Category Archives: Politics

US Government Already Pays More Than Other Countries’ Single-Payer Systems

I blogged about this before, but I thought it was relevant to cover again after reading Paul Krugman’s brief post and listening to all the controversy (fear) on a single-payer system (please see the definition if you are not familiar – essentially single-payer means the government becomes the insurer, i.e. it pays the health care professionals).  Lost in all the arguments is how the government is already picking up nearly half the cost of health care already (46%), more than what insurers pay (41%).  Sure this is substantially less than most other countries, but it’s still relevant as part of the conversation.

Take a look at the two graphs below (I’m taking the top 22 countries by population that spend at least $1,000 per capita on health expenditures, which excludes BRIC and developing countries).  The first one compares (as a percentage) where the money for health expenditures comes from – government, out-of-pocket, or private/insurance.  The US clearly has the largest percentage coming from private/insurers.

The second graph looks at raw expenditures per capita.  The US doubles nearly all other countries in spending, as we all know (this is slightly self-selected as I only chose countries with over $1,000 in spending, see my earlier post for a more complete picture).  Yet it’s clear that the US government spends nearly as much or more than other countries spend combined (government, out of pocket, and private/insurers).   Correlation does not mean causation, but clearly the intricacies of our current employee/insurance-based model adds significant overhead to the overall system.  But are there other inefficiencies in the system that lead to the high costs?

Opponents of single-payer argue that our quality of care will be poor if we move that way, but what is the evidence of that?  Our health care as currently setup is not the best in the world (perhaps it’s in the conversation).  But only two countries listed here have insurer’s paying over 15% (US insurers pay 41%).

My personal hope is that we slowly begin to move away from our overly complicated system and begin to adopt a system that resembles other countries’ (albeit better).  This won’t happen quickly- half the “stakeholders” (or special interests) in these negotiations would be severely hurt by reducing costs, as inefficiencies to us mean profit to them.  The Obama administration is making progress (I would rather we do it right slowly than rush into a poor solution) but we must all continue to educate ourselves, keep an open mind, and avoid the knee-jerk reactions from phrases that opponents throw out to impede potential improvements.

Health Expenditure Split (by % overall)
Health Spending Overall
Health Expenditures Overall
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Health Care Expenditure by Country

There’s a lot of talk about health care proposals in Washington these days.  Personally, I have been having issues with my health insurance and health care provider getting on the same page – i.e. they’re making me pay for a routine visit that should be fully covered.  In my case, I have (great) insurance, and yet I’m forced to settle between the (at least) 4 parties involved: the doctor, the back office billing for the doctor, the insurer, and the network provider.  It’s crazy.

Anyways, many analysts bring up how we pay more per capita for health care – well here’s the data, courtesy of World Health Organization’s Statistical Information System (WHOSIS), an excellent resource.  I broke it down into a single chart, using the top 37 countries by population (over 30M) in 2006.  It’s crowded, but still readable I think.  Note, the right vertical axis is age and percentage, and PPP stands for purchasing power parity.

Health Expenditure, by Country

The results are fascinating.  We can easily gather that the US spends over $3,000 more than any other country on health, per capita.  Yet the life expectancy and healthy life expectancy are on par and often lower than the other top countries.  Makes me wonder where all our additional money is going.  Actually, I know that answer – it’s in the administration, e.g. see my problem above (and this doesn’t account for lost productivity at work for patients trying to figure out the system).

The thing I learned, that I never realized before, was that for countries where health expenditures are at least $500 per capita, the government in the US contributes the least (as a percentage), by a significant margin.  That means that private expenditure is huge, i.e. we have placed a larger burden on businesses to cover health care than comparable countries.  The fact that out-of-pocket expenditure makes up a lower percentage of private spending in the US is most likely due to the high contributions by the private sector overall.

The question is this, if the government contributed more to health care and we asked individuals to pay slightly more out-of-pocket, would we be able to bring down the overall health costs?   Keep in mind that the US government already spends more per capita than any other government listed here.  There’s no easy answer.

Deficit Should Not Impact Health Care

Last week the NYTimes released some very interesting data (methodology) about how we went from an $846 billion surplus when Clinton left office in 2001 to a $1.2 trillion deficit currently estimated for this year (via Freakonomics and Matthew Yglesias).  That’s a $2 trillion swing in yearly spending – in just over 8 years.  It’s amazing how fast things can change.  Check out the timeline:

NYTimes - Leonhardt
NYTimes - Leonhardt

Taking Yglesias’ idea for a pie chart, but breaking it down with percentages:


The data helps put some of the recent programs in perspective, as well as give some context in regards to cost figures related to the recent health care proposals (estimated at $1 trillion over 10 years, or $100 billion per year).  $100 billion is obviously significant, but I would argue that the relative importance of health care reform is greater compared to the overall budget deficit (especially the Bush tax cut).  Either way, the finger-pointing should stop from the apparently freshly minted deficit-hawks among Republicans, as this deficit has everyone’s fingerprints on it.  If the federal government can continue to work towards fixing the economy and ending the war in Iraq, we may find ourselves with a lot more money that would pale in comparision to savings generated by skimping on health care.

UPDATE: According to the Congressional Budget Office, there would be a net decrease of 16 million uninsured people with this plan:

“Once the proposal was fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges,” it said. “At the same time, the number of people who had coverage through an employer would decline by about 15 million . . . and coverage from other sources would fall by about 8 million.

Jon Stewart responds to Rick Santelli

Jon Stewart continues to amaze me in his (and his writer’s) ability to break down hypocracy in our public figures.  It’s like we almost expect him to represent us.  While I hardly believe we should rely on the Daily Show as a sole source of news, it’s great at it’s ability to put things in perspective.  Their memory is spectacular.  Jon is also a decent interviewer.  I used to watch CNN in the morning while getting ready, but I switched awhile ago so now I watch the Daily Show – and I feel like I learn 10 times more.    Anyways, a lot of you probably watched this, but if you missed it, this is worth it:



Oh, just in case, here’s the original rant.