• A plan that has never worked or a plan that’s never been tried.

    Ezra Klein has a must read column today on international health care systems and spending:

    Everyone knows — or should know — that the United States spends much more than any other country on health care. But the Kaiser Family Foundation broke that spending down into two parts: the government’s share and the private sector’s share (both measured as a percentage of total gross domestic product), then compared the results to figures from 12 other countries that are members of the Organisation for Economic Co-operation and Development. And here’s the shocker: Our government spends more on health care than the governments of Japan, Australia, Norway, the United Kingdom, Spain, Italy, Canada or Switzerland.

    Whenever I teach my Health Policy and Economics class, students inevitably become exasperated and claim they don’t want a nationalized health care system. Some rebel against a single payer system. The problem is that they think that, other than the US, that’s all that exists. They believe that all other countries are single-payer systems or worse.

    They’re not. The health care systems in the chart above all employ varying levels of private insurance. What they do have in common, however, is significantly more government involvement. There’s more government regulations, more government cost controls, more government negotiation. In our country, many are pushing the other way. They want more privatization and less regulation.

    Look at the chart. They’re all beating us.  They have far cheaper systems. Their outcomes are similar to ours, often better. And they cover everyone.

    Think about what they have in common, and whether it’s smarter for us to try and move in the direction that has worked, or to move further away, in a direction that hasn’t.

    • >>whether it’s smarter for us to try and move in the direction that has worked, or to move further away, in a direction that hasn’t.>>

      It depends on what you mean by “worked”

      1) Provides massive profits for providers, insurance companies, pharma companies, etc.; campaign contributions and lobbying jobs for politicians and staffs; support an ideology that says govt is the problem, not a solution

      2) Provide low cost quality healthcare for a population

    • Well just to spread a little doubt:

      Consider that we have government run schools and and we spend much more that those other countries on our schools and if you just look at the output of the schools without considering any other factors we do worse than those other countries.

      So either our government is worse than in those other countries or other factors are important.

    • Aaron, I think this post should be book-ended with Kevin Outterson’s April 13 post on “Optimal design of health organization and finance”. As with so many other things, success does not come down to some ideologically pure big- or small-government policy, but to the overall quality and flexibility of design and the alignment of incentives. The problems in the US system may have more to do with endless and uncoordinated tinkering, rather than ideology.

    • Do we not effectively subsidize their health care systems by paying more for devices, drugs and biotechnology.

    • Kimberly, this is a concern often mentioned in the US, and there has been some research on it:


      I think it is actually a tough one to sort out. Clearly Americans get more drugs and get them faster. Whether this is better in terms of national health outcomes is a separate matter. I think the critical question is whether or not eliminating the free-riding somehow would reduce the spending disparity between the US and other countries. I don’t think it would significantly, because higher spending in the US seems to have more to do with excess provision and consumption of care, rent-seeking, and excess cost growth in many areas..

    • Given how much our demographics differ from those of these other countries, I don’t know how useful such comparisons are in evaluating health care systems. I’d like to see someone compare, for example, Swedish-Americans with Swedes and let me know what they find. It’s perhaps notable that North Dakota, the state with the greatest number of Norwegian-Americans, clocks in at 79.8 for life expectancy (as of 2005) compared to 80.2 for Norwegians. I also don’t find it coincidence that Hawaii has the greatest percentage of Japanese-Americans and also has the highest life expectancy for any state (81.7 years)

      Meanwhile, I can’t help but notice that nearly half of Switzerland’s health care spending is from the private sector and the country has the best life expectancy of any other European country listed in your chart. This certainly doesn’t fit your narrative about regulations and government intervention corresponding with improved health outcomes.

    • “Consider that we have government run schools and and we spend much more that those other countries on our schools and if you just look at the output of the schools without considering any other factors we do worse than those other countries.”

      And those other countries don’t have gov’t run schools?

      Just to add that the deficiencies of the US educational system are greatly exaggerated.

    • Yes, Americans are so unique that we can’t possibly learn anything from any other country in the world on any subject.

      But seriously, Switzerland imposed a mandate forcing people to buy health insurance, imposed regulations forcing private Swiss health insurers to offer a basic package of benefits on a non-profit basis,and provides gov’t subsidies to those who can’t afford to pay for insurance. I don’t see how anyone could be reminded of the ACA by any of this.

    • How much do doctors and nurses earn in those countries relative to US? What is the relative amount of tort claim cost in these countries. Do those countries invest the same amount (per capita or as a function of GDP) on drug and technology development? And what about wait times for various procedures? These are the things that must be compared to make some logical choices on the path forward. The chart shown doesn’t clarify the question at all. For example, wait times in the UK are abominable, often because doctors are running side businesses that they view as more profitable. Canada is listed but Canadians needing special care come to the US and pay out of pocket, a number that counts against the US spending charts above and not Canadian spending. The US government does very few things efficiently. I am not inclined to think they would do this better than a rationally regulated, and tort-law reformed free(er) market. One more point, 20% of the people on medicaid account for 60% of the spending. Why? Isn’t that a place to start in controlling cost?