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Study finds both businesses and workers squeezed by health care costs

Oct 27, 2015

Credit getoverit.org

A new study released by the Economic Alliance for Michigan (EAM) says rising health care costs threaten economic growth and the stability of working families.

The report says overall health care spending in the U.S. nearly doubled, from $1.5 to $2.9 trillion between 2001 and 2013. Projected costs are expected to reach $4.8 trillion by 2021.

More than half of our economy is made up of the government and health care sectors.

"Every other part of the economy – manufacturing, agriculture – every single thing else that we do is now in the minority and that's just not a sustainable model," said EAM president Bret Jackson.

The study found that health care spending in Michigan increased 59 percent between 2007 and 2013, according to the U.S. Department of Labor. Meanwhile, spending on things such as personal care products increased only 22 percent, and spending on apparel and services declined 15 percent.

Factors including new medical technology, higher diagnosis and treatment costs, demographic changes and wasted resources are to blame, according to the EAM.

"If we cut the waste by a third, we put $3 billion back into the economy," Jackson said.

For every four employees a company has, they're paying the equivalent of a fifth employee in just health care costs, says Jackson.

"But that's a fifth employee that does no work, provides no productivity, and doesn't do anything to move the company forward," he said.

To offset rising health care premiums, some employers are cost-shifting health premiums onto employees, cutting employees' hours to part-time, freezing salaries or offering high-deductible health benefit plans.

"According to some national polls, 67 percent of business leaders believe that controlling health care costs is their number one challenge," Jackson said.

The Alliance encourages consumers to become more actively involved in their health care decisions, and to do their research.

"Instead of taking people's word for things, instead of going to the place we've always gone to and following what we're being told and how to take care of ourselves, we really need to take ownership of our own health care," Jackson said.

Consumers can access tools such as The Leapfrog Group's hospital survey when making treatment decisions.

The EAM hopes to create a greater sense of urgency, which it says is lacking among lawmakers, through education and awareness.

"There are many different solutions to this problem, but unless we make cutting health care (costs) a priority, Michigan workers, Michigan employers and our economy will continue to suffer," Jackson said.

 - Paulette Parker, Michigan Radio Newsroom