Two decades back, life expectancy for U.S. born citizens ranked 11th in the world. Today, though American’s expect to live eight years longer than in 1960, numbers from the Census Bureau and National Center for Health Statistics show U.S. life expectancy falling to 42nd place worldwide — even while the nation spends more per person on health care than any country on earth.

“Something’s wrong here when one of the richest countries in the world, the one that spends the most on health care, is not able to keep up with other countries,” the best way truly to reduce health care cost is to improve its qualityDr. Christopher Murray, head of the Institute for Health Metrics and Evaluation at the University of Washington, told the Associated Press in 2007. Murray calls for increased attention to reducing cancer, heart disease, lung disease and diabetes and he points specifically at tobacco use, high blood pressure, elevated cholesterol and poor diet: “Even if we focused only on those four things, we would go along way toward improving health care in the United States.” For the record, about two-thirds of adults 20 and older are overweight in the U.S. — nearly a third are clinically obese.

Dr. Murray wants to take the argument beyond the “We’re Number One” chants that sometimes drown out reasonable conversation: “The starting point is the recognition that the U.S. does not have the best health care system,” Murray says. “There are still an awful lot of people who think it does.”

That’s partly a function of availability. About 46 million U.S. citizens are without health insurance and another 25 million are under-insured (a 60 percent increase in the under-insured from 2003-2007).

But according to What Should Employers Do about Health Care? — a report by Michael E. Porter, Elizabeth O. Teisberg, and Scott Wallace in Harvard Business School’s Working Knowledge — the problem goes much deeper. “Many U.S. employers are dropping health benefits or hoping for reforms that will transfer responsibility for health insurance to individuals or to the government,” they write.

Think again. Employers cannot get out of health care, no matter what kind of health insurance system is put in place. They bear the cost of poor health in the form of sick days, absenteeism, reduced productivity at work, and early retirements of skilled contributors. Recent internal company studies in the United States estimate that employers spend 200 to 300 percent more on the indirect costs of poor health than they do on health benefits. The costs of poor health are especially high for chronic conditions such as diabetes, migraines, heart disease, and respiratory problems. These costs remain even if employers get out of health insurance obligations. But by disengaging, employers lose much of their ability to influence the costs of poor health.

They maintain that attempts to deliver health care at the lowest possible cost is fuzzy thinking that only makes the problem worse: “In every other aspect of their business, employers are attuned to quality and value. But health care has been treated as a commodity and cost reduction has been the dominant approach.

Most employers do not even measure the costs of poor health among their employees. If they did, however, they would discover that many of the steps they have taken to reduce benefit costs have actually made the costs of poor health even greater. For example, studies have shown that co-pays and deductibles on essential medications for chronic conditions can reduce adherence to therapy, leading to expensive hospitalizations, complications, and the like. Here, so-called consumer-driven health plans not only failed to benefit the consumer, but they hurt employers as well.

The report concludes that employers must begin thinking about health care in terms of value instead of cost, claiming, “New research on value-based health care delivery reveals some powerful, and ultimately optimistic, principles.”

First, the best way truly to reduce health care cost is to improve its quality—better diagnoses, more timely treatment, less invasive methods, getting the right treatment to the right patient, fewer complications, and so on. Quality, defined in terms of outcomes, is the secret to success in health care.

We won’t solve the larger issues around health care here and now, but Porter and friends raise a significant question: If what gets measured is what gets done, are you measuring the value of employee health?

• What do sick days, absenteeism and early medical retirement (or death) cost you at the bottom line?
• What is the value in measurable productivity from your healthiest employees?
• What can you do in the next 60 days to encourage and enhance employee health? And in the six months after that…
• Based on the difference in your answers to the first two questions, what can you reasonably spend to help your employees stay healthy?