« Second Best | Main | Health Is Forever »

Almost!

Shocked and saddened to see the following sentence in the new issue of my very own magazine: "As a result, total government health expenditures per capita (mainly for Medicare and Medicaid) are now almost as high as in many countries with universal coverage." Almost? As Krugman says:

In 2002, the latest year for which comparable data are available, the United States spent $5,267 on health care for each man, woman and child in the population. Of this, $2,364, or 45 percent, was government spending, mainly on Medicare and Medicaid. Canada spent $2,931 per person, of which $2,048 came from the government. France spent $2,736 per person, of which $2,080 was government spending.
The stingy Brits and relatively poor southern Europeans spend even less. Sweden spends less. The only countries we're "almost" as high as are Iceland and Norway.

April 15, 2005 | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8345160fd69e200d8345511ae69e2

Listed below are links to weblogs that reference Almost!:

» Health Care Spending: International Comparisons from Outside The Beltway
Matthew Yglesias notes the following expenditures for health care for different countries. United Stats: $5,267 on health care/ $2,364 is government spending. Canada: $2,931 on health care / $2,048 is government spending. France: $2,736 on... [Read More]

Tracked on Apr 15, 2005 12:41:02 PM

» Matthew Yglesias on Health Care from Deinonychus antirrhopus
Matthew has a rather deceptive post on health care and I've posted my thoughts on his mindless use of statistics over at Outside the Beltway.... [Read More]

Tracked on Apr 15, 2005 12:48:11 PM

» Matthew Yglesias on Health Care from Deinonychus antirrhopus
Matthew has a rather deceptive post on health care and I've posted my thoughts on his mindless use of statistics over at Outside the Beltway.... [Read More]

Tracked on Apr 15, 2005 4:14:28 PM

» Let’s de-socialize our healthcare from Half Sigma
Matthew Yglesias posted some healthcare statistics, and Steve Verdon responded. These are the statistics: • United States: $5,267 on health care/ $2,364 is government spending. • Canada: $2,931 on health care / $2,048 is government spending. • F... [Read More]

Tracked on Apr 15, 2005 8:07:42 PM

Comments

What's the reason for this disparity? Why do we spend more and get so much less.

One reason I've heard is that emergency room treatment is very expensive and inefficient. What other reasons are there for why public healthcare spending in the U.S. is so high even without universal coverage?

Posted by: WillieStyle | Apr 15, 2005 11:43:10 AM

Of course the Swedes spend less. If Sweden were an American state, per capita it would be the poorest of all.

Posted by: John Emerson | Apr 15, 2005 11:44:33 AM

And this proves what? Besides that you are looking at aggregated statistics that can possibly be highly misleading.

For example, do you account for what amounts to a huge subsidy many of these countries benefit from in regards to pharmacueticals?

Posted by: Steve | Apr 15, 2005 11:58:07 AM

John Emerson,
Sweden is indistinguishable from Mississippi, except much, much worse because you cannot have guns.

The arguments that I hear bandied about by people who do not follow this stuff very closely is almost always that government (the difference between government run v. single payer does not register) health care would cost an unbelievably higher amount that what we currently have. The tone seems to indicate they imagine it would be something like twice as expensive.
I think this issue is a winning issue for Democrats. The keys to the argument are expanding universal care for children, getting large corporations on board, and making everyone in the country know the fact that our government run system as it is now is more expensive than almost all of the others that are doing a much better job.

Posted by: theCoach | Apr 15, 2005 11:58:33 AM

For all the people attacking Sweden, it has a much higher life expectancy and a lower rate of infant mortality. That must mean it's doing something right. And it's doing it with less money. This is a system that bare further investigation, not mockery and derision.

The problem with the American health care system is way too much money is being spend on really, really expensive high tech treatments that only benefit the wealthy.

"For example, do you account for what amounts to a huge subsidy many of these countries benefit from in regards to pharmacueticals?"

What subsidies?

Posted by: C.S.Strowbridge | Apr 15, 2005 12:06:29 PM

Is that really John Emerson, or someone stalking him? Because he hits on a key point. The appropriate way to look at this is as a percentage of GDP, not in nominal dollars. And, as a percentage of GDP, Sweden makes a much greater public expenditure on health than does the US (7.9% of GDP as compared to 6.6%, according to the OECD).

Posted by: Al | Apr 15, 2005 12:09:36 PM

The appropriate way to look at this is as a percentage of GDP

Why?

Hypothetical: Japan, Sweden, and Chad all have the exact same health care system in place. They pay their doctors in Euros.

Japan's expenditures will be a much smaller % of GDP than Sweden's or Chad's, but everybody's getting essentially the same health care.

