Health Costs

by Brian on January 9, 2004

Kevin Drum picks up on something Matthew Yglesias noted a while ago: the American government spends more per person on health than some governments that run quite good comprehensive public health systems. The data almost suggest that public health care is more efficient than private health care. Of course, if America gets better quality health care for all the extra $$$$$ it is spending, this conclusion wouldn’t follow. There’s remarkably little actual data to bear that out, but if you trawl through Kevin’s comments board you’ll find lots of people reporting fourth- or fifth-hand anecdotes to that effect. So I thought I’d add my own little anecdotes, comparing the only two countries I’ve ever spent significant time in. My non-expert observations suggest

1. A person with private health insurance in Australia gets higher quality health servives than a person with private health insurance in the US.
2. A person without private health insurance in Australia gets much higher quality health servives than a person without private health insurance in the US.
3. In some cases (e.g. mine) a person without private health insurance in Australia gets slightly better health servives than a person with private health insurance in the US.

There’s a few points to be made about the use of Australia, rather than France or the UK, as a comparison here.

First, we have an even lower population density than the US, so James Joyner’s good point that lower density leads to higher costs is accounted for in the comparison.

Second, Australia does not have ‘socialised medicine’ by any stretch. We don’t even have socialised health insurance. We do have a universal health insurance system that covers most of what most people need from a health plan.

Third, the distribution of coverage in the Australian plan is just what you’d expect from a public system.

It’s pretty good on day-to-day stuff. If you need to see a GP with no appointment, you can see one, usually with not that long a queue, with no co-payment. That was the feature of the system I most liked, and most used, and most miss about my American equivalent. (Note I don’t have that even with a reasonably expensive private health plan.)

It’s world-class on life-and-death matters. Even people with private health insurance will end up in the public system if they have a heart attack or are in a car accident, because at emergency care our public system is better than the private system at these things, and as far as I can tell, is as good as it gets.

And it’s pretty lousy at the stuff in between. I wouldn’t want to be on a waiting list for a knee reconstruction, for example, in the Australian public system. Just how long the list will be will vary by state, and by the finances of the state at the time, but it could be a painful wait. The real benefit of private insurance in the Australian system is that it helps with the ‘in-between’ needs: worse than everyday stuff that a GP handles, but not life-threatening. I’ve seen people with private insurance in the states get put on fairly long wait lists for this kind of stuff too, so I’m not convinced this is a major advantage to America. It’s worth noting that the fourth- and fifth-hand horror stories one hears about public health systems seem to always involve these kinds of cases – not life-threatening but significant.

Overall though, I’d say it’s pretty remarkable how much better the Australian public system is than the American public system, given that the American public system is more expensive.



digamma 01.09.04 at 6:15 pm

If it’s truly possible to spend less taxpayer money on health care and provide everyone with care equal to or better than they get now, I’m all for it. We’ll have our cake and eat it too.

However, Brian Weatherson admits that “there’s lots of things to control for here”. Foremost in my mind is how price caps affect the numbers. Would implementing European-style healthcare at European-style spending levels necessitate price caps in the US? And how would such controls affect advances in healthcare worldwide?


Sebastian Holsclaw 01.09.04 at 7:09 pm

Since drug costs are a huge component of the price of health care, price controls would almost certainly come into effect under a centralized US system. The US is the main country where drug companies are able to recoup their research costs. In most other countries they only recover a slight amount more than their per unit immediate production costs.

So price controls in the US are likely to lead to a dramatic decline in private research spending. (Which unfortunately is to say the research spending that tends to lead to the development of new drugs. I wish it were true that government research is good at creating new drugs, but it isn’t.)

Furthermore we should note that in the heart attack or car accident case, even non-citizens without health insurance still get their life saving treatment from our hospitals. I’m not sure if you were suggesting otherwise above, but it is important to remember. The main gap for the uninsured is in routine maintainence matters. If we decided to remedy that, we don’t need centralized health care, we need a safety net.


