July 3, 2009


Health Care: Costs And Reform (Bruce Bartlett, 07.03.09, Forbes)

Americans widely believe that while the our health system is expensive it is nevertheless the best in the world. However, a new report from the Organization for Economic Cooperation and Development suggests otherwise.

According to the OECD, the U.S. spends 5% of GDP more on health than France, the nation with the second highest level of health spending among the 30 wealthy countries in the organization. The average for all OECD countries is 8.9% of GDP.

We spend $7,290 per person on average versus $2,964 among all OECD countries. Norway, the nation with the second most expensive health system on a per capita basis, spends $4,763. (Currency conversions based on purchasing power parity.)

Of course, Americans know that they pay a lot for health; the rising cost of health insurance for employers is the main reason why wages have been stagnant for years. [...]

Nor has the U.S. bought significantly better health with its vastly higher health spending. Life expectancy at birth is probably the best general measure of a population's health. This statistic has increased by 8.2 years in the U.S. since 1960, but has risen more in most other OECD countries. In Canada, life expectancy has risen 9.4 years and more than 10 years in both Germany and France. Life expectancy rose by almost 15 years in Japan over the same time.

Infant mortality is another good general measure of the quality of a health system. In 2006, 6.7 infants died per 1,000 live births in the U.S.--a sharp decline from 26 deaths in 1960. But the infant mortality rate is lower in every other OECD country except Turkey and Mexico. The average rate for all OECD countries is 4.9 deaths per 1,000 live births.

The U.S. does excel at one thing: the amount of highly expensive medical equipment per capita. In 2007, there were 26 MRI machines per 1 million population here versus an OECD average of less than 10. But our lead in high-tech equipment is shrinking. A few years ago we had far more CT scanners per capita than any other country; now our lead is much less and several countries have more scanners per capita.

As an economist, Mr. Bartlett ought to know that modern health care is just a consumer good, like chips and salsa. Analyzing it as if its effects mattered to the consumer makes little sense.

Posted by Orrin Judd at July 3, 2009 7:15 AM
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