No, I think real costs are the way to go here.

Posted by: Brautigan | Apr 15, 2005 12:19:19 PM

Just as an example, if you want to look at nominal dollars, compare Sweden and Norway.

Sweden spends $2517 per capita, while Norway spends $3409 per capita, on health care. In other words, Norway spends 35% more than Sweden. Yet if we look at life expectancy, we see that Swedes' life expectancy is 82.1/77.7 (F/M), whereas Norwegians' life expectancy is 81.5/76.4.

So, Norway spends 35% more than Sweden but has a smaller life expectancy! What accounts for this? It's not like there are massive sociological differences between the two countries the way that there are between Sweden and the US. So, I'd argue that the mistake is in looking at nominal dollars, rather than percentage of GDP (as a percentage of GDP, Sweden and Norway spend virtually identical amounts).

But of course, this is Paul Coulter-Krugman we're talking about here, so "lying with statistics" is to be expected...

(Numbers from OECD Health Data 2004 - http://www.oecd.org/document/16/0,2340,en_2649_34631_2085200_119656_1_1_1,00.html)

Posted by: Al | Apr 15, 2005 12:22:07 PM

Is that really John Emerson, or someone stalking him? Because he hits on a key point. The appropriate way to look at this is as a percentage of GDP, not in nominal dollars.

I don't see why it should be. It seems to me the right way would be in terms of total spending per capita, adjusted -- if at all -- for price levels. Adjusting for GDP is dumb.

And, as a percentage of GDP, Sweden makes a much greater public expenditure on health than does the US (7.9% of GDP as compared to 6.6%, according to the OECD).

This is true, though again, I'm not sure of the relevance. But -- even so -- the total US share of GDP spent on healthcare, at about 15% -- is much higher than most OECD countries, despite the fact that its public spending is very similar, and the US lags far behind many other countries that spend less total -- even as a percentage of GDP -- in many objective measures of quality and outcomes.

However you slice it and adjust it, the US spends much more in total on healthcare than systems with more universal public coverage that provide an overall better outcomes of care. And the poor outcomes in the US have been traced back specifically to access barriers.

Posted by: cmdicely | Apr 15, 2005 12:22:09 PM

There is an interesting article on Tech Central Station about comparative health care costs (I know you guys immediately discredit anything on TCS because of its global warming stance, but give this a chance). If you look only at health care spending on people over 65, the United States still spends way more than France. In fact, the difference in costs between American seniors and French seniors is roughly the same as the difference between American and French citizens of other age brackets. So why would we expect health care spending to drop if we expand Medicare to cover people under 65?

http://www.techcentralstation.com/041505B.html

Posted by: Xavier | Apr 15, 2005 12:28:04 PM

Shorter Al: If country A has twice the GDP of country B, then a Volvo should cost twice as much in country A as in B.

Posted by: Ferdinand | Apr 15, 2005 12:28:19 PM

So, Norway spends 35% more than Sweden but has a smaller life expectancy! What accounts for this? It's not like there are massive sociological differences between the two countries the way that there are between Sweden and the US.

So? Who says the cause has to be massive sociological differences? Minor differences in healthcare delivery could have substantial effects. The Norwegian system could be much less efficient than the Swedish system.

So, I'd argue that the mistake is in looking at nominal dollars, rather than percentage of GDP (as a percentage of GDP, Sweden and Norway spend virtually identical amounts).


You might argue that, but you haven't even begun to make a case for it. Suggesting that, a priori, Norway and Sweden should have similar spending numbers because they have similar life expectancies and no "massive sociological differences" sort of misses the whole point of the analysis.

Posted by: cmdicely | Apr 15, 2005 12:28:28 PM

So, Norway spends 35% more than Sweden but has a smaller life expectancy! What accounts for this? It's not like there are massive sociological differences between the two countries the way that there are between Sweden and the US.

So? Who says the cause has to be massive sociological differences? Minor differences in healthcare delivery could have substantial effects. The Norwegian system could be much less efficient than the Swedish system.

So, I'd argue that the mistake is in looking at nominal dollars, rather than percentage of GDP (as a percentage of GDP, Sweden and Norway spend virtually identical amounts).


You might argue that, but you haven't even begun to make a case for it. Suggesting that, a priori, Norway and Sweden should have similar spending numbers because they have similar life expectancies and no "massive sociological differences" sort of misses the whole point of the analysis.

