Tags: Trump Administration | Healthcare Reform | healthcare | overpay | costs | insurance | obamacare

Does the US Overpay for Health Care? Not Really

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Wednesday, 22 Mar 2017 01:39 PM Current | Bio | Archive

"America spends more on health care than other rich nations, but has lower life expectancy." If I had a nickel for every time I have been informed this by an email, seen it in a headline, heard it in conversation, or watched it scroll across my social media feed, I would be able to personally fund a single-payer health-care system.

As with many political memes, its usefulness to policy wonks is inversely proportional to the weight that its casual proponents place on it. As stated, this meme is true enough: America does have higher health-care costs than anywhere else, and we do indeed have shorter life expectancies than some nations. But of course people are not introducing these facts as a fun bit of trivia, like “Babe Ruth used to wear a cabbage leaf under his baseball cap to keep cool.” What they are actually interested in communicating is the implication that America could switch to a single-payer health-care system and thereby enjoy longer life expectancies at lower cost. And that implication is considerably more dubious.

Some of the disparity may indeed be attributable to the fragmented nature of our health-care system. But most of it probably isn’t -- which means it can’t be fixed by changing the form of our health care system, either.

Start with mortality. A recent survey concluded that “regardless of cross-national differences in access to quality medical care, the fact remains that the overwhelming contributors to the incidence of disease (e.g. poor health behaviors) operate largely outside the influence of medical care.” Americans seem to be sicker than people in other countries, and while people often attribute this to lack of preventive care, on some metrics that ought to improve our life-expectancy -- such as screening tests -- America actually does more than other places. Other contributing conditions, such as obesity, have shown little response to the things that primary care physicians can do, such as tell you that you should lose weight.

We’re also at greater risk for fatal injuries than people in other countries. We have a higher homicide rate, in part because Americans seem to be more violent and in part because we have greater access to guns. And we drive more, so more of us die in auto accidents. No matter what you think of America’s car-driven development policy, or its gun-control regime, you can’t think that altering our health-care system is going to keep Americans from driving to their suburban homes, or shooting each other.

Skeptical? Let’s look at what happened when the U.S. greatly expanded the government’s funding of health care: Between 2014 and 2015, age-adjusted mortality rose for the first time in decades.

Did Obamacare kill those extra people? Nah. Car crashes, guns and drug overdoses did. But this experiment certainly indicates that simply eyeballing the government’s health care financing, and comparing it to the mortality rate, is not a good way to assess the effect of the health-care system on human lifespan.

All right, maybe single payer isn’t going to make us all live as long as the proud people of Monaco. But surely getting the government involved can control the cost side?

Well, actually, that too is more complicated than it sounds. When you actually look at our spending, you see that even before Obamacare, America spent more on its government systems as a percentage of GDP than many of the comparison countries we’re supposed to emulate -- this to cover a fraction of the population. Somehow, getting the government involved did not make American health care cheap.

That’s because policy is path dependent: What you did yesterday determines what you can do today. No government system in the world has actually lowered health-care costs on any sustained basis, absent something like the Greek financial crisis that forces a sudden and drastic reduction in government spending. Lowering health-care spending means denying treatments, closing hospitals, and cutting provider salaries. Politically, this has proven impossible.

What you can perhaps do is control future cost growth better. Europe’s health care systems may have done a better job of preventing costs from getting so high in the first place.

But even here in the U.S., we don’t have a cost growth problem. Looking at our health-care-cost growth for the most recent six years, you see that spending as a percentage of GDP was basically flat from 2009 to 2013, then rose 0.5 percent in the two years after Obamacare kicked in. These numbers are quite comparable to OECD competitor nations, and better than some, such as the UK and Switzerland, even though we undertook a massive expansion of government health-care coverage. We aren’t a nation that has a cost-growth problem; we’re a nation that had a problem a couple of decades ago, when we failed to keep costs from outpacing the hog-wild inflation of the 1970s. Which means that we can’t even hope to get our costs down in the future, relative to other countries, by switching to a more government-driven system now, as many people have suggested when I pointed this out.

Why are memes like this so compelling? Because they’re easy. But the whole truth is not so easy. And solutions for Americans' health-care complaints? Those are really hard. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”

© Copyright 2017 Bloomberg L.P. All Rights Reserved.

 
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"America spends more on health care than other rich nations, but has lower life expectancy." If I had a nickel for every time I have been informed this by an email, seen it in a headline, heard it in conversation, or watched it scroll across my social media feed, I would be...
healthcare, overpay, costs, insurance, obamacare
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2017-39-22
Wednesday, 22 Mar 2017 01:39 PM
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