Rising healthcare costs devastate US manufacturing.

The U.S. manufacturing industry is at its lowest level in modern history, now at 11% of GDP. The cause is the growth of the healthcare Industry and how the U.S. pays for it. A simple comparison of the percentage change in GDP of the healthcare industry versus the manufacturing industry shows a direct correlation between the growth of one and the shrinkage of the other, percentage point for a percentage point. No other industry besides manufacturing has seen such a decline during this time period.

The cause is simple: the U.S. is the only industrial country where the employer directly pays a substantial share of employees' healthcare benefits. In other nations, for the most part, citizens themselves and businesses foot the bill, through income taxes.

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The most fundamental rule of competition is to lower manufacturing costs, whether it is for a small business or a whole country. Until the United States goes from an employer-paid system for healthcare benefits to a citizen-paid policy, it will continue to lose its dominance in manufacturing.

U.S. payment of healthcare costs by employers causes the loss of U.S. manufacturing companies and manufacturing jobs. Health care costs, both primary and secondary, are passed during each step to the next contributor in the manufacturing process; think of it as value-added tax, moving the health care benefit costs to the next purchaser of services or goods. But each time the cost is passed on to another manufacturer in the supply chain, there is an additional markup for profit; therefore, manufacturing employers’ portion of the $3.6 trillion spent annually on healthcare in the United States is included in manufacturing costs. No other industry has as many links in the supply chain for cost markups or have international competition.