Commentary: Bitter medicine for US health

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America's beleaguered healthcare industry is putting a brave face on yesterday's figures, which show that the cost to US companies of providing medical benefits to their employees rose by 10 per cent in 1992, the lowest rise in five years. That rate, however, is triple the rise in consumer prices. US businesses are now spending an astounding dollars 4,000 a year per employee to keep their workforce healthy.

Washington's new healthcare tsar, Hillary Rodham Clinton, has made it clear that this extraordinary inflation is unacceptable. But the latest rumour about the Clintons' cure - imposing a benefits tax on employers to pay for a health plan - suggests that things will get worse for companies before they get better.

In the long run, however, all companies that employ Americans are going to realise important savings from a scheme that encourages competition within the healthcare sector, as US firms that employ Canadians have discovered. It is no coincidence that Detroit's car makers, whose medical costs are 50 per cent lower at branch plants north of the border, have been in the forefront of the corporate campaign for socialised medicine in the US.

Thanks to an active generic-drug sector and a drug-price review board, even named prescription drugs typically cost 33-66 per cent less in Canada than in the US.

Next on the Clintons' hit list: America's doomed health-insurers. Investors beware.