How Healthcare Is Hurting the Manufacturing SectorPublished on: October 2, 2020
Categorized in: News
One of the rising challenges that are facing manufacturers in recent time is healthcare cost. Profitability and sustainability are being dragged to the floor because of rising healthcare costs. The most significant occurrences have seen a continuous rise in the price of insurance and deductibles. A lot of citizens in the United States have been wondering and asking why per capita cost has been going up.
One of the most important things to note is that manufacturers are facing a lot of risk as a result of the hike in HealthCare cost. According to research by industry week, the manufacturing companies have their GDP at 11%, which is genuinely low. The reason for this is stringent to the fact that the healthcare system in the United States is multiplying. Additionally, the model of paying for the healthcare system by the United States government plays a role in the hike of the cost.
When the GDP of the healthcare system was put beside that of the manufacturing industry for comparison, it was seen that one has significant growth, and the other does not. It is seen after this comparison that in a time like this manufacturing industry is at its lowest decline.
You may wonder why this is; it is basically because the United States allows its employers to foot a part of its employees’ healthcare bill. When in other nations, citizens are the ones in charge of paying their healthcare bills. Citizens carry out this payment by making use of the income taxes.
The United States as one of the most industrialized countries in the world needs a change in its healthcare system. If for any reason, the US wants to continue dominating in terms of manufacturing the goal would be to help the manufacturing industry. To continue to compete, a manufacturer needs to reduce its manufacturing costs. This rule applies to any size of business as well as a whole nation. The moment the United States moves its healthcare system from employer-paid to citizen paid plan, manufacturing companies will begin to see significant changes.
For every manufactured good, it takes a lot of processes before it becomes a finished product. However, with every step through the production of goods, all employees are entitled to healthcare benefits according to the process duration. This type of payment is known as an indirect form of healthcare cost. To make this clearer, a perfect example is the production of a plane. Healthcare bills are paid for every level of workers until the plane is fully functional. For the designers of the aircraft, the healthcare bill must be paid, the engineers involved will be paid in the same vane till the final stage of the plane. Therefore, manufacturers have to find a means to stay in business through this challenging healthcare cost system. What this means is that manufacturers must endeavor to make sales above their break-even to stay up in the industry. The best way to help the manufacturing industry is to nullify both direct and indirect employer’s healthcare cost system of payment.
The most significant thing to note is that nullifying the employer’s system of paying for healthcare cost is just a fraction of the solution. The reason for this being that it will put citizens back to paying expensive medical aid, and this will increase the numbers of bankruptcies in the country. The immediate solution to this problem is for the United States to cover healthcare aid for all citizens through tax generated income.
How to solve the problem
The possible most effective way to solve this problem is to adopt the “single-payer system.” This system is being used mainly in European countries. What the Europeans do is that they help the citizens to regulate the healthcare prices while also helping them out in the healthcare payment. However, the United States sees this type of system as a capitalist type of system. It is not looking like this approach will change until citizens and businesses ally to change this approach. In reality, the possibility of this happening is pretty low, because no citizen would want to incur debt on themselves.
Another solution that may be viable is for the country to have a reform where necessary in the current healthcare system. Also, the country needs to pay attention to the reforming of the economic system. What will make this possible will be for the government to cut prices for hospitals and physicians? Also, the administrative costs should get trimmed, so it will make healthcare affordable for citizens. When the government makes the approach that will announce the prices of all of the above healthcare costs to citizens, the competition will arise. The moment citizens can compare healthcare costs, it will help trim down on the lots of overpriced charges in the healthcare industry. By doing this, the government can now push that healthcare payment is made by employees rather than the employers. Additionally, when prices are posted, the big players in the healthcare industry will find ways to maintain competition and become more strategic.
The downright problem to this is that the Medical Association of America is a set of individuals with lots of power. They are always keen to make sure maximum profit is realized. Also, pharmaceutical companies are still going to be interested in maintaining their status quo. They would instead push and fight to keep prices while also making certain regular practices are maintained. Therefore, getting the government to showcase prices might not duly work against the proficient power of the medical association of America.
Therefore, the manufacturing industry will most likely have to seek balance from the government and find a way around the hiked cost. Also, manufacturers can lobby to half the healthcare cost between the government and the manufacturing industry.
On the other hand, the healthcare cost can again be halved between employers and citizens. Doing this seems to be the most possible and viable option for the manufacturing industries.