Myth #14

National Health Insurance Would Improve America's Ability To Compete In International Markets.

Table 16

A commonly held view is that U.S. health care costs make U. S. products less competitive in the international marketplace. An example of this view are the assertions that health care costs add $700 to the price of every U.S. automobile and that national health insurance would make American auto manufacturers more competitive. Both assertions are wrong.[136]

There is no evidence whatever that private health insurance costs add anything to the price of an automobile – or of any other product. Health insurance is simply one element in the total compensation package of auto workers, a fringe benefit provided in lieu of money wages. Over the last two decades, fringe benefits for most American workers have grown steadily in real terms, while money wages have grown little, reflecting the preference of employees for nontaxed benefits over taxed wages.

What workers are paid depends on what they produce, not what they consume. The fact that Americans spend a greater proportion of their income on health care and a smaller proportion on other goods and services does not put us at a competitive disadvantage relative to other countries. [137] For example:

  • The Japanese spend a greater proportion of their income on food, but that doesn't mean that food consumption adds to the price of a Japanese car.

  • The Canadians spend a greater proportion of their income on education but that doesn't mean that education adds to the price of Canadian lumber.

The differences in consumption patterns merely reflect consumer preferences and consumer product prices.

However, national health insurance would affect our ability to compete in international markets. That is because such insurance involves not only the purchase of health care but also a redistribution of income among producers in different industries. On the whole:

  • A national health insurance system would impose extra taxes on U.S. exporting industries and use the proceeds of those taxes to subsidize other industries.

  • The industries which would receive subsidies contribute mostly to domestic rather than international markets.

  • The industries which would be penalized are the manufacturers which provide most of our exports.

National health insurance would raise the costs of our export goods and lower marketing costs in the U.S. for our foreign competitors. Far from making auto producers more competitive in international markets, it would raise auto production costs relative to foreign rivals and make the industry less competitive.

Despite the fact that one-third of our federal budget goes to defense spending, a burden not equaled by our trading partners, taxes are lower in the U.S. than in most developed countries. As Table XVI shows, only Japan currently has a tax burden as low as ours. Were we to adopt a program of national health insurance, the U.S. tax burden would approach that of Britain and Germany. That additional burden would have a major impact on our ability to compete.