Jason 01.09.04 at 7:14 pm

it’s the third party pay system. that will always be the problem.


baa 01.09.04 at 7:22 pm

There are, indeed, lots of things to control for in any comparison of EU/Oceanic health and the US(income inequality, demographics, immigration, total level of GDP). I find these data fascinating and weird. Proponents of market-based care need to address the questions they raise. But the rush to cite these and other data as definitive *proof* of the inefficiency of the US health industry strikes me (and others) as transparently bogus and polemical. I’ll bet the US spends more $ per capita on law enforcement than EU countries, but has higher crime. Inefficient policing, no doubt.


Edge 01.09.04 at 7:33 pm

Sebastian, why is necessarily research that will be cut if price caps are instituted. What if pharmaceutical companies were restricted in advertising, as tobacco companies are?

I like the free market as much as the next guy, but in order to have an orderly healthcare system that serves patients best, isn’t it doctors that ought to be deciding what medicines people take?

Of course, this raises the ethical dilemmas of junkets and freebies that doctors have always gotten from drug companies, but … is my memory flummoxed or didn’t advertising for prescription drugs used to be severely limited in this country?


ivan 01.09.04 at 7:38 pm

Here is what the IMF has to say about it:
“The Medicare trust fund begins to run into deficit in 2016, and the unfunded actuarial liability (in net present value terms) has been estimated at 130 percent of current GDP. This raises the question of whether it would have been prudent to defer an extension of benefits, including to cover prescription drugs, until credible measures to address the system’s longer-term financial problems are established. Indeed, the broader weakness of the U.S. health care system—which has left health care spending the highest among OECD countries (relative to GDP), without a commensurately high ranking in public health indicators suggests that more sweeping reforms of the system may be needed.”


Mats 01.09.04 at 7:47 pm

>>There’s remarkably little actual data to bear that out>>

No, it’s not! Look at highly available statistics on infant mortality (note that Internet Explorer 6 sometimes makes the link fail unless you *shrink your browser window somewhat* before using the following link):

US Healthcare – the World’s Least Productive?


Brian Weatherson 01.09.04 at 7:53 pm

You know, there aren’t price caps in the Australian system, so I’ve really got no idea where all this talk of compulsory price caps comes in.

To be sure, there are caps on how much Medicare will pay for things, and a fair chunk of the population uses Medicare and Medicare only, but many people (including most rich people, who are going to be the ones spending above a cap anyway) use private insurance which is somewhat more generous.

Besides, it is incredibly hard to believe that the American health care system, as currently constituted, is the most efficient way of supporting drug research. That could be true, but my prior for it is somewhere around 0.


Mark 01.09.04 at 7:54 pm

Drug companies DO make more money in America, but there actual margins are similar to everywhere else. They make more money in the US because the US is 55% of the world drug market in terms of purchase volume. The cost of sales is much higher in the US (Marketing, administration) than anywhere else so that affects the margin. I would suspect that introducing a centralized purchasing system would substantially reduce cost of sales to drug companies, and the cost of purchase to patients whilst leaving margins intact. Source – Drug Company financial statements. Anyway, at current net profits, drug companies could increase the amount of money they spent on research by 50% and still have stock that anyone would be happy to have in their portfolio.


ahem 01.09.04 at 8:08 pm

edge is exactly right: pharmaceutical companies now spend far more on marketing than research, thanks to the massive relaxation of restrictions on DTC advertising. So to say that drug-cos should be allowed to gouge the market in order to recoup the costs of researching that patentable-near-copy of Viagra is just hogwash: they gouge the market to be able to recoup the cost of advertising that patentable-near-copy of Viagra.

In fact, if you look at the ‘research’ of most leading pharmaceutical companies in relation to marketing, it’s clear to see that the ad dollars are going behind what could be called ‘patentable generics’ — that’s to say, products that essentially replicate existing drugs, but can be patented — and tweaks on existing drugs, such as time-release formulations.

