Intel alert on US ‘Achilles heel’

The US will lose thousands of jobs to low-cost countries unless companies reduce soaring healthcare expenditure urgently, Craig Barrett, chairman of Intel, the chipmaker, warned on Thursday.

Mr Barrett said failure to curb the $2,000bn annual healthcare bill would compromise the global competitiveness of the US economy. “Healthcare is the Achilles heel of the US in terms of competitiveness,” said Mr Barrett in an interview with the Financial Times. He said healthcare costs for US companies were so high that it was cheaper for some to hire new employees in a low-cost country than to pay for healthcare benefits for American workers and their families.

Mr Barrett’s comments come a day after General Motors clinched a deal with unions to shift more of its healthcare burden to workers – a landmark agreement that could pave the way for similar arrangements at Ford and Chrysler.

Unlike other corporate leaders, Mr Barrett urged companies, rather than politicians, to take the lead in bringing down healthcare costs from the current 16 per cent of gross domestic product, the highest level in the developed world.

He said debate in the run-up to the 2008 presidential election would centre on how to provide coverage for the millions who have no healthcare insurance, leaving companies to deal with their insured workers.

The Intel chairman said companies, hospitals and doctors should make greater use of information technology, starting with measures such as the provision of digital health records.

Intel has made little progress in selling to the healthcare sector since creating a digital healthcare division in 2005 and Paul Otellini, its chief executive, has criticised the industry for its resistance to change. Last year, Intel joined forces with companies such as Wal-Mart, the US retailer, and BP, the UK oil group, to launch a plan to provide digital health records for employees. Mr Barrett also reiterated his call for a relaxation of the US immigration regime, warning that the rules, that were tightened in 2001 are starving companies of much-needed skills.

But he said he was not optimistic a new administration would deal with the issue, saying that most of the presidential candidates were focused on illegal immigration rather than attracting people with engineering and information technology expertise into the country.

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By Francesco Guerrera in New York

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