I stumbled upon this blog post (sorry for its length) that discusses the issue of US health spending. The conclusion is that healthcare spending is not exorbitant, but rather a reflection of our relative wealth and so it's about what you would expect. I'm still reading through it myself but thought that this would be interesting for discussion. Enjoy!
https://randomcriticalanalysis.word...ined-by-its-high-material-standard-of-living/
The government spent only a little more per covered beneficiary before ACA than almost every social democracy. The other part that makes it so high is private spending. That is a private affair.
RCA said:The plot above (volume) strongly suggests that the volume of health goods and services is much higher in the United States. This data argues pretty strongly against the popular notion that it’s prices that drive US health care expenditures (presumably due to lack of market power on part of payers) above trend, i.e., this data suggests costs are actually below what you’d expect with AIC and volume significantly above what you’d expect with AIC (note: it would also help explain why US spends more than average on administrative costs).
Okay? What does that have to do with anything that's in the blog post?
This is an interesting note from the blog post:
I stumbled upon this blog post (sorry for its length) that discusses the issue of US health spending. The conclusion is that healthcare spending is not exorbitant, but rather a reflection of our relative wealth and so it's about what you would expect. I'm still reading through it myself but thought that this would be interesting for discussion. Enjoy!
https://randomcriticalanalysis.word...ined-by-its-high-material-standard-of-living/
The government spent only a little more per covered beneficiary before ACA than almost every social democracy. The other part that makes it so high is private spending. That is a private affair.
It is a long blog, indeed, but it seems to argue that in the US, since we spend too much for everything, it is OK that this trend continues with our spending on medical care. In other words, since we have more expensive X it naturally follows that we would have more expensive Y. Tossing out GDP in favor of creating (making up?) some other index to use to prove what they wanted to prove is, IMHO, ridiculous. Saying that your rent is not too high because your personal spending (which includes that high rent) is also high is what I get as the basic premise.
That is simply not true. The government only "insures" a small fraction of the population. The actual per beneficiary costs for both Medicaid and Medicare are substantially higher than the same for private insurance overall and much higher than total NHE throughout the OECD.
View attachment 67216576
https://www.cms.gov/research-statis.../nationalhealthexpenddata/nhe-fact-sheet.html
Now it may be true that this comparison is "unfair" because Medicare is mostly elderly and the Medicaid is mostly poor and/or sick, both of which are higher cost populations, but it certainly means that you cannot make this claim.
P.S., I wrote the aforementioned blog post.
But you're not paying for the same thing. As you get more disposable income, you're able to pay for more of it and get higher quality of what you buy. That's true especially of housing, but it's also true for healthcare.
It is a long blog, indeed, but it seems to argue that in the US, since we spend too much for everything, it is OK that this trend continues with our spending on medical care. In other words, since we have more expensive X it naturally follows that we would have more expensive Y. Tossing out GDP in favor of creating (making up?) some other index to use to prove what they wanted to prove is, IMHO, ridiculous. Saying that your rent is not too high because your personal spending (which includes that high rent) is also high is what I get as the basic premise.
Nice to meet you! I've been fascinated by your blog posts lately, and every new one that I find is another gem.
The author of the blog post, despite a great deal of sophistication, somehow didn't seem to account for the fact that AIC in the US includes health care spending. And by definition, this will be excluded from almost every other nation in the list, where most of the health care costs are paid by the government.
Ooops.
I do agree that nations spend more on health care as they become wealthier. What I don't agree with is his position that the higher costs of care in the US are explained by the alleged higher standard of living or GDP per capita. It may be a small contributor, but it doesn't explain the massive discrepancy -- which is hidden in some charts by using log instead of linear scales. I.e. the US isn't twice as affluent as nations like Italy or France or the UK, yet we still spend twice as much as they do on health care as a percentage of GDP.
(2008 figures, as a typical example)
We should note that the additional spending doesn't improve outcomes. Compared to the rest of the OECD, US infant mortality rate is much higher; life expectancy is slightly lower; the US has more chronic diseases and higher obesity rates; we do well with cancer care, but poorly with heart disease and diabetes; much of our spending is on the elderly, for care that neither extends life significantly or improves quality of life. Despite the myths, the US has wait times nearly the same as the rest of the OECD. Just because we don't have to wait as long for an MRI doesn't mean that the shortage of GPs, or delays in other types of care, or inability to afford procedures or pharmaceuticals, does not exist.
Now, we do know (from other studies) that Americans do consume more pharmaceuticals and use certain services far more than other OECD nations. E.g. we get twice as many MRIs and CT scans than the OECD median. Ironically, this flies in the face of many conservative critics who assert that socializing care will result in an increase in frivolous use of health care services.
And.... We know that medical costs are a significant factor for US bankruptcies. That's far less of an issue in other OECD nations.
