Arnold Kling  

NCH Watch

Is Capitalism Pro-Kid?... Morning WaPo...

Mark Whitehouse of the WSJ blog writes,

Annual public and private health-care spending in the U.S. stands at $7,538 per person, 2.41 times the OECD average and 51% more than the second-biggest spender, Norway. Meanwhile, average U.S. life expectancy is 77.9 years, less than the OECD average of 79.4.

Gaze at the chart he includes. The U.S. government spends more per person on health care than the Canadian government.

Somebody should do a similar chart for K-12 education. My guess is that there we also far outspend everyone else, with mediocre outcomes.

Health care and education are, of course, the New Commanding Heights. That is, they are the growing sectors of the economy which, if you were Lenin, you would want to be sure that the state controls.

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COMMENTS (13 to date)
ColoComment writes:

Everyone talks about spending levels on health care, yet no one discloses the data that underlie those spending claims. What, exactly, is included? Excluded? Direct payments to providers? Insurance premiums? Medical R & D? Pharmaceuticals? Pharma R & D? Over-the-counter medicines? Long-term care? Hospice care? What? Does it include all those millions in fraudulent U.S. Medicare payments?

And when comparisons are made between the U.S. and other countries, are they "apples to apples" or "apples to grapes to oranges to kiwis"?

I've read that comparisons of birth rates may be faulty, since the definition of live birth varies from country to country.

Just as "rich" should be defined as wealth or income, and "poverty" should be defined as including or excluding transfer payments, I'd like to see some defined terms w/r/t health care spending so that we're speaking a common language.

mike shupp writes:

Two possibilities:

A. We're doing something very different from other developed nations, and from a standpoint of overall cost and benefits, it's something wrong.

B. We're doing something different, which is not directly connected to health and economics, and it's working very well, but for some reason we can't talk openly about what we're doing.

Liberals almost universally would select A. I think that makes conservatives supporters of B.

ExZonie writes:

Obamacare will only make this worse.

End Stage Renal Disease began to be covered by Medicare in 1970. I believe, as a direct result, that dialysis is now the dominant (if not only) modality for treatment of kidney failure, written if not chiseled into Social "Security" (ahh, ropesmanship) law as if handed down from the Lord Himself. What prudent entrepreneur would risk his own capital to unseat the dialysis providers with his brilliant, but unknown, technology - what possible benefit could there be to him, when the payment schedules, billing codes and large employment base are all in place and he has no hope of breaking into that fortress?

Dialysis costs anywhere from $500 to $2200 per session, at two-three sessions per week, 52 weeks a year. According to the American Association of Kidney Patients, "according to the United States Renal Data System, the estimated ESRD population will be over 500,000 by the year 2010 and cost the Medicare program (i.e., American taxpayers) over $28 billion."

PPACA in one version threatened to perpetually cut the top 10% highest patient expenses every year. I asked my clinic to cut my treatments from three times to twice weekly to cut my expenses, but others are so sick they don't have that luxury. Maybe I’m not in the top 10% now but I will be, with costs going they way they are. So I'm in a quandary and others are in a worse quandary. Add up the expenses and dialysis costs between $50,000 and $250,000 per year, per patient. Medicare pays a low price that barely covers the cost, but Medicaid and private insurance pay the balance. That upper end of the scale is way more than I make per year. Something has to be done. I guess the 10% cut means that someone gets to decide that dialysis costs less or else, or that certain people are denied care. Is that what FCCCER was for?

And to top it off, immigrants get dialysis even if they're here illegally. Are we going to become the "free" dialysis clinic to the world?

This is why we have to repeal PPACA as soon as possible. We should repeal the ESRD provision of Medicare too, and then the insurance companies would have an incentive to move the research ball forward - maybe.

Kevin writes:

If health care and education are truly the Commanding Heights, then the state is wrong as usual. People are already finding ways to achieve superior outcomes outside the health care system, and people will find ways to use resources like the Khan Academy to outperform the education establishment. It will be interesting to see what the state will do when these pillars of the status quo lose their perceived legitimacy and value.

Don Lloyd writes:

"...Annual public and private health-care spending in the U.S. stands at $7,538 per person, 2.41 times the OECD average and 51% more than the second-biggest spender, Norway...."

As with all other prices, a failure to try to adjust for differences in per capita money supply renders all such raw comparisons meaningless.

Regards, Don

Phil writes:

I've looked at the K-12 education data and, if memory serves me correctly, the U.S. spending per pupil is not abnormally high and we rank in the middle of most OECD nations, depending on the academic measure. I do remember that the plot was not alarming, which is probably why so few write about it. It tells the story of an unexceptional nation, not a wealthy one nor a particularly well educated one.

Scrutineer writes:

Sorry, no chart, but this roughly confirms your suspicions:

"At the combined elementary and secondary level in 2006, the United States spent $10,267 per student, which was 41 percent higher than the OECD average of $7,283. At the postsecondary level, U.S. expenditures per student were $25,109, more than twice as high as the OECD average of $12,336."

In 2003, the U.S. ranked 15th of 29 OECD countries in reading literacy and 21st of 30 OECD countries in scientific literacy. (comparison was of 15 year olds.)

Joseph K writes:

I wouldn't say we have dismal results in health. We have lower life expectancy for reasons completely unrelated to health care, like that we drive more, are more obese, have a higher rate of murder. We have excellent health outcomes when it comes to treating diseases. If you get sick and go to a hospital, you're much more likely to be saved in an American hospital than in a hospital in any other part of the world for the vast majority of major diseases. For example, with cancer, the US has the highest cancer survival rate for most types of cancer.

On the other hand, your point is well taken. Are we spending too much for those health outcomes? Most probably. Why are we spending so much? Probably a combination of excessive regulation/bureaucracy and high levels of third-party payment for health.

Daublin writes:

"Health care and education are, of course, the New Commanding Heights. That is, they are the growing sectors of the economy which, if you were Lenin, you would want to be sure that the state controls."

That's a terrific comparison. Lenin, Mao, and Stalin thought that industrial production such as steel and heavy machinery were the most important outputs of their national economies. They took it as a point of person pride in their country to maximize these outputs.

These things were considered too important to be left to the market. Now that history has unfolded, we know that these countries did awful, even in these sectors that they considered their top economic priorities.

andy weintraub writes:

But U.S. life expectancy is higher than all OECD countries if you exclude homicides and accidents as causes of death.


Tracy W writes:

I think your causality may be around the wrong way. How about the possibility that the state controls health and education, and because of that control, they are the growing sectors of the economy?

After all, the state paying for so much takes away the consumer discipline to keep prices down, and I'm not aware of a government around the world that has found a way to force productivity improvements on the education and healthcare sectors without that discipline.

Never attribute to malice what can be explained by stupidity.

Artturi Björk writes:

Tino has done some charts.

I'm surprised that you didn't already know about them.

Arnold Kling writes:

Thanks for the links, Scrutineer and Artturi!

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