Conover Debunks Health Care Myths

Christopher Conover at AEI discusses his new book American Health Economy Illustrated.

Myth: Relative to other countries, the U.S. spends “too much” on health care.

Differences in income explain 85% of variations in health spending.

The U.S. is spending what it should in GDP per capita, while France spends 1/5 too much, and Canada and the U.K. spend too little. Blue states are spending too much due to overregulation (Massachusetts, New York, New Jersey). After RomneyCare Massachusetts has the highest level of health care spending.

Myth: The U.S. has an abysmal infant mortality rate.

It does rate 43rd, but there is no standard for reporting infant mortality. The U.S. is one of eight countries that count extremely premature infants as live births despite low chances of survival. If we categorize births by length of gestations the U.S. ranks 2nd, 3rd, or 4th (depending on type of rank) to European countries.

Myth: The U.S. lags behind its competitors in life expectancy.

The U.S. ranks 39th, but this is misleading. This distortion is due to a high rate of deaths resulting from violence. When adjusted for deaths related to violence and suicide the U.S. ranks first in OECD countries.

Myth: The U.S. has worse health outcomes than its peers.

Cancer is the second leading cause of death in the U.S., but cancer patients live longer in the U.S.; cancer survival rates are better. The U.S. has far higher screening rates.

Conclusion: The U.S. health system has many problems, but other countries do not offer a magic bullet.

Comments (8)

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  1. Studebaker says:

    Interesting points!

  2. Devon Herrick says:

    People often look at spending health care spending in other countries and complain how badly the United States is getting taken to the cleaners. The U.S. is a wealthy country and medical care is a luxury good. As income rises, the demand for health care rises disproportionately with income. The U.S. also funds much of the medical research & development for the world. Because we are willing to pay for technology, the technology gets developed. Other countries free-ride off our higher demand for health care by paying only marginal cost for our drugs and medical devices.

    Our health care system is in dire need of reform. But this does not mean we need a top-down, command and control system like Canada or the United Kingdom. If critics want to improve the efficiency of our health care system, they should support Health Savings Accounts, private accounts for Medicare and Medicaid and selective contracting by health plans.

    Our health care system faces a host of perverse incentives. Realigning incentives to induce consumerism (and competition) would go a long way towards improving the efficiency of our health care system.

  3. Neil H. says:

    Sounds like an intereesting book.

  4. Tom H. says:

    Good post.

  5. Brian says:

    There seems to be a few different ways that countries can compute their data with respect to the rankings, though the U.S. arguably fairs well enough on health care regardless.

  6. Eric says:

    Why should health care spending necessarily be proportional to GDP/capita? It seems to me that this is a pretty poor way of justifying the level of “necessary” spending. If Country A is twice as wealthy (by GDP/capita) as Country B (and spends twice as much as Country B on health care) but their populations are equivalent in terms of health care needs, then Country A could very well be overspending (or Country B could be underspending). That point is not very persuasive.

    The violent crime adjustment is interesting and fairly persuasive, but isn’t there an argument that the quality of the medical system could reduce the rate of death from violence/accident? I understand that a good portion of those people are dead before they make it to the hospital, but for the remainder, the outcomes could be indicative of the quality of the emergency medical system.

    The cancer survival rates are not especially meaningful in aggregate as a metric of quality. High screening rates can inflate 5-year survival rates (because of earlier detection) without actually affecting mortality for a number of cancers. Higher screening rates can also mean higher detection of cancers that would not have gone on to harm the patient, which can also inflate the survival rates.

    I agree that there is no magic bullet, but that doesn’t mean that the US can’t learn from what other countries have done (both successfully and unsuccessfully).

  7. Alyn Ford says:

    Your post is music to my ears. I have been blogging about differences in the per capita spend between Canada and US for a while now. Few consider the fact the Canada, as a result of the lower spend, has a much bigger inventory of “sickness” than we do in the US… Hence the 1 to 3 year waiting period for elective hip replacements, versus 1 to 4 weeks in the US.

    I also concur with your points on Life Expectancy and Health Outcomes.

    I find myself wondering, frequently, what happens as we continue to reduce the funding for healthcare per capita, without a corresponding increase in the fundamental efficiency of the care delivery process. To date, EHR’s and many of the other improvement efforts have not created change that will sustain us going forward.

    I would argue that we have yet to focus, as a healthcare economy, on the fundamental logistics of the movement of patients in the care delivery process…., but that’s a debate for another day.

    Love the article.