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America spends way, way, way more on health care

health_spending_graph.gif

It's hard to constantly come up with new ways to say "America spends way, way, way, way, way more than any other country on health care." But we do! Just look at the National Geographic graph above, which puts per-person spending on one side of the chart and average life expectancy on the other. Or consider this: If we spent what Canada spends per person, our deficit problem would go away entirely. And Canada's per-person average is in a country where everybody is fully covered and so has full access to care. America's is in a country with 47 million uninsured, and so many people skimp on needed care. So the comparison is actually unfair to Canada.

David Leonhardt has another way of making the point. We don't have a government-run system. But our system is so expensive that our government's partial role is pricier than the whole of government-run systems.

In per-person terms, government agencies spent roughly $4,500 on medical care, while the private sector spent roughly $3,000.

Here’s what’s notable about that $4,500 figure: It’s more than what a lot of other rich countries spend on health care — including both the public and the private sectors. All told, Canada, Belgium and Germany each spend about $4,000 per person on health care. Australia and Britain spend about $3,500 each. Japan spends a little less than that.

This is serious pitchforks-and-torches stuff, if only people really understood it. I continue to believe, however, that the improbable size of the disparity is a barrier to understanding. People just don't believe these numbers. America may not be the best, but we're not supposed to be the worst by such a large margin. If we just spent 15% more than everyone else, people might be more willing to listen.

By Ezra Klein  |  January 13, 2010; 1:05 PM ET
Categories:  Charts and Graphs , Health Reform , Health of Nations  
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Comments

And, where does all that extra money go that we spend? It would be interesting to get a breakdown of what we spend that extra $3500 per person on.

Posted by: AuthorEditor | January 13, 2010 1:14 PM | Report abuse

I really don't believe the current healthcare bill, or any sort of government run healthcare, will change that chart significantly for the U.S. We're America. Our government run healthcare will cost way more per person just like our privately run system did.

Do those numbers just take into account only actual medical expenses, or does it include the overall cost of the healthcare bureaucracies in those countries, some of which are quite large. In any case, our healthcare bureaucracy will be so huge, it'll dwarf the rest of the world. Because we're America, and that's how we roll.

And, at the end of the day, we'll still have 10m+ people complaining that they can't get their healthcare.

Posted by: Kevin_Willis | January 13, 2010 1:16 PM | Report abuse

I actually do agree with the numbers; however, Leonhardt's calculation is a bit misleading. In particular, I question the inclusion of the "about $250 billion in lost federal revenue" -- that is, the money which could have been collected under the guise of health care and spent on things other than health care.

In any event, dividing the total by the population yields about $7 to $7.5K in spending per person. As a percentage of GDP spent per capita, it's still higher than any other country; however, the cheapest fiscally stable alternative isn't all that far behind.

It's a point raised here before, which gets blurrier -- not clearer -- when graphed by dollars rather than portion of GDP: as a fraction of GDP, Japan spends too little on health care (and is heading for trouble) while the US seems to spend too much. Germany and a few others are in the middle.

Posted by: rmgregory | January 13, 2010 1:33 PM | Report abuse

Author Editor:

Here's one take on your question, by noted healthcare economist/public health expert Gerald Anderson. "It’s The Prices, Stupid: Why The United States Is So Different From Other Countries" http://content.healthaffairs.org/cgi/content/full/22/3/89

I believe that link is free without an academic license.

It's just one opinion, albeit from a noted expert, and the paper is showing its age now, but it's a good introduction to one compelling line of thought in the American health care spending debate. Anderson is a good person to google if you're interested in learning more.

Posted by: CarlosXL | January 13, 2010 1:34 PM | Report abuse

Part of the problem is that all that excess spending gives gold-plated health care (or at least the perception of it) to the politically-powerful Americans who control this debate. Most people are selfish at heart; they want the best possible health care they can get, even if that means some nebulous group of "others" suffer by comparison. And when the benefits are so concentrated (you), and the costs are so diffuse (the entire national economy), there's a strong incentive to maintain the status quo. Who cares what the per capita spending number is if I'm not writing that check?

Posted by: simpleton1 | January 13, 2010 1:40 PM | Report abuse

I think the fear is all our best practicioners will flee the country for a libertarian paradise like Somalia or even the People's Republic of China where they will sell their life-saving treatments to the highest bidders, and government officials. This drain will end innovation and create long waiting lines at the remaining public clinics staffed by National Guard medics and graduates of the veterinary school of Sierra Leone.