And the ‘main gap’ isn’t ‘routine maintenance’ so much as preventative healthcare and the pre-emptive treatment of conditions that can become chronic and debilitating if left untreated. Right now, far too many uninsured people will not go to a doctor for fear of that horror of horrors, the diagnosis of a ‘pre-existing condition’ that will make getting insurance in the future that much harder and more expensive.

My wife has had joint pain and inflammation since her teenage years — she’s in her mid-20s now. She won’t see a doctor because she doesn’t want a ‘pre-existing condition’ on her records. Which means that for temporary relief, she has to scrounge from her sister’s prescriptions for Mobic (both have the same problem), and is reduced to asking friends who are doctors if they have samples lying around.

When obtaining anti-inflammatory medicines is more furtive than trying to score some crack, then you know that there’s a problem with the system.


harry 01.09.04 at 8:13 pm

Brian, does the comparison control for inequality (of income and wealth) in the population, which we know is bad for health? (I don’t know how the Gini co-efficients for US and Auystralia compare). Or obesity (surely Australians are not as fat as Americans)? Or the dispersal of the extended family (so that lots of care that might be done by relatives in more familially integrated countires is passed off onto the healthcare system)?

Also, Sebastian’s final point is important — emergency room treatment of the uninsured absorb a lot of public money, and, of course, the uninsured end up with expensive emergency conditions because they don’t get any primary care. Public money is, deliberately, spent very inefficiently.

The drug issue has always seemed to me to be a red herring. Drugs are nice, but public health measures (which are much cheaper to research) are much more cost-efficient. And the Feds spend spectacular amounts of money on R&D, training drug researchers, etc

On an unrelated topic, I’ve always been curious whether anyone has done a study on the effects on labour market flexibility of the non-portability of health insurance. Anecdotally, small business people I know curse the absence of universal insurance and people I know with health worries simply refuse to work for small businesses.


Ophelia Benson 01.09.04 at 8:29 pm

’emergency room treatment of the uninsured absorb a lot of public money,’

Yes and also the money of the uninsured. That’s one aspect that gets overlooked a lot. It’s not the case that all the uninsured are flat broke – to put it mildly. Health insurance is extremely expensive (gosh, really?) now, there are plenty of people (I have no idea what the numbers are though – by ‘plenty’ I mean – er, whatever I say it means) who do have assets but can’t afford to buy insurance and don’t get it through work. They’re much worse off than the flat-broke uninsured, in a way, because if they do get sick, they get cleaned out. This does happen – in fact it’s the largest cause of bankruptcies in the US.


kevin 01.09.04 at 8:34 pm

In Canada, our system is similar to what you describe in Australia. We, too, have universal access to emergency services and basic health care, but waiting lists for some kinds of procedures and tests. This is partly due to a lack of specialist physicians.

I wonder, though, how much our system is distorted by living next to the abnormal US system, which has used high salaries to attract a surplus of specialists, at least some of whom would otherwise be practicing at home in Canada, Australia, etc.

What some people view as an inherent problem with public health care could be an unfortunate consequence of the world market for private health care.


Brian Weatherson 01.09.04 at 8:37 pm

There’s no controls for anything here, so many of those factors will matter. And they could explain all of the divergence in costs. Whether they do or not is miles beyond my expertise – I was just shocked at how large the difference is between what the US spends and what everyone else spends, and at how small the difference is between what the US govt spends and what other govts spend. Beyond that I was just at the comparing-anecdotes stage. All the factors you raise will make it more expensive to run a decent health care system in America than in other countries. As I said, whether they account for all of the extra cost in the US is a hard question, not one we’re likely to solve on a blog. My suspicion is that they won’t – as I noted previously it’s not just America but every private system that seems to run excessive expenses – but obviously something more subtle than a raw comparison of numbers is needed to make precise decisions.


harry 01.09.04 at 8:44 pm

Yes, I realise the limitations of the blog for these Biran, and agreed with everything you said. I’m still curious about the relative levels of ineqaulity.

