Can US manufacturers cope with healthcare costs and remain globally competitive?

Kate Supino
- People and Skills - Nov 12, 2014

As manufacturers in the U.S. strive to meet the challenge to abide by government regulations for healthcare, two things are clear. First, this challenge presents a clear disadvantage for our manufacturers, compared to overseas manufacturing companies that aren't subject to the U.S.'s employee healthcare mandates. Second, healthcare costs are rising across the board in administrative, direct and indirect ways.

Can manufacturers somehow find ways to overcome these challanges?

Challenges some manufacturers’ face

The employee healthcare mandates pose a specific challenge to manufacturers in the U.S., some of whom employ more than 300,000 employees.

SEE MORE: The Toyota Way: How the automotove giant handles health and safety

Manufacturers like General Electric, Ford and Hewlett-Packard bear the brunt of rising healthcare costs while their counterparts in other countries escape the added strain on operating expenses.

If the auto industry and others are to survive, however, rising healthcare costs must be contained.

The impact of healthcare expenses

There are several ways in which healthcare costs affect manufacturers. One is the added load to administrative employees. Increased oversight and constantly trying to find new ways to keep employees happy with their healthcare benefits have human resource personnel working overtime, sometimes literally.

As the following article shows, the more time that is spent on managing increasingly complex healthcare paperwork, and helping employees in choosing a health insurance plan that functions for their individual needs, the less time can be devoted to improving employee morale and affecting general positive change in the workplace. That's an intangible cost that builds with time.

The direct costs associated with ever rising healthcare costs are more immediate and possibly more dangerous.

As more procedures and coverage are allowed, insurance companies continue to raise their rates, despite previous government assurances that rates would reduce. When rates rise, manufacturers have no choice but to pay up or risk harsh government penalties. And in a global trade economy that already has the United States manufacturing industry on its knees, healthcare costs have the potential to take some of the frailer manufacturers out of the picture altogether.

SEE MORE: Why reputations management is so important to the global manufacturing sector

So how can manufacturing companies compete in the global marketplace with their hands tied by healthcare costs? The solution may be a multi-pronged approach that addresses all the issues facing manufacturers.

Standardising healthcare administration

One possibility may be a standardisation of healthcare administration. If all manufacturers worked together to develop a comprehensive method of managing healthcare administrative requirements, it would place the bulk of their healthcare admin work on autopilot.

Whether manufacturers would be willing to consider such a unified effort, as well as be willing to invest the time and money necessary to grow such a standardized system, is in the cards.

One thing is certain. Healthcare costs aren't going to go down. The promises that Americans thought they heard aren't going to happen, so the sooner all manufacturers get on board the global survival train, the better off they'll be.

Now isn't the time to be divided or to argue about whether the new system is wrong or right.

Now is the time to act.

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