campaign in the organization’s history called, “Divided We Fail,” because accomplishing the goal of affordable quality healthcare and financial security for all will require the efforts of everyone.

AARP is building a strong network of coalitions to help spread the word and reach unprecedented numbers of people. Getting there is going to take the concerted efforts of every sector – health, business, government and individuals, too. AARP will be engaging its members and the public to press for change. The organization will put pressure on candidates to make health and financial security the top domestic issues in 2008. To achieve this, AARP has joined forces with businesses and labor unions, and will add a broad spectrum of other groups to see this through.

Americans have an enormous opportunity to compel the nation’s leaders to work out commonsense, bipartisan solutions so that everyone has access to affordable quality healthcare.

For more information about AARP’s lobbying efforts on this and other issues, visit www.dividedwefail.org.

Carla Sloan
Carla Sloan is the Nevada State Director of AARP.