Ophelia’s absolutely right, by the way, as I know to my own massive cost — my now-divorced mother in law was wiped out in exactly the way she describes by an accident to her ex-husband and we (my wife and I) are now, post-divorce and many years later, picking up some of the pieces…


Mats 01.09.04 at 9:00 pm

I compiled links to posts based on health statistics and expenditure data on my main page: More On USA’s Inefficient Health Care


Anno-nymous 01.09.04 at 9:09 pm

Health Spending Rises to Record 15% of Economy:

“Since 1985, the report said, per capita health spending has grown more slowly under Medicare than under private insurance. Liberals say that shows Medicare is more efficient. But conservatives trace much of the difference to the fact that private insurers have provided more generous benefits.”

I’m glad the Times cleared that up for all of us.


Anno-nymous 01.09.04 at 9:12 pm

Whoops, link didn’t work. This is it.


dop 01.09.04 at 9:29 pm

I have to say, having lived in Australia for a year as a tourist and the US most of my life, that the quality of healthcare in Oz is much better than I’ve experienced in the US.

I had very good private insurance growing up in the US but have only had health insurance at all off and on as an adult. While visiting Australia for a year (and having just no insurance at all) I saw a doctor, got prescriptions, and had labwork done all for a tiny fraction of what I’d pay for similar services in the US.

On top of that, I had no trouble getting an appointment (just try getting an appt. with a doctor in the US while admitting up front that you have no insurance and will be paying cash), and the doctors in Oz were actually punctual and spent time with me instead of hustling me in and out as quickly as possible.

It was amazing!


Sebastian Holsclaw 01.09.04 at 9:53 pm

“pharmaceutical companies now spend far more on marketing than research,”

No, those often quoted statistics are for Marketing and Administration and Advertising. This silly statistic comes from this Families USA report and has been flying around the internet. You are counting all the drug company secretaries and file clerks in that amount. You are counting the administrative costs of continuing compliance with the FDA in that cost. You are counting a million other things that fall in the catch-all ‘administration’ there. You are failing to differentiate between marketing (much of which we would see as completely legitimate teaching) and advertising.

There are further methodological problems with this report. There method of comparing profits to research are snapshot oriented like: “Merck’s profits were nearly three times the amount the company spent on R&D in 2001” What? You only want to talk about the good years? Does pharmaceutical companies only spend money on research on the good years? If you want to look at an industry with a 10 year development window you have to compare over the whole period. And if you want to count the industry as a whole you have to take into account all the research companies that fail when their drugs dont pan out. Living in San Diego I could name four that effected my personal friends. Pharma research has to be particularly profitable because it is particularaly risky. If it weren’t profitable people would do less risky things to earn money. That is why their Table 8 is so stupid.

Hmm, I suspect I’m going to regret pointing out the methodological flaws, because all I’ve done is further publicize an awful report.


msg 01.09.04 at 10:07 pm

Ophelia Benson’s post was thrillingly apt.
Health-crisis bankruptcies are almost literally a phenomenon of predation. Whether it’s an accidental by-product of political/economic theory or not isn’t really significant if it’s you or your family going under.

Microsoft/capitalism running the health care industry, or Linux/socialism; how far can that metaphor stretch?
Open-source health-care would never work, though, obviously.
No motivation, no glory, no reward for years of effort.
On the other hand Mozilla does do its job pretty well, yes? Better than IE.


MC 01.09.04 at 11:02 pm

The American system tends to be very good at the expensive, innovative interventions. If you’ve got something rare or something difficult to treat then the States is the place to go. They are also willing to spend big money at the end of life. However, these kinds of interventions apart from being extremely expensive don’t tend to lead to a whole lot extra in terms of extra years lived.
On the other hand, the cheaper interventions–such as regular doctor visits–are relatively more inaccessible to more people than in countries with universal care and tend to be the things that really make a difference, population-wise, to health.


