Health Care: US vs World

As the Obama administration prepares to reform health care in the US, there’s relatively little news coverage comparing the US system to other similar countries around the world. If indeed the US were planning on going alone and creating new health care system unheard of anywhere else the cause for skepticism would be completely justified. However, many point out that the actual situation is reversed. The US is the only industrialized country without a major public health system. Is our current rogue status justified? Is our current unique health care system producing such spectacular results that we are justified in merely tweaking the current system or is our unique system producing mediocre or poor results in comparison with other industrialized countries? Should we be considering a significant overhaul in our health care system?

We’ll answer these questions by examining information collected by the United Nations on 180 different countries. Their 2007/2008 Human Development Report includes a comprehensive set of statistics for the year 2005. Additionally the UN breaks down these 180 countries into 4 categories. The UN ranks each country on an index they call the “Human Development Index” (HDI). The HDI is a “quality of life” indicator and includes things like longevity, personal wealth and literacy rates. Where full data is available the UN groups these 180 nations into a “high”, “medium” and “low” HDI ranking. Many of the countries in the High HDI category are capitalistic democracies, but many are not. The online version of the UN’s report further breaks down the “high HDI” category into those countries that are members of the Organization for Economic Cooperation and Development (OECD). Countries who are members of the OECD “accept the principles of representative democracy and free-market economy”. Since the OECD does not include every democracy with a High HDI score we’ll refer to these OECD countries as “select democracies”, and the other countries as high, medium or low development as appropriate.

QUALITY OF HEALTH CARE

For a measure of a successful health care system we’d like a measure that reflects a variety of factors and is as objective as possible. No single number can capture this without lots of explanation. For our purposes we’ll keep it relatively simple and just choose two numbers, infant mortality rates and average life expectancy. The obvious good place to be is with a low infant mortality rate and a high life expectancy. In the chart below this is the upper left hand side. The diagonally opposite place is the worst place to be, high infant mortality and short life expectancy. The other 2 diagonals are clearly in the middle but whether you prefer the lower left or the upper right is a judgment call. All 180 countries are plotted color coded to which of the 4 categories they belong to. It’s not surprising to see the most developed nations and within that the “select democracies” are in the best place, to the far upper left. The least developed nations are to the far lower right. While this chart is useful to see how all 180 countries lie with respect to each other, it’s not as useful for our purposes since everyone of the countries we’d compare ourselves to are in the upper left hand side.

HealthCareQualityAll

The next chart focuses only on those “select democracies” and “highly developed” countries. This is merely a magnification of the upper left region of the previous chart. There is a region where the “select democracies” are clearly ahead of the other highly developed countries, a region where the highly developed are clearly inferior to the select democracies and there is a region where the two rankings overlap. This particular chart shows 70 nations. We find 12 of these countries to be particularly interesting, so much so that if you mouse over the larger squares in the chart below you can get additional information on these countries. The four extreme countries stand out immediately,the two that are as far to the left and top as possible and then the one to the very far right and the one to the very far bottom. The other 8 countries are an even mix of almost randomly chosen countries in the overlap region between the select democracies and the other highly developed countries. One country in the “select democracies” is especially far removed from the other select democracies; it is the furthest down and left. This country is also almost in exactly the same position as another highly developed country. The identity of these two countries may be surprising. Click on the image below and a version with the mouse-over activated will be shown.

Click to Use Mouse Over

MEASURING FREE MARKET HEALTH CARE

A predominantly private health care system should see the benefits of market efficiencies. Is this the case? The theory goes that in a vibrant market there should be lots of doctors competing for your business and consequently health care costs should be low. Fortunately the UN provides exactly the statistics we need to investigate this. These statistics are the number of doctors per 100,000 people and the average health care expense per person. Note that the 2nd statistic, average health care expense per person, may not be what each person pays, because in a public health care system consumers may pay little or no costs directly themselves. This statistic is the value of the services the consumer receives, regardless of who pays.

Below is a chart showing all where all 180 countries lie in this measure. As stated above, the place you’d expect the most efficient free market country to lie is in the upper left.  The least efficient, the countries with the lowest number of doctors per person and the highest expense per person, is in the lower right. Unlike the previous chart where it was beneficial to get as far to the left as possible (to have a zero infant mortality rate), here despite the free market philosophy, it may not be desirable to get the health care expense to zero. After all zero may indicate that no health care is being provided at all. Indeed this chart seems to reflect this as no select democracy has an average expense less than $1500 per person and no highly developed country has an average expense less than $225 per person. It’s reasonable to suppose a minimal acceptable expense per person is somewhere in this range, expenses less than this probably means some health care services are not being provided at all. Click on the graph below to pull up a mouse-over-able version. This one shows all 70 countries in the highly developed category (which includes the select democracies).

