Bryan Caplan  

Quibble with Crook on Health Care

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I was puzzled when Clive Crook wrote: "Public spending is lower in the US, but not vastly lower once you remember to add state and local spending to federal outlays; the US healthcare anomaly accounts for a lot of the remaining difference."  My impression was that, contrary to popular belief, U.S. government health spending as a percent of GDP roughly equaled Europe's.

My impression checks out.  According to 2007 OECD data, U.S. government spending as a percentage of GDP is actually slightly above the average of (Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Norway, Spain, Sweden, Switzerland, and the UK).  As a percentage of GDP, the U.S. government outspends Canada, too!  And since U.S. GDP per capita is higher, the U.S. government actually spends a lot more dollars per person than the average country in Europe.  Lack of U.S. government spending on health care is not the reason why our government's share of the economy is smaller than Europe's.

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COMMENTS (4 to date)
gnat writes:

Looks like the US is an outlier by a considerable amount.

It is not clear that the results would change on a per capita basis.

Robert Fisher writes:

Though I could have misinterpreted, I thought Crook's piece was saying that overall spending in the US and in Europe are much more similar than the far left or far right believe, and that the health care bill helped to bridge that gap even more. Perhaps the word "anomaly" was too vague here.

Mr. Econotarian writes:

@gnat, indeed US total spending on health care as percent of GDP is much higher than that of other countries, but the point is US GOVERNMENT SPENDING on health care as a percent of GDP is also at or above that of other countries as well.

mulp writes:

I assume what Clive Crook was saying was that when you consider what one must pay for health care out of one's own pocket, costs that are largely covered by taxes in the UK, Canada, and France, the cost of government and health care are the same in the US as elsewhere.

What you have pointed out is the horrendous inefficiency of the US health care system which costs twice as much to do the same or less than the health systems of dozens and dozens of other nations in the world.

If the US government covered everyone, or alternatively, if the private sector covered everyone as efficiently as the health care system in Israel or France, the burden of "existing" would be lower.

Let me make the point another way: given the US private health care sector consumes as much of US GDP as the total health care sector, government plus private, in the supposedly highly inefficient socialist nations, 100% of the US population would be covered by private health care. Instead, the private sector covers only about two-thirds, and most of the sickest people are covered by government.

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