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The broken economics of our health care system are a threat to our prosperity at both a national level and at the individual level. At the national level we must address the fact that our health care system costs, in aggregate, far more than it should, and far more than we can sustain. Healthcare cost as a percent of gross domestic product (GDP) is about 18 percent in the United States. In comparison, most other developed western countries spend 10-to-12 percent of GDP on health care, and many of these enjoy the same or better outcomes in terms of life expectancy and general wellness. Our excess spending crowds out investments we might make that would substantially increase or aggregate productivity and competitiveness, for example investing in better education for our youth. It is an essential national priority is to get control of healthcare costs.

The excess cost comes from multiple causes. Some is due to how the health care industry is structured, with market power concentrated among large care providers, insurers, and pharmaceutical companies. Some is due to how the law forbids the government from negotiating for lower drug prices. Some is due to financial incentives that reward a focus on acute needs rather than managing chronic conditions cost-effectively. Some is due to our willingness to pay for costly, invasive, and largely ineffective care in end-of-life situations. And some is due to the rise in obesity and decline of physical activity in the American population. The crisis requires comprehensive solutions that take into account all these factors.

The Affordable Care Act fulfills an urgent need by providing health insurance coverage for many people previously uninsured, but it has far to go in addressing the cost of healthcare. Doing so will require some very difficult decisions to stop funding enormously expensive interventions that provide little if any measurable benefit. And it will require the politically difficult task of bringing pressure to bear on the prices of new drugs and devices, which were not addressed in the ACA due to the need to win political support (or at least non-opposition) from pharmaceutical companies and device manufacturers.

In addition to the aggregate costs imposed upon America’s economy by the 18 percent of GDP that we spend on health, the cost burden of health care is particularly challenging to small businesses and their employees. Small business owners generally want to do right by their employees but they lack negotiating power to obtain reasonable deals from giant insurance companies and healthcare-providers that enjoy near monopolies in many markets. Businesses suffer in two ways: from the direct, out-of-pocket costs for health insurance and from the productivity that businesses lose when employees struggle with healthcare costs. The cost problem must be solved so that American firms can be truly competitive with companies that operate in countries with far better systems than ours.

Fortunately, the SHOP program component of ACA will provide some relief to small businesses seeking affordable coverage for their employees. And the provision that supports integrative delivery of traditional and alternative medicine (Section 2706) could provide less costly options to many patients and their employers.

Despite the problems with its launch, the Affordable Care Act represents a significant improvement and it provides a solid foundation for further progress. ASBC supports continued vigorous work to improve the ACA’s functionality and, in states where it is still restricted, its availability. We also support expanding preventative healthcare, integrated care, and other innovations to provide quality care at a reasonable price. The health of American businesses as well as the health of our nation is at stake.