Posted by: luko | January 13, 2010 1:42 PM | Report abuse

Ezra,
Where were posts like this when the healthcare debate was in full swing? You could have had an impact then but now...

This information has been out there for years... Though, yes the Nat Geo graph is great.

Please be more of a fighter for the truth...

Posted by: michaelterra | January 13, 2010 1:53 PM | Report abuse

"Do those numbers just take into account only actual medical expenses, or does it include the overall cost of the healthcare bureaucracies in those countries, "

Yes it does. The question reflects an inability to see how healthcare might be organized in any way other than what we have. Between CMS, the VA, and the NIH, we already have a much bigger healthcare bureaucracy than most countries that have successful universal care programs.

Not only does government spend proportionally more on health care in this country, it is in fact more "government run" than in most universal care systems.

The German system, financed through payroll taxes is much more privatized. The same is true of the Netherlands where the government safety net includes longterm care for all while relying on *universal*, individual private insurance as the centerpiece of its policy.

The inability to "think outside the box" and appreciate that there are completely different approaches to financing and managing care is strangling us.

Posted by: Athena_news | January 13, 2010 1:57 PM | Report abuse

"People just don't believe these numbers."

Ezra, any evidence for this? What makes you think people actually know about these numbers (Most people can't even explain the public option)? Might not that be a more likelier explanation for the lack of pitchforks.

Posted by: arthur11 | January 13, 2010 2:14 PM | Report abuse

From my perspective, the way we are going are costs are going to go way way up. The more government involvement we have, the more our costs go up. We aren't even going to be allowed to have real insurance anymore, only something like a group co-op health care plans where no matter how unhealthily you behave, I still have to pay for your gastric bypass surgery.

There is a such a clear relationship between the number of people on Medicare and our cost curve, that it is obvious to almost everyone that it is the most inefficient system ever devised. If you look at the average number of doctors visits per year of people on Medicare, it is vastly higher than than people on private insurance. We need Medicare co-pays now so that people will stop the insanity of over treatment. This is the gold plated plan driving over 50% of health care costs in this country, not the few people with insurance.

The providers are the source of our high costs, and they are enabled by our systems that hide the cost of their behaviors and people that demand excessive care, with consequences spread between all of us. Only market where the costs are passed more directly on to consumers is going to drive the demand for significant change in provider pricing, and the demand for value.

In the current health care debate, the people that need our help the most are the uninsured, because they are the ones exposed to the true cost of healthcare. Thus, something is better than nothing for them. For the rich people getting our money to pay for Medicare...sorry, the party should be over for you soon.

Posted by: staticvars | January 13, 2010 2:26 PM | Report abuse

@static: "If you look at the average number of doctors visits per year of people on Medicare, it is vastly higher than than people on private insurance."

Could it be, I wonder, that the Medicare population is much older and sicker? Just saying.

America has both a price problem and a utilization problem. It's true we're never going to be the cheapest health system, nor should we try to be. I believe one of the goals of our system should be to encourage health care innovation. That costs money. To lower costs, we need to trim the fat: First, Medicare for All (private insurers would provide claims processing and sell supplemental policies. Second, a national drug formulary.

Those are the low hanging fruit. Eventually our leaders will figure it out.

Posted by: bmull | January 13, 2010 2:45 PM | Report abuse

michaelterra: Ezra's been posting on relative costs since at least May. Check the archives.

Posted by: etdean1 | January 13, 2010 2:50 PM | Report abuse

I've been wondering when you were going to mention that graph. But, at this point, it's not clear to me that having knowledge is enough to change anyone's mind. Whether it's the size of the disparity that's causing the block is unclear to me. Maybe the problem is what some here have expressed: doubt that government can provide a meaningful solution. Republicans get tons of attention by spreading FUD about the prospects of government--or at least, Democratic government--intervention. Democrats need to prove them wrong through both messaging and policy implementations. That's their main job. And no amount of startling graphs from Nat Geo or elsewhere can do that job for them.

Posted by: slag | January 13, 2010 2:51 PM | Report abuse

@Posted by: staticvars | January 13, 2010 2:26 PM

Your entire argument completely ignores the information presented in this post. Stop pretending you're interested in anything other than propagandizing your unsubstantiated belief system.

