Health care wasn't broken

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Dr. Stephen DiMarzo and nurses go over work details in the maternity ward at Scripps Memorial Hospital in La Jolla, California on Jan. 9, 2007.

  • Title:

    American Health Economy Illustrated
  • Hardcover Dimensions:

    7" x 10"
  • 332 Hardcover pages
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Article Highlights

  • 5 myths that drove #health care #reform

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  • Income per capita explain about 85% of the variation in health expenditures per capita across industrialized countries

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  • Since 1960, the US has been about in the middle of economic peers in terms of rate of growth in real health spending

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The epic debate over President Obama's controversial individual health insurance mandate finally reaches the Supreme Court this month. Stripped of legal jargon, the administration's defense of the mandate — and the broader Affordable Care Act — boils down to this: The U.S. healthcare system was badly broken, so we had to fix it.

Indeed, the fierce battle over reform was based on the perception that Americans did not get good value for their money. Many of the global comparisons that informed this view, however, were flawed, incomplete or misleading. It's time to set the record straight.

"The U.S. health system is far superior to the statistical caricature critics have presented." - Christopher J. Conover

The U.S. spends too much compared to other countries.

This is a pervasive misconception encouraged by reformers who sought to argue that other countries, especially those with single-payer systems such as Canada or Britain, outperform the United States. Thus it was feasible to imagine that the U.S. could dramatically expand access to care without spending more money.

But throughout the world, as income rises, so does willingness to pay for healthcare. In fact, differences in income per capita explain about 85% of the variation in health expenditures per capita across industrialized countries.

Conventional models purportedly show that the U.S. spends 60% more on healthcare than it should given its level of per capita income. These models treat all nations the same so that the United States and its 300 million people is compared with very small countries such as Iceland, population 500,000. But a more precise model that compares apples to apples shows that the U.S. spends only 1.5% more than it should. By contrast, France spends about one-fifth too much, while Canada and Britain spend about one-fifth too little.

Other countries are doing better at controlling health spending growth.

Since 1960, the U.S. has been about in the middle of its economic peers in terms of the rate of growth in real (inflated-adjusted) health spending per person. But surely the single-payer countries have done best in controlling costs? Not so. Since 1990, growth in the rates of per capita spending in Canada and Britain have exceeded the U.S. rate.

What really matters is how much the average person has to spend on everything else once healthcare has been purchased. And on this score, Americans have a huge advantage. In real dollar terms, the U.S. margin of advantage in nonhealth spending increased between 1960 and 2007 compared with every country in the then-G7 except Japan. The U.S. spends more on healthcare in large part because it can afford to do so.

The U.S. has abysmal infant mortality rates.

This is a half-truth. The U.S. ranks 43rd internationally in infant mortality, according to United Nations figures for the years 2005 to 2010. Unfortunately, there is no consistent standard for reporting infant deaths across countries. The U.S. scores lower because doctors here count as failures extreme cases in which the odds of survival were so low that foreign doctors don't count them at all.

Specifically, many nations also do not report any live births at less than 23 weeks, even when vital signs are present, according to a study published in 2000 in the American Journal of Public Health. That same study found that when all deaths to infants delivered in Philadelphia at 22 weeks' gestation were excluded, the city's measured infant mortality rate declined by 40%.

If we categorize births by length of gestation, the U.S. ranks second, third or fourth among major European countries in achieving the lowest infant mortality rates for every category examined prior to full term.

The U.S. has abysmal average life expectancy.

Life expectancy does not suffer from the same measurement problems that distort infant mortality comparisons. Even so, the U.S. ranking of 39th in life expectancy (according to U.N. figures) also is thoroughly misleading. When life expectancy figures are adjusted to account for deaths due to violence, the United States ranks No. 1 among nations in the Organization for Economic Cooperation and Development. U.S. deaths due to violence include all gunshot-related deaths as well as deaths due to automobile accidents or other injuries. Such deaths, obviously, say nothing about the quality of U.S. medical care.

The U.S. has worse health outcomes.

Critics have argued that the U.S. has the worst healthcare in the developed world. Most who believe this use the infant mortality and life expectancy indicators debunked above. The U.S. does perform worse on so-called avoidable deaths amenable to medical treatment. This measure likewise has many flaws, not the least of which is that such deaths constitute only a fraction of overall deaths. A more relevant comparison might be cancer, which is the second-leading cause of death in the United States. Cancer patients live longer in the U.S. than in any other country.

There are many problems with the U.S. health system. But figuring out how to fix them requires a clear understanding of where we fall short. Too often, Americans appear to think that other countries, such as Canada, Britain or France, offer a "magic bullet" healthcare system that would cure our ills.

A fairer comparison reveals that the performance of the U.S. health system is far superior to the statistical caricature critics have presented.

Christopher J. Conover is a research scholar at Duke University's Center for Health Policy and Inequalities Research, an adjunct scholar at the American Enterprise Institute and a Mercatus affiliated senior scholar. He is the author of the just-published "American Health Economy Illustrated."

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Christopher J.
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