Brian Weatherson 01.09.04 at 11:48 pm

For what it’s worth, this site has Australian’s Gini index at 35 compared to 41 for the US. The numbers are a few years old, but it suggests Australia is somewhat more equal than the US. And that probably does distort the numbers a little.

If you just want to discuss public/private systems without bringing in America, it is worth noting that Switzerland has the most privately-titled health system in Europe (i.e. lowest govt spending on health as % of total spending) and by far the most expensive health care system. (Switzerland is demographically pretty similar to its neighbours, so the comparisons here are better than cross-ocean comparisons.) As far as I can tell, they get a reasonable quality product for all that dough, but it would be interesting to get some data on just how much better the Swiss health system is than the French, German, Dutch, etc systems, because this might be a better comparison between public leaning and private leaning systems.


roger 01.10.04 at 2:05 am

I don’t understand Sebastian’s point. Let’s say that health care research is extraordinarily costly. Still, the benefit of that research is, supposedly, that it finds cures for illnesses. But if that benefit has to be weighed against the fact that, to pay for those cures, a large segment of the population can’t afford the cures or treatments that are out there, you don’t get a net benefit. In fact, you would get more of a benefit from public research, which is not as successful for very non-mysterious reasons — that is, that researchers can get very rich from going into private research. They will only make a standard, comfortable, above 200 thousand dollars working in public research. Although that is tragic, there’s still no reason to coddle pharma companies by disallowing the one thing capitalism does really well: allowing competition. As in making the period of time that the research company can get a ‘fair” return on its products much shorter, so generics can take over.
This might in fact split pharmaceuticals into those that market and those that research. A long overdue destructuring of a way too fat and lazy industry.


mike md 01.10.04 at 2:41 am

Marcia Angell, MD, former New England Journal editor, makes the point that per capita spending in the US is higher than anywhere else in the world despite our 40 million or so uninsured. Were the system able to trim its current 25% or so administrative costs, it could provide vastly more care.
Our system is like a Ptolmaic cosmology, adding epicycle on epicycle, waiting for Copernicus, Kepler and Newton to come along…


cafl 01.10.04 at 3:11 am

Another point regarding drug company research. It is not chosen to solve the problems that would most improve some metric of health, it is chosen to maximize the profits of the drug companies. Courtesy of private free market research plus the U.S. patent system we have the recently publicized research experimenting with a (patentable) “good cholesterol” deduced from a long-lived Italian family’s mutated cholesterol chemistry that proved to reduce arterial clogging significantly. But there is no research plan to study (unpatentable) common ordinary good cholesterol because to do so would not result in a profitable patentable drug.


hope 01.10.04 at 4:17 am

The reason the US spends more on health care than other countries is higher prices for doctors and hospitals and higher use of medical technologies. We also have an “unusally high” intensity of health care activities.

The US does not compare well on traditional health status measures except for life expectancy at age 80. But these measures have lots of factors that impact them, and very little comparative outcome data exists that would say something more directly about quality in the health system. What does exist indicates the US may have slightly better outcomes for five year relative survival rates after breast cancer diagnosis and has shorter estimated wait times for a specific heart surgery. In addition, per capita health spending has an inverse relationship to wait times for nonemergency surgery, so you’re likely to have shorter wait times in the US.

On the subject of covering the uninsured:
“…it would cost between $33.9 billion and $68.7 billion to cover the uninsured. The lower cost would be under a government program, which would likely pay providers less, while the higher cost assumes the uninsured are enrolled in private-sector insurance plans that pay providers more.” Interestingly, in 2001, uninsured Americans received $35 billion of care that was considered uncompensated. Governments at various levels picked up $30.6 billion of that amount. Do the math vis-a-vis the government program option, and you can’t help but conclude that we are pretty much paying for it already.


