The Big Lie of US Health Care

I like to keep an eye on the comparative health-care statistics that the OECD publishes annually on the costs and medical outcomes of industrialized nations. It makes for fascinating (and frustrating) reading, especially when you bear in mind how convinced opponents of so-called Obama-care are that the U.S. has the superior health-care system.

Well, on the majority of indicators that’s just not true. About the only indicator the U.S. leads on is expenditure.

The OECD releases the comparative figures in June. I’m late this year. According to the OECD, U.S. health-care costs have increased yet again. The country is spending now 17.4 per cent of GDP on health. The U.K. is spending 9.8 percent and Italy 7.9 percent.

No doubt that massive gap benefits Americans in terms of outcomes and life expectancy or in the number of doctors, say, per 1000 of population. If you thought that, you’d be wrong. Americans will live longer on the whole than Mexicans or Turks, who can expect to live respectively until they are 75.5 and 73.4 years old. Americans on average will make it to 78.1. But they lag behind Britons and Italians with their national health-systems. Britons outlive Americans by 14 months. And Italians can expect to live for 81.4 years.

And the density of doctors? In the U.S. there are 2.4 physicians per 1000 people. Italy, again, is better with 3.4.

Agreed, the Italian diet is healthier than most Americans enjoy, what with all that fresh simple food, excellent red wine (good for the heart) and low-fat diets. But Britons? They live as unhealthily as Americans!

The fact is, of course, Americans are not getting value for money for what they pay; despite paying a lot more than others their life expectancy, access to physicians and medical outcomes are lagging. A lot of the increased cost in the U.S. is tied up with the expenses of medical education and insurance. Tort reform would presumably help to reduce costs. The greed of the U.S. medical profession is also a clear factor.  Another factor is the sweetheart deal big Pharma gets in the U.S., where prices, unlike in Europe, are not really negotiated.

Strip out “socialized” medicine for a second. Even when it comes to private insurance comparisons the U.S. doesn’t look good. My private health-care insurance costs me $600 a month in the U.S. (And try to get reimbursed when you pay up front. I am still waiting for Aetna to pay the contracted share of some dental bills after filing a claim 5 months ago). In Italy, a good policy costs me 1700 euros a year. That’s about $2400 a year compared to $7200.

Oh, by the way, maternity costs are basically free in Italy whether you pay into the state system or not or whether you have private insurance or not. And, unsurprisingly, Italy does much better when it comes to infant mortality rates. According to the OECD, infant mortality runs at 3.7 per cent per 1000 births, while in the U.S. it is 6.7 percent.

So even when you take out arguments about morality and fairness and social solidarity, the U.S. still doesn’t compare well. The plain fact is in the U.S. there’s an inefficient allocation of resources when it comes to the health-care system. In short, there’s a market failure.