Posted by: slag | January 13, 2010 2:55 PM | Report abuse

Is there a graph out there that looks like this but shows mortality amenable to health care, instead of life expectancy at birth?

Posted by: bean3 | January 13, 2010 3:04 PM | Report abuse

You might be interested in Andrew Gelman's re-imagining of this graph:
http://www.stat.columbia.edu/~cook/movabletype/archives/2009/12/healthcare_spen.html

Posted by: madjoy | January 13, 2010 3:25 PM | Report abuse

"We aren't even going to be allowed to have real insurance anymore, only something like a group co-op health care plans ..." - staticvars

Which is exactly what every other industrialized country realized decades ago: the conventional insurance model can't protect society when it comes to the physical and financial consequences of illness. In Germany and France the (non-profit) private companies that manage healthcare are called "sickness funds" or "mutuelles", not insurance companies. In the Netherlands and Switzerland, where individual insurance policies play a key role of the national healthcare plan, risk is "equalized" by the government to avoid the problems of adverse selection that would result in a market based insurance program.

Contrary to what many liberals here may believe, stringent regulation of the insurance markets is not the reason that those universal care system that integrate private insurance are successful. They are successful because they recognize that conventional insurance alone cannot meet societal needs and they regulate insurance to be sure that that it provides a dependable underpinning for other components of the overall system.

That is a distinction with a great deal of difference. The current legislation imposes a number of unfunded mandates on private, for-profit companies and the result will unquestionably be higher premiums. Contrast that with the government funded risk equalization to enable companies to service all subscribers equally.

"There is a such a clear relationship between the number of people on Medicare and our cost curve, that it is obvious to almost everyone that it is the most inefficient system ever devised."

You realize of course, what we have was designed to accommodate (bribe actually) doctors into participating. The AMA hired Ronald Regan for an ad saying that passage of Medicare would signal the end of the American way of life.

Posted by: Athena_news | January 13, 2010 3:25 PM | Report abuse

I really hate this type of infographic. It can almost always be presented more informatively as a scatterplot.

Still, it does make a good point, even if its presentation is less that than ideal.

Posted by: zosima | January 13, 2010 3:34 PM | Report abuse

Ezra- Comparisons of health care expenditures and life expectancy like the above chart gloss over the fact that Americans might be sicker, on average, than citizens of other countries. And in fact we are.

New research from Sam Preston at Penn shows that we have substantially higher rates of heart disease and cancer than our OECD peers, owing, Preston argues, to our decades as the top smoking country in the world.

http://www.upenn.edu/gazette/1109/gaz01.html

When smoking is controlled for, our life expectancy improves from near the bottom to the top half of OECD countries, and the gap in per capita spending narrows (though it doesnt go away).

Our health care system has plenty of problems and I wholeheartedly support the reform bill. But on the particular issue of life expectancy and costs, we often oversimplify.

Posted by: klhartnett | January 13, 2010 4:04 PM | Report abuse

staticvars, nowhere in your screed do you seem at all concerned that the US fares pretty poorly in terms of life expectancy. You and Kevin seem to be pretty wedding to the idea that America is a rotten, incompetent nation bordering on a failed state. I am not sure this is a compelling line of argument.

Posted by: constans | January 13, 2010 4:28 PM | Report abuse

This is a point I'd like to make better and more extensively in the future, but I'd like to not put it off any further and note it now:

It looks like we'd get a lot more quality of health and extra years if we spent a lot less on delivery, and a lot more on medical research.

According to this article:

http://www.cbsnews.com/stories/2005/09/20/health/main861059.shtml

We spend about $100 billion per year on medical research, something of this magnitude.

We spend about $2 trillion on delivery. If we cut our spending per person in half, to about the level of European countries that have about as good or better health care and results, then we would save about $1 trillion.

Now what if we spent that $1 trillion in savings on medical research? It would increase medical research spending more than 10 fold.

Even if delivery did get a little worse, even if we did get a little bit less of our brightest and best becoming doctors due to lower pay, it seems like this would be totally outweighed over the long run by tremendously more advanced medical understanding and treatments due to the more than 10 fold increase in medical research spending.