Dick Fitzgerald 01.10.04 at 7:19 am

Just look at WHO’s statistics: the US not only spends more per person than anywhere, the casre delivered isnt’ close to that of other major industrial nations (infant mortality, morbitity, longevity, etc).


Dick Fitzgerald 01.10.04 at 7:19 am

Just look at WHO’s statistics: the US not only spends more per person than anywhere, the casre delivered isnt’ close to that of other major industrial nations (infant mortality, morbitity, longevity, etc).


Anon for this 01.10.04 at 11:37 am

I agree with Ophelia Benson that not all the uninsured are destitute, but disagree that they are not necessarily offered insurance through their employers or can’t afford it. About six years ago, I worked for a construction company that offered insurance to all its employees. The minimum wage paid by this company was ten dollars an hour and most employees worked 45-50 hours week (overtime after 40). The company picked up 60% of health insurance costs. For a single person in Texas, this meant health insurance cost $35/month to the employee. The company ended up having to stop offering insurance to Texas employees because the insurance company required that 40% of all employees offered insurance accept it or provide proof of coverage elsewhere. The company couldn’t meet the goal, only 25% took the policy. This was not due to the cost of for family policies being higher ($85/month to the employee), since 72% of the Texas employees were single, and 62% were single parents/had dependents, and 60% of those with families/dependents did take the policy. Of those who took the policy, most were switching from their spouses coverage because this was less expensive.
The only way the employees who refused the policy would have accepted the insurance was if it were free. And even then, they didn’t like having co-pays on doctor or emergency room visits. In meetings to convince employees to take the insurance, they claimed they could go to the emergency room for free anyway, so why get insurance? (I assume they were just planning to never pay the bill.) I am not sure that offering universal care (that required a copay) would change their attitudes at all. That means that the argument for early and less expensive care through universal health insurance would not apply to this particular population of indivduals. (Approximately 300 employees.)


Ian Whitchurch 01.10.04 at 11:42 am

This would be how I’d so it.

Get various governments and other bodies together.

Publish an ad, saying “We have $10 million in cash and shiny new passports for country X, Y or Z for anyone who can come up with a new drug that is a work-alike for . We’ll assess applications, and we need to make sure you didnt steal your work. We then pay for the human trials, and then you get the dough, and the new passport”.

Add up how much, say, Germany, Denmark, Australia and the Peopl;es Republic of Berkely spends on a single anti-inflammatory drug, and we could come up with the dough.


anon for this 01.10.04 at 11:44 am

Should read 62% were NOT single parents/had dependents


Nicholas Weininger 01.10.04 at 3:12 pm

Very few of the anecdotes I’ve seen have mentioned end-of-life care or care patterns vis-a-vis extraordinary interventions for extremely sick people. These are major, major cost drivers in the US, and tend to be ignored by people who express perplexity at the US system’s costs.

I once worked as a programmer for an HMO. I recall running some statistical analyses on a large claims data set and finding that about 1% of all claimants were responsible for 50% or so of claim dollars. I expressed surprise at the time, being new to the industry, and was told that this was entirely typical. Most anecdote tellers on any side of the debate, I think, seem not to have much experience in that 1% or understanding of who they are– and this severely lessens the relevance of said anecdotes to the cost/efficacy question.


Markku Nordstrm 01.10.04 at 5:08 pm

Don’t believe the hype about welfare state based healthcare being the best solution: people are dying in Scandinavia because they can’t get the health care they need in time. The system is so overburdened that countries often export their patients to other countries to relieve the pressure.

Should that happen in the US, the people responsible would be singled out faster than you can say “lawsuit!” But as the state is responsible for everything in Scandinavia, the possibilities for redress – and reform – are quite limited.

Even the media in Scandinavia plays along, usually burying the stories – and the issues they raise – into innocuous articles about unfortunate incidences.

Yes, people fall through the cracks in a national health care system, too: the dead. At least in the US, the ones that are outside the system… still have a voice.