This is not to say that socialized or single-payer systems are all hugs and puppies. They have their own issues and challenges. The US system, however, seems to be much worse on nearly every count and measure, including cost. Massaging statistics and making nice charts ultimately can't obscure that issue.
RCA said:Even if we remove HCE from AIC, to preemptively address complaints that the vast majority of HCE is allocated to AIC (and thus mechanically contributing to this relationship), we find much the same result!
The author of the blog post, despite a great deal of sophistication, somehow didn't seem to account for the fact that AIC in the US includes health care spending. And by definition, this will be excluded from almost every other nation in the list, where most of the health care costs are paid by the government.
Ooops.
We should note that the additional spending doesn't improve outcomes. Compared to the rest of the OECD, US infant mortality rate is much higher; life expectancy is slightly lower; the US has more chronic diseases and higher obesity rates; we do well with cancer care, but poorly with heart disease and diabetes; much of our spending is on the elderly, for care that neither extends life significantly or improves quality of life. Despite the myths, the US has wait times nearly the same as the rest of the OECD. Just because we don't have to wait as long for an MRI doesn't mean that the shortage of GPs, or delays in other types of care, or inability to afford procedures or pharmaceuticals, does not exist.
I wrote the aforementioned blog post. While I personally do not to share the moral panic over this issue, my point is not so much that it is "OK" (that's really a normative question), but that this is largely caused by higher real incomes in the long run, i.e., even if you might prefer NHE to be lower it's probably not caused by US idiosyncrasies in its reimbursement systems, unusually high medical wage premiums, etc. Put differently, if what you care about is actually reducing NHE you would be well served to actually understand what drives NHE higher because merely copying the sorts of systems found in Europe/Anglosphere will likely not deliver the results you presumably want.
Incidentally, AIC is not a "made up" stat. It constitutes (1) vast majority of GDP in most countries (2) can be derived directly from national accounts data and (3) is regarded by many other people as being a superior indicator of actual living conditions in a country (i.e., how wealthy the people really are). However, if you don't like AIC similar results are obtained with household disposable income (yes, US also has much higher disposable incomes and these incomes constitute a larger fraction of GDP than most other rich countries...)
https://randomcriticalanalysis.word...o-explains-us-health-expenditures-quite-well/
Yes, there is no question in my mind that US NHE volumes are much higher than average and much of this is found in areas with limited effects on mortality rates and the like (e.g., extra scans, diagnostics, elective surgeries, etc). However, we find that these patterns correlate well with how wealthy a country truly is, i.e., with better income measures/proxies than GDP, and that these generally explain the US quite well, i.e., the amount of technology in medicine, the volume of elective surgeries, and the like are almost entirely product of high and rising wealth. As we get richer as a society (not so much an individual-income effect) our willingness to chase diminishing returns increases because the marginal utility of extra consumption falls and we attach higher and higher value to human life. Some of this may be arguably irrational, but it certainly does not look like other health system configurations produce generally more rational decisions along these lines (for some definition thereof). Put differently, save for the rare regime like England's NHS of old (it's much less true these days and increasingly less so), which embraced top-down rationing and the like, there is very little to suggest that other systems actually change the relationship between wealth and NHE (or how NHE is allocated) -- their slopes, intercepts, etc are virtually identical and many even quite a bit worse.Now, we do know (from other studies) that Americans do consume more pharmaceuticals and use certain services far more than other OECD nations. E.g. we get twice as many MRIs and CT scans than the OECD median. Ironically, this flies in the face of many conservative critics who assert that socializing care will result in an increase in frivolous use of health care services.
The point that I am making is that while a typical low to median income person might be able to easily find a $10 haircut they easily cannot find a cheaper dose of drug X or a medical specialist willing to treat them for a discount. Sure those that are poorer can buy a used car/truck instead of a Cadillac or BMW to get to and from the hospital but they get the same bill, for the same treatment, once they get treated there.
I stumbled upon this blog post (sorry for its length) that discusses the issue of US health spending. The conclusion is that healthcare spending is not exorbitant, but rather a reflection of our relative wealth and so it's about what you would expect. I'm still reading through it myself but thought that this would be interesting for discussion. Enjoy!
https://randomcriticalanalysis.word...ined-by-its-high-material-standard-of-living/
That is simply not true. The government only "insures" a small fraction of the population. The actual per beneficiary costs for both Medicaid and Medicare are substantially higher than the same for private insurance overall and much higher than total NHE throughout the OECD.
View attachment 67216576
https://www.cms.gov/research-statis.../nationalhealthexpenddata/nhe-fact-sheet.html
Now it may be true that this comparison is "unfair" because Medicare is mostly elderly and the Medicaid is mostly poor and/or sick, both of which are higher cost populations, but it certainly means that you cannot make this claim.
P.S., I wrote the aforementioned blog post.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?