Monday, September 29, 2008

US health care in perspective: or, $2.3 trillion is a lot of money

Given the justifiable concern about the world's economy--as I write, Congress is voting on the bail-out plan and Wall Street is sinking yet again--we haven't been hearing a lot about health care in recent days. Maybe we should. Sure, $700 billion is a lot of money. But in 2007, the US spent $2.3 trillion on health care. And though housing prices are tumbling, health-care costs keep going up.

Clearly we've got problems: aging Boomers, greed (on the part of Big Pharma, insurance companies, physicians, hospitals, malpractice lawyers, crafty individuals--hey, maybe greed is part of the human condition), increasingly expensive technology. Both presidential candidates recognize the problems, but so far neither has come up with a compelling solution.

To put the American situation in perspective, let's compare the United States with three other Western nations: the United Kingdom, France, and Italy. It's an arbitrary choice based on my interests: I'm a citizen of the US, have worked in the UK, have studied in France, and have often visited my closest childhood friend in Italy, where she has lived for over 30 years. If you'd rather look at different countries, you can follow the links and find info about 186 others.

Q. Which country has the best health care? That seems to depend on whom you talk to. This summer one English friend told me about her rotten experiences with, and resulting hatred of, Britain's national health-care system. A few weeks later, another English friend told me about the excellent--and free--medical care she regularly receives and loves. My childhood friend, who has had several surgeries in Italian hospitals, is enthusiastic about Italian health care; but she recently mentioned that Italy, apparently influenced by Catholic views on suffering, is poor at offering pain relief to terminally ill patients.

Anecdotes are more interesting than statistics, but they make poor public policy. Attempting an objective comparison of worldwide health care, the World Health Organization's 2000 report compared health-care systems in 190 countries on the basis of a wide and complex range of factors. Their oft-quoted overall ranking put France first, Italy second, the United Kingdom eighteenth, and the United States thirty-seventh.

(A. France)

Which country spends the most per capita on health care? The WHO report, whose statistics are now ten years out of date, put France in fourth place on spending per capita, Italy in eleventh place, and the United Kingdom in twenty-sixth place. Interestingly, the United States was in first place. In the late 90s we spent more per capita on health care than any other nation on earth--and we still do.

The OECD's 2008 report based on data from 2006 indicates that the United States spent 15.3% of its gross domestic product on health care, followed by France, 11.1%; Italy, 9.0%, and the United Kingdom, 8.4%. This percentage includes money from all sources: public, tax-supported programs (such as Medicaid and Medicare in the US), as well as private payments from insurance companies and individuals.

(A. The United States)

Which country spends the most public money per capita on health care? Here is something truly amazing. Scroll down to the second graph on the OECD report page and see how public and private spending is divided up. Total per-capita health-care spending in the US was $6714 in 2006. Of this amount, slightly over $3000 came from public funding. France, Italy, and the UK spent less from public funds than we did--yet all three countries have national health-care programs. In fact, Italy and the UK spent less on total health-care funding--including both public and private sources--than the US spent on public funding alone.

(A. The United States)

How much would a national health-care program cost American taxpayers? Our taxes would go up--I'm willing to bet on it. Not that they would have to. Presumably we could imitate France and devise a health-care program with better results and lower costs, all for less than we are presently taking in through taxes. (Yes, the French pay significantly more in taxes than we do--just not for healthcare.) But we won't imitate France, and we will raise taxes. It's a shame, but that's how we do things.

But wait--even if our taxes go up, that doesn't necessarily mean our paychecks will go down. In 2007, the average cost to your employer for the health insurance that covered you, your spouse, and your two kids was $12,100, says the National Coalition on Health Care. You no doubt spent less than that out-of-pocket, but the total cost is part of your total compensation. What if your taxes went up, but your insurance costs went down?

The Census Bureau reports that in 2007, the median family income was $62,359. If the family included a married couple, their income was $72,785. According to an article at MSN Money, the current average US tax bill (after deductions, exemptions, and credits) comes to 13.6% of total income. That's less than the current cost of health insurance--19.4% of the median family income and 16.6% of the median married-couple family income.

So how much would a national health-care plan cost U.S. taxpayers?

If we add on to present programs, taxes will shoot up; but if at the same time we stop paying for private insurance, wages could also rise.

If we start from scratch, paying close attention to what has and hasn't worked in countries that already have national health insurance, we could finance the entire program without raising taxes, and we could cancel our private insurance while we're at it.

(A. It depends.)


Monte Sahlin said...

This has to be one of the best concise summaries of the situation that I have seen anywhere. It certainly focuses the discussion right where it needs to be; this is not about spending more money, but reorganizing the system so that it is more efficient. Half the money we spend on health care in the U.S. goes to overhead, not the delivery of care.

Christine said...

I've linked to you LaVonne:

Ditto Monte.

LaVonne Neff said...

Christine, the story you tell on your website is a good example of our broken system. Thanks for posting your link.