Click for Mouse Overs

Also, unlike the previous chart, the highly developed countries as well as the select democracies are spread out across the chart. This is not surprising, many democracies have significant government involvement in their health care. In some countries all doctors are government employees. In other countries the prices doctors can charge are regulated by the government. What is consistent is that the under developed countries have fewer doctors and/or lower health care expenses perhaps because an insufficient level of service is being provided.

As an aid to processing this information we’ve given each section of the graph a short name that attempts to capture the behavior in that section. Treat these labels as a mnemonic, they’re not meant to be a completely accurate summary. Keep these labels and the descriptions below in mind as you mouse over the various country data points. Come to your own conclusions.

  • Free Market Inadequate Care – this is the region where costs are so low that some medical services may not be provided. it may be desirable to be in this region, but it may also be desirable to be more toward the right side than the left.
  • Completely Free Market – this is the region where costs probably reflect comprehensive health care. Cheaper is probably better than more doctors, but more doctors may also mean shorter waiting times for necessary procedures.
  • Over Developed – Costs are high and the number of doctors per person is above average. This may be due to governmental regulations requiring second opinions (for example). It may also mean that there are a lot of specialist doctors and fewer, less costly general practitioners.
  • Developing/Retreating – there are several reasons why countries may be in this region.
    • poor countries where being a doctor is the most lucrative job. (developing)
    • health care expenses are reasonable and the doctor population is on the increase (developing)
    • health care expenses are managed by government and doctors are leaving (retreating)
  • Restricted Markets – there are only 2 countries in this region. While both countries have a below average number of doctors per person, neither is significantly below the average. One country may have above average costs because its cost of living in general is high. The other country may have above average costs, not because doctors are getting wealthy but because there’s a large number of administrators involved between doctor and patient. Each though has this in common: something is preventing more doctors from coming in and competing for the large health expense per person.

CONCLUSION

If you didn’t find the United States in the Quality graph, it’s in the worst position for all the select democracies. Our infant mortality is the worst of these democracies and our longevity is essentially tied for last place (along with Portugal). And in a realization that’s surprisingly reminiscent of Michael Moore’s Sicko, we’re essentially tied with Cuba on the overall score. Our “free market” health care system is clearly failing us.

If you haven’t found the United States in the “Free Market” graph, it’s in the extreme lower right. Ours is the most expensive system in the world by far and has a below average number of doctors per person.  As stated earlier one of the 2 countries in this region may have a high cost because the cost of living there is high. That country is Luxembourg which has a per-capita GDP that’s almost 150% that of the US. It’s reasonable to suspect that Luxembourg’s high health care cost is due to everything being expensive there and not just health care.

It’s further interesting to note that the standard whipping boy countries of “socialized medicine”, England, Canada, Japan, are all in what we’ve called the “Developing/Retreating” section. None of the countries that the conservatives use as worst-case examples are in the “Free Market” section.

In some sense this is good news. Those senators, congressmen and political pundits who worry that a government run health care system will ruin our current free market based health care system can rest assured that our system is already ruined from a free-market point of view. It’s hard to imagine how more government involvement can possibly make things worse.

5 comments for “Health Care: US vs World

  1. John Thacker
    July 28, 2009 at 4:54 pm

    “Our “free market” health care system is clearly failing us.”

    Yes, but so is our “socialized” health care system of Medicare. Medicare is also more expensive than other countries’ system. Most of the big costs in the US system are among the elderly anyway, which means Medicare. If you compare costs among people barely not eligible for Medicare to those who have just qualified, you don’t see a discontinuous jump at all. It’s a smooth curve. Medicare overspends exactly the same way our other (certainly government-influenced) system does.

    Is there any reason to expect government involvement in the non-Medicare system to do anything other than make it like Medicare?

  2. numbersguy
    July 28, 2009 at 5:38 pm

    “Is there any reason to expect government involvement in the non-Medicare system to do anything other than make it like Medicare?”

    Yes, for the simple reason that every other industrialized country in the world has much heavier involvement in health care than we do and their costs are lower and their longevity is higher. If they can do it, so can we.

    In all fairness… I’d be upset if we got a system like Canada’s or the UK’s or Japan’s, but from the data above, I’d be happy to have Luxembourg’s, Norway’s or Switzerland’s system.

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