The sustained, rapid increases in the cost of health care in the United States have had a tremendous impact on GM’s profitability, as they have for many other companies. This is a major competitive issue for all of American business – especially manufacturers – in an increasingly global economy.

Consider these numbers:

• Health-care costs in the United States have increased sharply every year since 1991, often at double-digit rates. In 2003, they were about 15 percent of gross domestic product, at least 30 percent higher than in the next-most-expensive country.
• Many employers cite rising health-care costs as their biggest problem, and that’s true for state governments as well.
• GM spent $5.2 billion on health care in 2004 for our 1.1 million employees, retirees and dependents throughout the United States. Those costs amounted to about $1,500 for each vehicle we manufactured in the United States last year.
• Our foreign-domiciled competitors have just a fraction of these costs, because they have few, if any, U.S. retirees. In their home countries, their governments cover a much greater portion of employee and retiree health-care costs.
• Unfortunately, America’s high health-care costs don’t buy the best care. In fact, according to the Organization for Economic Cooperation and Development, the United States ranks 12th out of 13 industrialized nations in 16 top health indicators, things like infant mortality and life expectancy.

The impact of the health-care burden is particularly frustrating for GM, because over the past decade, we have made huge improvements in our operational competitiveness.

GM also has worked aggressively for years to lower our costs on many fronts, with our health-care providers and with employees on prevention and wellness activities. We’ve worked with providers to help them eliminate waste and errors in their processes, much as we have done in our assembly plants. But we have reached a point of diminishing returns.

This is a crisis, and it can be resolved only if all of those involved – business, the health-care industry, government and consumers – work together toward finding solutions. There is no silver bullet.

Where to start? First, as a nation, the United States needs to bring all of its capabilities in quality, productivity and information technology to the health-care industry.

For example, GM, Ford Motor Co., DaimlerChrysler AG and the United Auto Workers announced earlier this year an electronic-prescribing initiative in southeast Michigan to reduce errors, improve efficiency and lower costs.

Second, we all need to become better health-care consumers. Today’s health-care consumers generally know far less about the drugs they take, or the quality and efficiency of their health-care providers, than they do about the cars and trucks they buy.

Third, we need to encourage access to affordable health-care coverage for all our citizens. It’s simply not acceptable for over 45 million Americans to be without health-care coverage. This causes a tremendous cost shift to those that do provide coverage, through higher bills to cover the costs of the uninsured.

A significant part of the problem is that so-called catastrophic health-care costs for 1 percent of the population generate 30 percent of the nation’s overall health-care costs. It is important to concentrate efforts on ensuring the best care for those with chronic diseases and high-cost conditions, and to stabilize the private health-insurance system by addressing these costs.

Fourth, we need to reduce the high rate of inflation in health-care spending, beginning with the very high cost of prescription drugs. And the easiest way to do this is by expanding the availability and use of generic drugs.

And most important, we each need to take better care of our own health – eat well, exercise, quit smoking…things we all know we should do.

These are just some of the major steps that need to be taken to resolve this crisis. But progress will lag unless all of the key constituencies involved in this important issue – business leaders, the health-care industry, consumers, Congress and the Administration – come together to address it with an open mind and a can-do spirit.

Failing to address the U.S. health-care crisis would be the worst kind of procrastination, the kind that places our children and our grandchildren at risk, and threatens the health and global competitiveness of the U.S. economy.