US health care in international context: the very picture of an outlier

September 8th, 2014 at 11:45 am

Two facts: as the figure below shows, a) the US spends more on health care as a share of GDP than every other advanced economy, and b) we spend less through the public sector. Over at PostEverything I explore the extent to which these two facts are merely correlated or causally linked, and I’m drawn to the latter.

Health Care Spending in Advanced Economies, Share of GDP and Public Share of Expenditures


Source: GS Research

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3 comments in reply to "US health care in international context: the very picture of an outlier"

  1. Robert Buttons says:

    It’s unfair to compare administrative costs (as a % of total expenditures) between the public and private sector.

    Let’s consider the equation: Admin cost ratio = Admin Expenditures / Healthcare expenditures.

    First, Admin costs are (relatively) fixed, therefore, an older, sicker population (Medicare) will drive up expenditures (denominator), driving down the Admin cost ratio. A population with low expenditures (Private insurance) will increase the ratio.

    Second, increasing expenditures through waste, fraud and abuse will improve the ratio. The govt system is ripe for such abuse. “Medicaid/Medicare mill busted” is a recurring headline. I can’t remember a “Blue Cross scheme busted” headline ever.”. The medicare scooter scam:

    • Oakchair says:

      Yep lets just handwave the fact that administration costs for every publicly funded health program both in America and outside it are around 20 times less. Why because its counter to conservative ideology!

  2. Michael C says:

    Why is everyone constantly surprised by the vast increase in cost that the private sector (ie the profit-motivated arm of the economy) accrues compared to the government sector? Administrative costs alone probably triple simply because everyone in a position of higher authority is economically motivated to create as much value for themselves as possible. And none of this emphasis on profit has anything to do with the actual value of the health care itself. Furthermore, a profit-oriented healthcare system is bound, like a car dealership, to not provide the patient/client the best possible service to them but the best possible service to the provider. Think about medicine. It is in the hospital’s best interest to either a) provide the patient with the cheapest medicine available, potentially undermining either the quality or the quantity of treatment given or b) provide the patient with the most expensive, most revenue enhancing medicine available, usually through some unspoken agreement with the pharmaceutical companies. How many patients are recommended/up-sold extra procedures (at a cost benefit to either the doctor or hospital) that provide little actual medical benefit but whose sole purpose is to provide revenue to the hospitals?

    Furthermore, the hospital’s complaint about having to engage in such practices in order to recoup the cost of ‘free’ medicine they provide to indigent clients only tells part of the story. The healthcare profession’s emphasis on profits filters into all aspects of it, including those who provide insurance. Therefore, insurance providers, who have to eventually pay for all those extra costs, have less incentive to provide health care, and more importantly preventative health care, at a reasonable price to its customers, who in turn have no health care and thus avoid going to a hospital until, as it eventually does, it requires immediate and expensive emergency room services. But it is the healthcare profession’s emphasis on profits that requires insurers to emphasize profits as well, leading to ever more emphasis on profits over medicine.

    And lets not even begin to talk about the vast economic/class differences between public and private hospitals that have essentially made medicine a two class system for decades. Medicine is BIG BUSINESS to alot of people in this country…and the end result, therefore, shouldn’t be surprising at all.