Ophelia Benson 01.10.04 at 5:11 pm

“In meetings to convince employees to take the insurance, they claimed they could go to the emergency room for free anyway, so why get insurance? (I assume they were just planning to never pay the bill.)”

Really – that’s interesting. Did other employees at the meetings point out how idiotic that is? It’s not all that easy just to never pay the bill, after all – unless you are in fact destitute. Did anyone point out that they could lose their savings, cars, credit, etc? I’m not disputing your account; I’ve met idiots too, I know they’re out there. I’m just curious.


Nicholas Weininger 01.10.04 at 5:46 pm

Some more data missing here: long-term time series on health care spending as % of GDP, and in constant dollars per capita, for the industrialized countries. Many of the socialist systems in other countries have been around for many decades now, longer than health care costs have been a big issue in the US; surely people have been keeping records on this stuff for a long time. It would be very useful to see whether the gap in spending levels existed in, say, 1964 (and what the life expectancies, infant mortalities, etc. were at that time, too), and how it’s changed since then.

It is at least plausible that the US has high costs partly as a result of being, perhaps for cultural reasons, an “early adopter” nation when it comes to health care. Early adopters of any sort of thing tend to pay much more and get less than those who wait for the cheap mass-market versions. And in the last couple of decades there’s been a whole lot of stuff to adopt early.


Ophelia Benson 01.10.04 at 6:21 pm

“At least in the US, the ones that are outside the system… still have a voice.”

No they don’t. Not really. Because the axiom of US politics is that money buys you access [to politicians]. It doesn’t (the bromide goes) buy you results (in fact it does, but put that aside), but it does buy you access.

Well, poor people don’t have the money to buy access any more than they have the money to buy health insurance. Insurers, on the other hand, do. So no, the uninsured really don’t have much of a voice.


Ophelia Benson 01.10.04 at 6:25 pm

Also, this is interesting –

“Don’t believe the hype about welfare state based healthcare being the best solution:”

I’m always fascinated by rhetoric. The ‘hype’? What hype? Surely in the US there is far more ‘hype’ about the evils of ‘socialized medicine’ than there is about its virtues. Am I wrong about that? And if I am – if there is more hype in favour of a national health than there is against it – why don’t we have it?


nectarine 01.10.04 at 9:11 pm

Anon, I think your experience is fairly typical. Were the guys relatively young as well — 20s & 30s? At that age, many of us aren’t so good at long-range planning or risk assessment; hanging on to more cash by gambling on good health and good luck seems like a wise financial decision. I’ve read a few suggestions for dealing with this, such as keeping income tax refunds unless the payer can prove insurance enrollment. Kind of like making proof of car insurance a requirement for registering the car.

(Ophelia, they intend to not pay the ER bill by just flat-out not paying it. Construction workers tend to be a pretty mobile population; they probably count on being gone before the collection agency catches up. )


Kevin Brancato 01.10.04 at 11:04 pm

Is there a current authoritative book that examines, in depth and impartially, the differences in health care cost, quality, and quantity across countries?


Zizka 01.11.04 at 12:33 am

Jesus, Sebastian, the statistic lumped marketing and advertising together? That’s a shocker!

I’m always amazed when **defenders** of the American system point out that the American market is being used as a cash cow to keep everyone else’s drug prices low.


hope 01.11.04 at 2:34 am

Kevin Brancato asked for a source that looks at health costs and quality across countries. See


grayson 01.11.04 at 2:47 am

Fascinating comparison of the US and Canadian models of healthcare at


Nicholas Weininger 01.11.04 at 5:16 pm

hope: thanks (even though I’m not Kevin). That goes a long way toward filling some of the gaps I’ve mentioned in earlier comments. Mmm, tasty data.

The 1960 numbers are, as I expected, interesting and relevant. US per-capita health care spending then was much higher in dollar terms, but not so much as a % of GDP; the US was near the top in % of GDP but not nearly so far out of line with everyone else as it is now.