So, it looks like if you want better medical results, better treatment, breakthroughs in rejuvenation, better odds of surviving cancer, etc., you should support going to a European style system, or otherwise greatly cutting spending on health care delivery, and using the great savings to increase basic medical research many fold.

Posted by: RichardHSerlin | January 13, 2010 4:30 PM | Report abuse

Ignorance and the capacity to rationalize are probably two major impediments.

Most Americans haven't had the opportunity to travel outside of our borders -- let alone use health care in other countries, so it's much easier to play-off fears grounded in a lack of first-hand experience.

The other side of this is that part of human nature that tends to rationalize uncomfortable facts away (e.g. "our system is the most expensive, because it is the BEST").

Finally, there's a group that has a vested interest in amplifying fears and reinforcing rationalizations simply because the current system is very profitable for them.

Posted by: JPRS | January 13, 2010 5:25 PM | Report abuse

"So, it looks like if you want better medical results, better treatment, breakthroughs in rejuvenation, better odds of surviving cancer, etc., you should support going to a European style system, or otherwise greatly cutting spending on health care delivery, and using the great savings to increase basic medical research many fold."

I'd say this is the exact opposite of the truth. If you want better results spend more on making sure patients get the right treatment that exists right now and cut medical research. See:

Unhealthy Medicine
All Breakthrough, No Follow-Through
Starkly put, for every dollar Congress allocates to develop breakthrough treatments, it allocates one penny to ensure that Americans actually receive them.
This imbalance in investment may cost more lives than it saves. A recent analysis by our research team at Virginia Commonwealth University demonstrated that developing new treatments often does less good than ensuring the delivery of older drugs to all those in need.
http://www.washingtonpost.com/wp-dyn/content/article/2006/01/06/AR2006010602269.html

Posted by: steveh46 | January 13, 2010 5:50 PM | Report abuse

@etdean1,
Ezra has thrown in the occasional post but this blog relatively speaking has left the comparative analysis of healthcare systems outside the main focus. What has been lacking until today is the passion that I read in this post which points out how blinkered our discussion in the US has been. No one writing daily on healthcare was doing the comparative analyses and Ezra at many points during the discussion accepted the terms of the debate as defined by Congress and the Administration. Many opportunities were lost. Somehow, now Ezra finds some passion regarding how f'd up the debate about healthcare has been, a debate which he had a small role in shaping.

He has been part of the consensus of young, liberal Washington pundits that try to look at issues as much as possible through the eyes of Congress and the Administration. Today, he discovers that in fact that the real audience for all of this is the people out there with their pitchforks, etc. They are the "end users" for all of this policy that was so claustrophobically decided upon within the Beltway.

I'm frustrated.

Posted by: michaelterra | January 13, 2010 6:06 PM | Report abuse

steveh46,

Look, suppose you take the best possible doctors and hospitals with 1910 medical advancement, and compare them to mediocre, or even substandard, doctors and hospitals with 2010 technology.

Even mediocre or poor doctors could easily save your life in 2010 with antibiotics which weren't discovered yet in 1910, so even the greatest genius doctor in the world could not have prescribed them. The genius 1910 doctor also could not have prevented your child from getting polio because the vaccine had not been invented, but even very sub-par modern health systems provide a range of cheap vaccines for things that would have been common killers or cripplers in 1910, that even the best doctors and hospitals in the world at the time could have done little or nothing about with the level of medical research advancement available to them at the time.

And you don't have to go back to 1910. I would think that most people would get substantially better treatment from a mediocre doctor and hospital today, especially for a serious illness like cancer, than from the Mayo clinic of 1990.

Now consider the proposal I put forth. Cutting delivery spending (doctors, hospitals, etc.) to European levels (which wouldn't even be a cut in quality anyway if we adopted a system like there), and using the savings to pay for an 11 fold increase in national spending on medical research. With this, in 20 years we could have the same advancement that it would have taken say 40 years, or a lot more, to get to without the research increase. So you're comparing a 2010 medical technology doctor to a 1990 doctor.

In 30 years, we could have advancement that would have taken 70 years, or more, so you're comparing 2010 medical technology to 1970 medical technology. Do you really think even the Mayo clinic of 1970 could compare to a just so-so medical center of 2010?

In 50 years, the advancement from the 11 fold increase in medical research could mean as much advance as would have taken 120 years without the increase. So, now you're comparing 2010 medical technology to 1940 medical technology. Do you really think even the Mayo Clinic of 1940 could come close to the effectiveness of even a crappy medical center of 2010?