Posted by: cmdicely | Apr 15, 2005 12:28:59 PM

Huh? Percentages of GDP makes sense for some things -- for example, public debt, or the level of trade an economy engages in, or how concentrated wealth is, or the size of the public sector -- but per capita spending is better for most things. If Haitians and Americans both spend the same percent of GDP amount on restaurants (I don't know if that's true or not), Americans still eat out more.

Posted by: Julian Elson | Apr 15, 2005 12:28:59 PM

As an aside, an interesting chart in the OECD data posted above is the "Public expenditure on health as a percentage of Total expenditure on health" chart. As to be expected, the US has one of the lowest public expenditures as a percentage of total expenditure. But ALSO one of the lowest is Canada! Canadian public expenditure on health is less than 70% of total expenditure - a percentage that is lower than almost all of the other OECD countries.

What accounts for this? As I understand it, there is not much opportunity for private spending on health within Canada itself. Is this wrong (at least as compared to, say, the UK, or Germany, or France)?

Or is the answer - as I expect - that there are an awful lot of Canadians who opt to pay for superior private health care... in the US? Free riders?

Posted by: Al | Apr 15, 2005 12:31:25 PM

One reason I've heard is that emergency room treatment is very expensive and inefficient. What other reasons are there for why public healthcare spending in the U.S. is so high even without universal coverage?

The absence of universal coverage means that there is more administrative costs within the public system in eligibility determination and determining whether the patient or some third-party should be paying some, and what, portion even when there is public coverage.

Posted by: cmdicely | Apr 15, 2005 12:32:03 PM

The Norwegian system could be much less efficient than the Swedish system.

Could be! Is it? I don't know. But my suspicion is that it isn't.

Posted by: Al | Apr 15, 2005 12:33:25 PM

If Haitians and Americans both spend the same percent of GDP amount on restaurants (I don't know if that's true or not), Americans still eat out more.

Why do you say this? I suspect not, since restaurant costs in Haiti are likely to be a lot less than here.

Posted by: Al | Apr 15, 2005 12:35:34 PM

Could be! Is it? I don't know. But my suspicion is that it isn't.

Your suspicion is hardly an adequate argument for the kind of adjustment you suggest is the right way to deal with the numbers (which, even if you do it, isn't all that kind to the US system; you'd have to try really hard to get a measure that makes the US system look good).

Posted by: cmdicely | Apr 15, 2005 12:39:24 PM

C.S.Strowbridge,

What? You aren't aware of the fact that many countries get lower prices for pharmaceuticals than the U.S.? This basically amounts to a subsidy from people in the U.S. We pay for the R&D that benefits all these other countries. At the very least an honest comparison (and person) would account for this (or at least note it) in a post like this.

Posted by: Steve | Apr 15, 2005 12:40:31 PM

Based on what do you guys say that Sweden in akin to Mississippi?

Do recall:

on their per-capita income they don't have to pay for healthcare, education (incl college) or retirement...

That increases a given salary's earning power to a great degree.

Posted by: Rahul Sinha | Apr 15, 2005 12:44:32 PM

What? You aren't aware of the fact that many countries get lower prices for pharmaceuticals than the U.S.?

Since that is quite likely a product of the nature of the healthcare system and how it relates to suppliers rather than an immutable external condition, it makes sense not to adjust for it.

Posted by: cmdicely | Apr 15, 2005 12:44:50 PM

You guys like to beat on Al, and I'll admit I've done the same a couple of times (even though we come from the same general direction). But I think he may well have a good point. Health care may well be one of those things you spend more on as you get wealthier. I've never given this any thought before, and it's a complex subject so I don't have an instant reaction, but it's a reasonable hypothesis.

Ferdinand: don't be stupid. Al's thesis isn't that a Volvo costs twice as much here, it's that we buy cars that are twice as expensive because we're twice as rich (or, more precisely, that we're twice as rich and spend slightly less than twice as much).

Posted by: ostap | Apr 15, 2005 12:47:07 PM

Shorter Al: If country A has twice the GDP of country B, then a Volvo should cost twice as much in country A as in B.

No. But health care is not like a Volvo. It is more like the restaurant that Julian Elson mentions. And in a country with a low GDP, the cost of a lot of things is likely to be less - for a restaurant, the salary of the chef and busboy, the rent of the building, even the cost of the raw food; for healthcare, the salaries for doctors and janitors, price of a hospital rooms, even the cost of pharmaceuticals is likely to be less than the US.

Posted by: Al | Apr 15, 2005 12:47:50 PM

The Norwegian system could be much less efficient than the Swedish system.

Yes, there's a possibility that Norwegian doctors are 50% richer than Swedish doctors and everything else is pretty much the same.

Posted by: abb1 | Apr 15, 2005 12:49:42 PM

The comments to this entry are closed.