Thought Arguments and Rants, via Professor Leiter, gives a table of data on a subject I'd been thinking of writing on sometime. I've excerpted some key numbers below and added a last column:
Country Pub% $/capita GDP% Doctors/capita Public $/capita Canada 70.4% $2,433 9.1% 2.1 $1,713 France 76% $2,211 9.3% 3.3 $1,680 Germany 74.8% $2,615 10.6% 3.2 $2,000 Japan 78.1% $1,852 7.5% 1.9 $1,446 Korea 43.1% $762 5.6% 1.3 $328 United Kingdom 80.5% $1,704 7.2% 2.0 $1,371 United States 44.2% $4,287 13% 2.7 $1,894 Pub% - Public Expenditure on Health as a Percentage of Total Expenditure on Health $/capita - Total Expenditure on Health per capita in US$ GDP% - Total Expenditure on Health as a % of GDP Doctors/capita - Practicing Physicians per 1000 population The figures are from 1999, the last year for which complete statistics are available.The table illustrates the biggest fact about health care internationally: the United States spends a lot more than anyone else. In fact, we have higher government spending per capita than any of these countries except Germany. Some people interpret this to mean that our spending on health care is wasteful, in the sense that less could be spent to get the same quality of health care. I doubt that. Our spending is probably much more effective, because less is government spending and more is controlled by individuals, highly competitive insurance companies, and cost-conscious non-profit and for-profit hospitals. Rather, what this shows is that American like to spend a lot on health care. No doubt we run into diminishing returns (the first $1,000 per capita has the biggest impact on quality, the increase from $3,287 to $4,287 much less), but we have higher quality. Americans are rich and care a lot-- maybe too much-- about their bodies. If you add the cost of the time we spend exercising for health's sake, or fussing about diet, our relative spending on health care would be even greater.
The other thing to keep in mind is that the poor in America have remarkably high spending on their health care. The American government spends $1,894 per capita on health care, but that is not spent on all Americans. It is made up mainly of spending on old people (Medicare), poor people (Medicaid) and veterans. Thus, government spending per person covered by government programs is probably greater than the $2,615 per capita spent even by Germany on health care. Our poor people get better health care than the average German, Britisher, Japanese, Frenchman, Korean, or Canadian. We shouldn't worry about lack of spending on health care for poor Americans.
The effect of socialized medicine is the opposite of what I would have expected. It increases spending on health care rather than reducing it. That does not make it any less inefficient, unless we say that American private citizens are wrong in their willingness to buy luxury health care. Rather, health care spending in countries with socialized medicine is inefficiently low.
Why does socialism reduce spending? Well, health care is a luxury good, in the sense that spending on it increases more than proportionately with income. What would happen if we socialized the provision of automobiles, forbidding private purchase and having the government buy each person a car. The government would not buy BMW's. It would probably not even buy a car of the average quality. Rather, it would tend over the years to try to buy cheaper and cheaper cars, forgoing technical improvements, ornaments, items of comfort such as seats or cupholders, and items of safety such as airbags. And it would slow down the replacement of old cars-- if your car hadn't collapsed yet, the government wouldn't replace it. That, I think, is what happened to health care in Britain and Canada.
There are a couple of caveats. One is that in the US we artificially restrict the number of doctors, raising their cost. Note that both France and Germany have more doctors per capita than the U.S. In the U.S., we substitute to technology and less skilled health care providers instead of expanding the size of medical schools or allowing more immigration of foreign doctors. Another caveat is that our tax system exempts health insurance benefits from taxable income, so we do not have an entirely free market system even outside of government spending-- in effect, we subsidize health care spending. I don't think either of those things can explain most of our high spending though, particularly since other countries might have those same features (I just don't know).
November 22, 2003. ר Medical Care. Here are some more facts on medical care for the poor in America. According to the Statistical Abstract, Table 516, health public assistance was $225 billion, out of total welfare spending of $436 billion (Note that this excludes Medicare and Social Security; we are not talking about poor old people).
In 1999, $190 billion of that was under the Medicaid program, to an average monthly figure of 42 million people. That is $4,523 per person. The total U.S. population in 2000 was 281 million ( http://www.census.gov/prod/2003pubs/02statab/pop.pdf. Table 1), so we seem to count at least the bottom 15% of the U.S. population as being poor. The figure of $4,523 is greater than the figure of $4,287 from my table below for the entire U.S. population. That is partly because the 42 million includes only poor people who needed health care, which is not all poor people. I would not be surprised, however, if it were true that poor people in America have more spent on their health care per capita than people who aren't poor. That is not just because our poverty programs are so generous--- they are, but probably the coverage isn't as good as with private insurance--- but because poor people are more prone to vice and take worse care of their health, so they need more health care. (I remember my father complaining that when staff were combined with faculty for health insurance at the University of Illinois, health insurance premiums went up for him, because the health of secretaries and janitors was so much worse than that of professors.)
What are we to conclude? Again, that the U.S. government takes better care of the health of American poor people than foreign governments take care of their average citizens.
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