The American Health Care Paradox: A Lot Of Money For Poor Results

November 29th, 2017 by Tom Lynch

Here’s something all Americans can agree on: Health care costs way too much. But way too much in reference to what? Well, how about the rest of the developed world? How about wealthy countries, our peers, in the OECD, the Organization for Economic Cooperation and Development?

The OECD was formed in 1961. Headquartered in Paris with a membership of 35 nations, the OECD’s mission is to promote policies that will improve the economic and social well-being of people around the world. Annually, it performs comparative analyses of issues affecting its members. One such issue is health care.

Want to know about health care spending around the world, infant mortality, life expectancy, doctors and nurses per capita and a host of other health care topics? The OECD is the place to go.

Which brings us to American health care, which I suggest is a classic paradox. On the one hand, on a per capita basis, we spend 41% more on health care than our wealthy nation peers in the OECD and 81% more than the entire 35-nation OECD average.

OECD Health Care Funding – 2015

(Light blue – Private Funding; Dark blue – Public Funding)

As you can see, while our public funding (Medicare, Medicaid, etc) is comparable to many of the other 34 countries in the OECD, Germany, France and the UK for example, private funding in the US is more than 100% greater than Switzerland, our closest competitor, and 300% greater than the OECD average.

This might be fine if we got what we paid for, but that is not the case. As an example, consider something that should be important to us all: life expectancy. In the US, life expectancy at birth is 78.8 years (76.3 for men; 81.2 for women). In the UK, it’s 81 (79.2 for men; 82.8 for women). In Japan, life expectancy at birth is a whopping 83.9 (80.8 for men; 87.1 for women).

What about infant mortality, the number of deaths of children under one year of age, expressed per 1,000 live births? Our infant mortality rate of 6.1 is 45% higher than the UKs, at 4.2, and 265% higher than Japan’s 2.3 rate.

Curious about obesity? Our obesity and overweight rate is exceeded only by New Zealand’s.

And stop for a moment and consider cancer. Judging by the television ads, one would think the US has more cancer treatment centers than golf courses. Yet our death rate from cancer per 100,000 people is 188. Mexico’s is 115; Japan’s, 177.

In fact, just about the only metric in which we lead the world is smoking cessation. So, yes, it’s paradoxical. Sort of like a big-market baseball team spending gazillions more for players than any other team, only to finish out of the running.

And now, into the fray trots the Republican tax reform plan, which is looking more and more like it will actually become law. This plan would cause 13 million people to  find health insurance unaffordable, which means their new PCP will be their old PCP, the local emergency room where costs are stratospherically higher than anywhere else. In addition, $25 billion will be cut from Medicare, which, although it’s only 4% of the total Medicare budget of $588 billion, can’t be good as more and more baby boomers age into Medicare.

Fixing health care in America is going to take time and a lot more money, but we have to start somewhere, sometime. It’s hard to see where the Republican tax plan even approaches trying to do that.