The United States has the worst health care system in the developed world

The title of this post is not hyperbole or an exaggeration. Judging by cost, access and quality of outcomes, the three metrics commonly used to evaluate a health care system, the United States does have the worst system in the developed world. On two of the three metrics (cost and access), the US is not even close to its competitors and the final one (outcomes) is a bit debatable but it still looks like the US is on bottom. (Let’s define “developed world” as the US, Canada, Europe and the highly developed Pacific Rim countries) I’ll knock out the easy metrics first.

Cost

Cost is where the US does the worst, and I mean the absolute worst compared to any other country. You’d think that since we aren’t even covering 18% of our population, our total health care costs would be less than most other countries, but as it turns out, our market-focused health care economy is remarkably inefficient and wasteful. Here is our per capita spending on health care:

From the Kaiser Family Foundation

The price the US pays for its strange private/public jumble of a health care system is that we spend twice what the Europeans spend for (less of) the same product. We almost spend three times what Japan and Italy do per capita. There is no question that the US has the most expensive health care system in the world by far. We spend huge sums of money on health care that could be going towards education, consumer spending, capital for new businesses or any other productive end. Instead, we waste a lot of money on health care for no apparent gain. Clearly, our approach to health care has failed on this front.

Now, the counter-argument to this is that we may spend a lot on health care, but at least we have choice in our health care market. At least the government doesn’t control our health care economy. But even if choice and limiting government intrusion into the marketplace are your goals, the US still fails miserably.

As for choice, how many Americans actually have a choice in their health insurer? Everyone over 65 doesn’t. They have Medicare. People that get health care through their job don’t have a choice. They get whatever their employer chooses for them. People with pre-existing conditions have no choice. They get no insurance unless they are lucky enough to qualify for a government plan. The poor have no choice. They are lucky if they qualify for Medicaid. The few people with a small say in their insurance provider are the handful of healthy (and somewhat wealthy) people under 65 whose employer does not provide them coverage. If that describes you then congratulations!  You get to choose from among a bunch of inexplicably complicated plans with astronomically high prices. And you better hope that your provider doesn’t find a loophole that will allow it to retroactively cancel your coverage once you get sick!

As for limiting government spending (the most important thing to many conservatives) the American system also surprisingly…. fails. Take a look:

US public sector spending exceeds or matches countries with universal coverage

Government health care plans control just as much of the US economy as they do everywhere else. That’s right. The US public sector spends just as much to cover the very old, *some* of the very poor and some veterans as most countries do to cover their entire population!

Our health care system is so inefficient that even our government spends more than most other countries’ governments. Amazing. The US could, for instance, completely adopt Canada’s health care system and actually see government spending drop as a result. If the US switched to a universal health care system, conceivably, we could reduce government spending as a proportion of the economy.

Access

The US is the only developed nation that does not guarantee its citizens access to health care. About 50 million Americans or one-sixth of the population lacks health insurance. A 2009 study found that there were 45,000 annual deaths in the US because of a lack of health insurance. That’s the equivalent of fifteen different 9/11 terror attacks every year. We expend countless billions to protect our citizens from terrorists. Why not do the same to battle a much larger killer?

Beyond the deaths (which are obviously extremely regrettable and preventable), the US suffers diminished economic productivity because American workers lack access to the care they need and must stay home from work or come to work sick. This is an economic cost that other countries do not have to bear because their citizens can always go to the doctor or buy drugs when they are ill.

Our labor market is also much less efficient than other countries’ market. Since most health insurance is given out through an employer in the US, workers may find themselves in a state of “job lock.” Job lock occurs when a worker wants to leave a job but cannot because he cannot get comparable health benefits anywhere else. For example, if an entrepreneur has a pre-existing health condition he cannot leave his menial job to start a new company because he will have no way to pay his health bills. The US health care system stifles innovation and creativity, and distorts the labor market.

 Quality

As far as quality goes, the US has a multi-tier system. The top tier, which only the most wealthy can afford, probably offers the best health care outcomes in the world. But we are looking at systems as a whole here and not just their effect on the top 1-5%. As a whole, our health care system delivers much worse outcomes than most other advanced systems.

For example, the US has a life expectancy of 78.3 years from birth. That’s good enough to put us in a tie with the communists living on Cuba. We’re ranked #36, which puts us behind the rich Pacific Rim nations and every European country that wasn’t formerly part of the Soviet bloc.  The US ranks similarly on measures of infant mortality. These deaths are immensely tragic, not the least because they are so preventable.

Recently, a study came out that ranked 19 developed nations according to how well they prevented the deaths of citizens with treatable conditions. “In establishing their rankings, the researchers considered deaths before age 75 from numerous causes, including heart disease, stroke, certain cancers, diabetes, certain bacterial infections and complications of common surgical procedures.” Predictably, the US ranked last. 19th out of 19.

There are differing opinions, of course. One of the most common responses is that the US system is better at treating disease once it has  been identified. Sometimes people claim that care  is “rationed” in other countries. One example put forward is that the US has higher survival rates for some types of cancer than many other countries. Many claim that this shows that treatments in the US are superior to those in other countries. It is very likely that this is not the case.

Uniquely, the US over-diagnoses certain types of cancer through excessive screenings. These screenings lead to an inflated number of diagnoses and the over-treatment of small abnormalities that would never develop into cancer if left alone. This problem has even led prominent doctors groups to recommend that their members cut back on the number of screenings and tests performed on populations who are not usually at-risk of developing cancer. Naturally, you are very likely to survive if you never actually had cancer in the first place, and that’s probably why the US ranks so highly.

As for other measures of care being “rationed,” it would seem to be the US that is doing the rationing. The US has fewer hospital beds per person than almost every other developed country. And despite our higher salaries, the US has fewer doctors per person than almost every other country. As a result, we get fewer annual doctor’s visits than most.

All in all, Americans pay much, much more for health care that is not available to the entire country and which produces no better results than in other developed nations. Clearly, this is a system in need of monumental reforms.

(Edit: Added some more information under “Quality”)

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    • Mark
    • November 14th, 2012

    You make many compelling arguments in this evaluation although you also make many assumptions. Curiously I don’t see the effect of law suits factored in any of the figures. It also does not address many the indirect expenses that drive healthcare costs such as the unreasonably expensive education costs, the malpractice insurance costs, and abuses of the system for qualifying for other government aid.

    I am certainly not making the argument that the system is fine, obviously it needs to be modified. I would consider a universal system if it could be demonstrated that the government has performed profitably or at a minimum effectively at anything. I would never give my weakest employee a major responsibility.

    I would be in favor of reforming the law in regards to frivolous lawsuits as well as opening up interstate competiton among providers.

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