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    Misc

    Our Healthcare System and Ford vs. Toyota

    January 31st, 2006

    I still processing some of the things that Jamie Orlikoff (one of the 100 most powerful people in healthcare) spoke about iin last week's CHEF meeting. One of the things he talked about is that we spend approximately $1.9 TRILLION dollars on healthcare in this country. That would be the equivalent of 2x the entire Chinese economy. All by itself, that would be the 4th largest economy in the world (and it's closing in on Germany pretty quickly).

    Let's take a look at this car - the good old American Ford Taurus.

    What is the single most expensive raw material in this car? It's not metal or computer chips - it's healthcare. In fact, ~$1,800 of healthcare costs goes into each of these cars.

    Compare that to a Japanese car, let's say the Toyota Matrix.

    toyotamatrix

    For the typical Japanese car, healthcare costs are ~$200.

    $200 vs. $1,800. On average, American car manufacturers have to spent $1,600 more per car on healthcare than their Japanese counterparts. How in the world do we even have a fighting chance to compete?

    Playing through all the ramifications of this, we start to see why the Fortune 500 are sounding the sirens - healthcare could single-handedly take out our entire American economy.

    Comments:

    Comment from: evina [Visitor]
    US company better copy toyota give $200 for healtcare,should be gov make cheap healthcare we rich but all the money only for war and this because free trade everything more worst
    Permalink 03/02/06 @ 22:56
    Comment from: othmar bruuner [Visitor]
    it is a joke that japanese car manufacturers are allowed to build car manufacturing plants in the USA but the japanese refuse American car manufacturers to build cars in japan. Americans are either naive or stupid to purchase japanese cars under this unfair conditions.
    That is not globalization that is simple protectionism acted out by the japanese, shame, shame!
    I'am working on a big web page in regards to this.

    Permalink 04/22/06 @ 20:53
    Comment from: Derek [Visitor]
    I get tired of these misleading apples-and-pears comparisons.

    (i) Japan has a mixed, partially-government-sponsored universal health care system that allows some of the costs to be born by general taxation: [http://www.medhunters.com/articles/healthcareInJapan.html]

    Presumably this, plus a fitter population, is why auto industry-borne health care payments are lower than in the U.S.

    Conclusion: The U.S. should move to a national health care system as soon as possible so that the whole economy, instead of just the auto industry (or any other industry) carries the burden for health care. This would make the auto industry more competitive. (Other benefits: universal coverage; and no more worries about losing health care when you lose your job.)

    (ii) P.S. How does Toyota (USA) manage to beat the crap out of Detroit? Presumably they have to offer health and other benefits to their workers in the U.S. at a rate that is fairly competitive with other U.S. auto makers?

    So it's not all about health care issues, the strong $ vs the yen, etc., etc. It's also about better vehicles.
    Permalink 02/05/07 @ 13:28
    Comment from: b hamilton [Visitor]
    Please remember that the Japanese who manufacture in the US have lower healthcare costs because they are not faced with the high cost retiree and older work force that the US manufacturers are faced with. As the Japanese (in the US) workforce ages and begins to retire they will incur increasing costs per car for healthcare costs just as the US manufacturers do. However since the retirment benefits are not as rich as the US workers they will have less chance of reaching the same per car costs
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