Tag Archives: international health spending

Health Care Access

Widespread Government Failure In Health Care

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UntitledThe Commonwealth Fund has published yet another survey comparing health care in the United States to health care in other countries. The title emphasizes US Adults Still Struggle With Access To And Affordability Of Health Care.

Really? As I’ve previously written, I agree fully with the Commonwealth Fund scholars that health care in the U.S. is inefficiently delivered and over bureaucratized. Nevertheless, suggesting U.S. health care is the worst overall is not consistent with the data.

The latest survey compares 11 developed democracies. The relationship between government control of health care and various measures of health status is not at all clear, despite other countries having so-called “universal” health systems.

When it comes to actual access to care, 35 percent of low-income Americans (with household incomes below one half the median income) had to wait six or more days to see a primary-care doctor or nurse the last time they needed care. However, so did 38 percent of low-income Germans and 32 percent of low-income Swedes. Continue reading Widespread Government Failure In Health Care →

Health Alerts

U.S. Health Spending Not An Economic Burden

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HSA(A version of this Health Alert was published by Forbes.)

Health spending consumes a higher share of output in the United States than in other countries. In 2013, it accounted for 17 percent of Gross Domestic Product. The next highest country was France, where health spending accounted for 12 percent of GDP. Critics of U.S. health care claim this shows the system is too expensive and a burden on our economy, demanding even more government intervention. This conclusion is misleading and leads to poor policy recommendations, according to new research published by the National Center for Policy Analysis (U.S. Health Spending is Not A Burden on the Economy, NCPA Policy Report No. 383, April 2016).

Discussing health spending in dollars, rather than proportion of GDP, the report notes Americans spent $9,086 per capita on health care in 2013, versus only $6,325 in Switzerland, the runner-up. (These dollar figures are adjusted for purchasing power parity, which adjusts the exchange rates of currencies for differences in cost of living). This big difference certainly invites us to question whether we are getting our money’s worth. However, it is not clear that this spending is a burden on Americans, given our very high national income. Continue reading U.S. Health Spending Not An Economic Burden →

Drugs

Why Are U.S. Prescription Prices Higher?

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Variety of Medicine in Pill BottlesJeanne Whalen of the Wall Street Journal has written a feature article comparing U.S. prescription drug prices to those overseas. Unsurprisingly, she find prices in other developed countries lower, and credits government price controls in other countries with (pretty much) all the difference.

A vial of the cancer drug Rituxan cost Norway’s taxpayer-funded health system $1,527 in the third quarter of 2015, while the U.S. Medicare program paid $3,678. An injection of the asthma drug Xolair cost Norway $463, which was 46% less than Medicare paid for it.

Drug prices in the U.S. are shrouded in mystery, obscured by confidential rebates, multiple middlemen and the strict guarding of trade secrets.

The state-run health systems in Norway and many other developed countries drive hard bargains with drug companies: setting price caps, demanding proof of new drugs’ value in comparison to existing ones and sometimes refusing to cover medicines they doubt are worth the cost.

(Jeanne Whalen, “Why the U.S. Pays More Than Other Countries for Drugs,” Wall Street Journal, December 1, 2015)

I do not dispute the facts of the article, but the article’s misidentifying the primary reason why drug prices are different. It actually does a good job of differentiating countries where the state exercises monopsony power over drug purchases (like Norway) and those where the state does not exercise purchasing power, but imposes price controls on al sales (like Canada). It is easy and intuitive to conclude that such government interventions reduce prices. However, contrary evidence shakes that thesis. Relative purchasing power better explains the difference. Continue reading Why Are U.S. Prescription Prices Higher? →

Health Alerts

The U.S. Is The Third Lowest Health Spender of 13 Developed Countries

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(A version of this Health Alert was published by Forbes.)