So many major advances are not hard to know about or administer. It doesn't take a genius doctor or a lot of money to give a polio vaccine, or prescribe penicillin. And the advance of technology and the expiration of patents brings down the costs of a given piece of equipment greatly (remember, the sooner the technology is invented, the sooner the patents expire, and an 11 fold increase in spending will speed along this whole process tremendously).

It's the advancement in medicine from research that really advances the health outcomes.

Posted by: RichardHSerlin | January 13, 2010 10:20 PM | Report abuse

Ezra,
You'll be delighted to know a Congressional candidate beat you to this graph/write-up. He's actually blogging policy daily. Here it is: http://votechili.com/2010/01/09/deal-or-no-deal/

what do you think of him? (he's in my district)

Posted by: osushah | January 13, 2010 10:55 PM | Report abuse

steveh46,

Also, I read the 2006 Op-Ed you refered to. It talked about gross inefficiencies in the healthcare delivery system that are just that, great innefficiencies of our current fragmented system. It's waste and inefficieny that should be stopped, but that would not entail more spending, it would entail less, it would be savings. It's the reason why we could spend $1 trillion less and get better results by adopting a smarter system like in many European countries. The spending the author recommends is doubling the spending on, "The smaller federal agency responsible for solving problems with the delivery of health care, the Agency for Healthcare Research and Quality (AHRQ)". But that would be just a $320 million increase in spending. That's just 1/3000th of the increase in R&D that I was proposing. It wouldn't affect it substantially.

Posted by: RichardHSerlin | January 13, 2010 10:56 PM | Report abuse

Don't understand the graph. It's also fuzzy to the eye and has too much info. Is the red line part of the graph or a pointer to something on the graph? Basically, this graph is useless to the average person who will get frustrated trying to understand it after 5 seconds or so and move on to something else to read.

Posted by: Lomillialor | January 14, 2010 7:13 AM | Report abuse

Ezra. This is great.

Do you have any info to share as to why Germany is excluded from the graph?

I would also like to see Cuba included.

Posted by: erichwwk1 | January 14, 2010 7:50 AM | Report abuse

" . . . the improbable size of the disparity is a barrier to understanding. People just don't believe these numbers."

Might help if WaPo would put this sort of reporting in the actual paper, instead of online-only . . .

Posted by: misterjrthed | January 14, 2010 9:39 AM | Report abuse

michaelterra@6:06pm has it right. The comparative analysis (ie, that we pay way more for results that are the same or not as good) should have driven both the policy debate and the political debate. It would have demonstrated in very concrete terms that the private health-care market was looting us, in relative terms, compared to the models used in Europe, and we could have urged those models on the public with a very popular agument about not being played for suckers any more. But our liberal "leaders," including opinion types like Ezra, spent no extended energy pounding this point home or trying to frame the debate with it. Instead, they accommodated themselves to the idea that "reform" would be tinkering around the edges of a failed industry. Too little too damned late, Ezra.

Posted by: poldy1 | January 14, 2010 10:00 AM | Report abuse

The way the USA health system is set up is already for those with money to pay extra for those that don't and receive care via emergency rooms. Also, Pharmaceutical Representatives can no longer bribe/bring physicians gifts, (Hopefully lowering medicine costs) However, they are still able to buy free lunches, dinners, etc. for the medical facility. This increases the cost of medicine again. Not to mention the fact that each pharmaceutical company has way too many REPS. Paying them bonuses and salaries increasing cost once again. Why does a drug company have to send two reps a week to talk to a physician about drugs that have been on the market for years???
MONEY....That's why. Many Reps that are successful in sales...believe it or not....Make just as much as the internist doing the prescribing. It's a disgrace... The next culprit is Insurance companies and lawsuits. Physicians have no choice but to order unnecessary diagnostic testing to not only please requirements by Insurance companies, but to protect themselves from lawsuits.

Finally, Americans expect certain treatments and medical procedures/testing. They are educated in a way (Internet educated) no other generations were. So...If they have good Insurance...they pretty much...call the shots.... The Doctors should be the ones to practice medicine....And they aren't always... It all costs money.......

Posted by: Intuition1010 | January 16, 2010 8:05 PM | Report abuse

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