A Bug or a Feature?

Kevin Drum shows this chart as evidence we need government health care like the rest of the "civilized" world:

Blog_OECD_Healthcare_2007_0

I write back in the comments:

I wonder if the graph you show is a bug or a feature.  My guess is that you could draw the same chart in the same shape with the US on the far left for consumption of items as diverse as "big screen TVs" and "pro sports tickets."  We would chalk up spending in any other area as simply a result of wealth.  Why not on health care?  Why is it so bad that we spend more money on something like health care which is arguably less frivolous and more critical than TV's or baseball games?

I would understand it if the argument was that we are not getting our money's worth, but that meme is just about dead.  The evidence is pretty clear that though life expectancy in the US is lower than some of these other countries, this is due to issues unrelated to health care (specifically murders and auto accidents).  When the cause of death is limited to things amenable to the health care system, the US ranks #1 in the world in life expectancy.  This is not even to mention the customer experience in accessing the health care system, which for all its irritations, is still ranked the best in the world.  We pay the most, and get the best results, because we can afford the best.

It makes me nervous that you think this is a problem.

PS- I certainly think there are efficiencies that could be wrung out from the health care system if people actually shopped with their own money for their own health care, as they do for every other product and service they buy.  This is proved out in the falling prices for non-insurance covered health procedures, such as laser eye surgery.  But it is a laugh to think the government will wring these savings out.  The government has never, ever, ever made a process more efficient.  All it can do to cut costs is a) institute price controls on suppliers, which eventually lead to shortages and reduced R&D and/or b)  Eliminate services.

Update: OMG, we need government take over of the automotive sector, because we spend more money on cars than any other country, and by the left's logic that is a sign of failure of the status quo.

autos

  • MGW

    If only we could spend as little as Mexico on healthcare. Just think how much better off we'd be.

  • m

    "we need government take over of the automotive sector"

    Done.

  • boqueronman

    You forgot two other reason why life expectancy calculations are lower for the U.S. than some other developed countries. And these are both material to the calculation. The first is the differences in how "infant mortality" statistics are calculated. The U.S. is the only country (admittedly this comes from hazy memory) that classifies a live birth - under all conditions - as an "infant" when calculating infant deaths. Since some European countries require that the infant survive 48 hours before he or she is classified as a live birth, their infant mortality and life expectancy averages will be boosted by the differences in data definition. The other factor is the degree to which immigrants, both legal and illegal, can bring potential and actual life threatening medical problems with them. Also the racial and ethnic homogeneity of the population (see Japan and the Scandinavian countries) facilitates the delivery of targeted medical services in a manner which is patently impossible in the U.S. Both these factors tend superficially to worsen life expectancy figures for the U.S., but have nothing to do with the availability and quality of medical service delivery.

  • Michael

    I thought the August auto sales said it best.

    Ford - up 17% over 08/08
    Chrysler - down 15% over 08/08
    GM- down 20% over 08/08

  • Mesa Econoguy

    Warren, you hit upon the “hidden” agenda of these statist jerkoffs: 1) start a crisis by intervening in the market for a particular good or service (claim it is unsafe, public domain, whatever), 2) drive up prices, 3) take over insurance/protectionist racketeering, claiming to “protect” the public from profiteering, 4) rule the world.

    Problem solved!

    These people are worse than the Mob.

  • Another point is that the USA has a much larger and much more diverse population, meaning it is much, much harder to come to a workable agreement on some kind of one-size-fits-all national health care policy.

    If the EU had one policy rather than country-by-country plans, then maybe I would be more optimistic about what could be accomplished in the US.

  • Methinks

    Nobrainer,

    That's a good point. However, given that European countries are being forced to move toward privatization of health care, one-size-fits-all is not even working at the country level for small countries with homogeneous populations!

  • DrTorch

    Yeah, but logic fails to work w/ these people. In fact it seems to be failing w/ the majority of people.

    That being said, logic dictates the need for a different tack to demonstrate truth to the populace.

  • Max

    Hmm, I think the left would have a point, if they could prove that this level of health-care spending is mostly from the rich. I mean it would show that poor people can't afford health-care, because the statistics show that they spent less...

    But as it is always with 1-parameter statistics, they don't show the real picture...

  • I really appreciated the analysis on Nolte's (2008) amenable mortality article. I'm still developing a critical eye for statistical methodologies, and you're an excellent model for that. But why have you chosen to adopt only one measurement for health, life expectancy, as your main metric for comparing the quality of health care systems? Perhaps you're just responding to the fact that liberals point to the same measurement, life expectancy, without adjusting for other factors. But it should be remembered that connecting the health of a population with its health system is extraordinarily difficult and cannot be done with one measure.

  • Jim

    How would this chart look if it were changed to percentage of per capita income spent on health care?

  • Methinks

    "I mean it would show that poor people can’t afford health-care, because the statistics show that they spent less…"

    Unless the excess amount spent by the rich is spent on bouncy new silicone boobs, chiseled noses and that distinctly embalmed pulled alien looked inexplicably favoured by wealthy ladies.

  • Interesting post. I wonder what other commodities exhibit the same distribution. I think one of the other unexplored elements is the rate of increase in health care expenditures.

    I suspect that you might see the same relationship with housing. We likely spend more per capita and have better, bigger housing. We kept spending more and more on housing. Then the bubble burst and now housing prices have fallen in many communities.

    The question is would the same fate befall health care. At some point it will, when the government, employers and people can no longer afford the bill.

    The problem is that the government is trying to solve the cost problem with a public plan that will impose price controls. That will undoubtedly distort the market in ways that will adversely affect research, medical breakthroughs and the quality of the human resources that will choose to go into the field.

    To follow the debate and health care delivery issues go to http://www.ilovebenefits.wordpress.com

  • jay

    There's something else too.

    My old dog was on thyroid pills. We ran low and found out we could get the same pill in a pharmacy... except it cost several times as much. There are many services for animals: X-rays, MRI, etc. that are exacly like the human procedures except they cost FAR less. Not technology, not equipment, not support staff... the difference is liability and regulations.

    If you really want to cut medical costs, you might start right there.

  • Michael

    Jay, do you mean we should just start taking people to the vet? 🙂

    An area of the cost to life expectancy debate I haven't come across is how illegals effect the ratio. While the US medical community is required to provide treatment for illegals, there is the possibility that because of their status they are wary of getting medical help until a disease has progressed to a more advanced stage. This could both bring the costs up, and life expectancy down.

    I'm not saying we should stop treating illegals, just that other countries don't have this issue or don't include illegals in their health care demographics.

  • Isn't education the poster child for this argument?

    Education 'advocates' are always complaining that we don't spend enough on education and that there are many countries that spend more than us.

    It even parallels that fact that we spend a ton without getting obviously better outcomes. What will the left do with that fact?