Scholars affiliated with the Commonwealth Fund recently published another report in the Fund’s series of international comparisons of U.S. health care. These reports are always well received by the media, which run articles lamenting how expensive U.S. health care is, and how great a burden on the country. Encouraged by the Commonwealth Fund to conclude that the major difference between health care in the U.S. and other developed countries is that they have “universal” health systems, many reasonable people understandably conclude that such a reform could reduce the cost of U.S. health care.

This conclusion is way off-base. According to the report, U.S. health spending accounted for 17.1 percent of Gross Domestic Product (GDP) in 2013. France comes next, at 11.6 percent. In dollar figures, the U.S. spent $9.086 per capita, versus only $6,325 in Switzerland, the runner-up. (These prices are reported at purchasing power parity, which adjusts the foreign currency exchange rates for differences in cost of living.)

These results certainly invite us to question whether we are getting our money’s worth. However, it is not clear that this spending is a burden on the U.S., given our very high incomes. Table I shows that when we subtract U.S. health spending from our Gross Domestic Product (GDP), we still had $44,049 per capita to spend on everything else we value. Only two countries, Norway and Switzerland, beat the U.S. on this measure. In the United Kingdom for example, GDP per capita after health spending was only $34,863 in 2013. So, even though American health care is significantly more expensive than British health care, the average American enjoyed $9,185 more GDP after health spending than his British peer, and just under $6,000 more than his Canadian neighbor.

20151026 Commonwealth Fund TI Continue reading The U.S. Is The Third Lowest Health Spender of 13 Developed Countries →

Health Care Costs

More on the Latest Commonwealth Fund Study: The United States is the Third Lowest Spender on Health Care in Eleven Developed Countries

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Devon Herrick has already addressed some of the shortcomings of the Commonwealth Fund’s latest survey of eleven developed countries, which questions thousands of residents about their health costs and access to health care. The report is inevitably spun with headlines such as: “We pay more, wait longer than other countries“.

In the United States, health spending accounted for almost 18 percent of GDP in 2011. The Netherlands comes next, at just under 12 percent. In dollar figures, the U.S. spent $8,508 per capita, versus only $5,669 in Norway, the runner-up. This certainly invites us to question whether we are getting our money’s worth. Free-market reforms, as described in Priceless, are expected to reduce costs.

However, it’s not clear that relatively high U.S. health spending is a burden on the nation. Table A, which uses data from the survey, shows that when we subtract U.S. health spending from our Gross Domestic Product (GDP), we still had $39, 560 per capita to spend on everything else we value. Only two countries, Norway and Switzerland, beat the U.S. on this measure. In the United Kingdom for example, GDP per capita after health spending was only $32,818 in 2011 (adjusted for the cost of living). So, even though American health care is significantly more expensive than British health care, the average American enjoyed $6,742 more GDP after health spending than his British peer.

Table A

Country Health
Spending/Capita (2011)		 Share
of GDP/Capita		 GDP/Capita
(2011)		 GDP/Cap less Health
Spending/Capita (2011)
 Norway  $5,669  9%  $60,957  $55,288
 Switzerland  $5,643  11%  $51,300  $45,657
 United States  $8,508  18%  $48,068  $39,560
 Australia  $3,800  9%  $42,697  $38,897
 Netherlands  $5,099  12%  $42,849  $37,750
 Sweden  $3,925  10%  $41,316  $37,391
 Canada  $4,522  11%  $40,375  $35,853
 Germany  $4,495  11%  $39,779  $35,284
 United Kingdom  $3,405  9%  $36,223  $32,818
 France  $4,118  12%  $35,500  $31,382
 New Zealand  $3,182  10%  $30,893  $27,711

Source: Schoen, C., et al., “Access, Affordabiliy, and Insurance Complexity Are Often Worse in the United States Compared to Ten Other Countries”, Health Affairs (November 2013).

Continue reading More on the Latest Commonwealth Fund Study: The United States is the Third Lowest Spender on Health Care in Eleven Developed Countries →