Now in 1960 the US had what by today’s standards is a pretty completely free-market health care system. At least some of the other countries in the comparison already had socialist systems. So these historical data argue against the proposition that a private system must necessarily impose a much heavier economic burden than a socialist one.

Also noteworthy is that in the more recent data sets, reflecting the availability of new medical technology, richer nations (Germany, US, Switzerland) tend to be near the top of the %-of-GDP numbers. Perhaps as nations grow richer, their peoples tend more and more to demand, in effect, luxury healthcare: extraordinary end-of-life interventions, cutting-edge technology, surgery with no waiting list. This sort of stuff costs a lot of money but tends not to show up in the aggregate quality measures beloved of the advocates of socialism. Access to MRIs, for example, does nothing to improve infant mortality and probably doesn’t do much for life expectancy at birth. On those measures where it *does* show up, the US indeed beats out the rest: the report gives two examples, life expectancy at 80 and waiting times.

All of which serves to reinforce my skepticism about the degree to which socialist health care would reduce costs in the US, even compared to our current sorry semi-private mockery of a system. The popular demand for expensive stuff would still be there, and socialism would remove the last obstacles to foisting the costs of said expensive stuff off on other people.


Markku Nordstrm 01.11.04 at 8:25 pm

Ophelia: the uninsured certainly have a voice in the US. This blog is proof of that. The dead Scandinavian citizens who did not get the health care they needed because they were wait-listed certainly don’t have a voice now.

A more telling example is the 15,000 elderly who died in France last summer, – the national health care system failed them. It is axiomatic of a welfare state’s raison d’etre that ALL must be taken care of: otherwise, the welfare state model is a failure.

Your arguments fail to convince me that the US model is far inferior to the European welfare state model, when it comes to health care. I assume it has to do with selective, ideologically-based reasoning.


roger 01.12.04 at 12:57 am

There’s a fascinating book by a Canadian researcher, Edward Shorter, on the ‘sensitivization’ of the patient body. According to Shorter, who is working with doctor’s interviews with patients over the last fifty years, we passed from a stage, in the fifties and sixties, when Doctors were briefly seen as demi-gods (the golden age of medicine, according to Jame Le Fanu — the age when the basis of contemporary medicine, from heart surgery to antiobiotics, was laid down) to a period of patient liberation, so to speak, when the patient became impatient of pain.

Hence, the interesting myth of the queue. Of course, in the US, queueing is done by simply avoiding medical care because it is unaffordable. When a system — like the vastly superior Canadian system or Swedish — is posited on “universal care,” that previously hidden queue, household by household, is revealed.

Those people who defend the U.S. healthcare system as one in which the market allocates health care are usually very ignorant of the particulars of the health care market — and in particular, the transformation of health care into a compensation package offered by employers. This is a classical instance of what Joseph Stiglitz won the Nobel Prize for — asymmetrical information. It certainly doesn’t make for a free market. It probably couldn’t — the ROI on medical care, without the insurance companies and the monopolistic grip of Big Pharma and the rest of it — that is, a truly competitive system, taken away from its biggest client base, the corporation — would collapse.

What we need is a robustly socialist health care system, combined with a robustly private health care system — something like what we have with the mail system, with Fed-ex’s competing with the Post Office to provide a delivery service that has the scale to accomodate the poorest and the private businesses to accomodate the richest.

It won’t be a perfect system, God knows — but there is no perfect system. And it would be much better than the patchwork of government interventions and private markets existing today.


Sebastian Holsclaw 01.12.04 at 7:49 pm

“Jesus, Sebastian, the statistic lumped marketing and advertising together? That’s a shocker!”

Good God zizka, can you read? The lumped marketing, advertising and administration .

Just ask the oh so efficient universities how much of a cost administration can be if you want to analyze how stupid it is to combine those catagories.

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