There is a lot to be learned about healthcare and its funding from international comparisons. Unfortunately, a lot of what we learn is liable to leave only more perplexed.
This is another chart based on data from the OECD statistics site. It shows funding and health indicators as of 2007, except that 2006 data have been used to fill in gaps for United States and Korean infant mortality, and for remaining life expectancy at age 65 for Frenchmen. The life expectancy at birth is the average for both sexes. The life expectancy at age 65 is for males only — I left out the figures for females (which OECD has) for reasons of space, but they follow the same trend as the males, but generally are 2 to 5 years longer.
The chart tells a story that is both simple and remarkable: The United States spends more on healthcare than other nations, and does so in a way that popular economic theories say should be especially efficient — but gets only mediocre results. Of course it's not really quite that simple, but looking deeper does little to resolve the perplexities.
Nations are listed alphabetically, putting the United States at the bottom. The first panel (black bars) shows total spending on healthcare as a percentage of GDP. As in all the panels, a dashed line is drawn to provide a convenient way to compare other nations with the United States. Here the United States comes out clearly ahead, by a big margin — no other nation comes close to spending as much of its GDP on health care as we do. And since we also lead the league among large nations in per-capita GDP, this implies that we spend a lot more dollars per person on health than do others.
As the second panel (green bars) shows, we are also nearly unique in how much of our healthcare is funded privately, rather than via the government. Widely popular theories of the efficiency of markets would seem to imply that this should ensure optimal allocation of healthcare resources, at least to the extent that they are actually privately funded. That is, since the United States leads in the proportion of private funding it should spend its healthcare dollars at least as efficiently as anyone else — meaning that no one should be able to get more healthcare for the money than we can.
But if we spend more for healthcare and do so at least as efficiently as anyone else it follows that we should get more, right? If we look at the measures of health that are shown in the last three panels, however, it is hard to see anything superior about U.S. health results. Our infant mortality rate (red bars) is better than that in Mexico or Turkey, but worse than anyone else's. Our life expectancy at birth (blue bars) is mediocre — a bit shorter than in any other truly wealthy nation. Finally, in the panel representing remaining life expectancy for 65-year old men (gray bars), we see the United States doing a bit better, but still somewhat behind the pack.
Of course this is not news to those who have been focusing on healthcare issues. Many theories have been offered to explain the seeming discrepancies — I have some of my own. But real evidence to support them is in short supply. And it leaves us with a nagging and important question: If rapidly escalating funding for healthcare really is buying us so little, what is really driving it? And what is there that might cause it to cease soaring?
15 Nov 2010