US Healthcare: no Bang for the Buck


Health care in the US is more expensive, by far, than anywhere else on this planet.  It represents greater than 17.9% of the US GDP.   Health spending is projected to grow 1.0 percentage point faster than Gross Domestic Product (GDP) per year over the 2017-26 period; as a result, the health share of GDP is expected to rise from 17.9 percent in 2016 to 19.7 percent by 2026.   Other comparable developed countries pay much less:

Screen Shot 2018-05-18 at 2.32.42 PM

The question is why are we so wasteful and what do we get for all this money.  If you look at longevity as the overall measure of success for healthcare, we are not doing very well, as described in a recent article in the NY Times:

Screen Shot 2018-05-18 at 2.25.22 PM

The above graph shows life expectancy over time compared to similar developed nations.

Screen Shot 2018-05-18 at 2.25.02 PM

This shows life expectancy as a function of health spending per person.

So what are the proposed causes for this dramatic inefficiency? The authors propose many factors to explain the sudden up tick in health care spending around 1980. For example:

“suppliers marketed very costly technological innovations with gusto,”and they “found ready customers in hospitals, medical practices and other entities eager to keep up with rivals in the medical arms race.”  The last third of the 20th century or so, was a fertile time for expensive health care innovation: Coronary artery bypass grafting, innovative drug treatments for H.I.V. for cancer and expensive NICU care for premature babies.

But innovation does not necessarily translate in to better outcomes. Almost no matter how it’s measured, longevity in the United States has not kept pace with that of other nations.

Another study, published in JAMA, found that even accounting for motor vehicle traffic crashes, firearm-related injuries and drug poisonings, the United States has higher mortality rates than comparably wealthy countries.

So here is the presumed bottom line.

“The lack of universal health coverage and less safety net support for low-income populations could have something to do with it.  The most efficient way to improve population health is to focus on those at the bottom,” says Ms Glied from Columbia Univ. “But we don’t do as much for them as other countries.”

The effectiveness of focusing on low-income populations is evident from large expansions of public health insurance for pregnant women and children in the 1980s. There were large reductions in child mortality associated with these expansions. “Those reductions were much larger for poor children than for richer children,” Ms. Currie said.

In 1980 the United States spent 11 percent of its G.D.P. on social programs, excluding health care, while members of the European Union spent an average of about 15 percent. In 2011 the gap had widened to 16 percent versus 22 percent.

Slow income growth could play a role because poorer health is associated with lower incomes. “It’s notable that, apart from the richest Americans, income growth stagnated starting in the late 1970s,” Cutler said. “Social underfunding probably has more long-term implications than underinvestment in medical care.”

Read more here about how social programs can lead to increased longevity: Are better health outcomes related to social expenditure?

It has been known for some time that low income/wealth is associated with much decreased longevity:

  • as the income gap increases in the US, so does the disparity in life spans between rich and poor as reported in the NY Times
  • in the U.S., the richest 1 percent of men lives 14.6 years longer on average than the poorest 1 percent of men, while among women in those wealth percentiles, the difference is 10.1 years on average.
  • This eye-opening gap is also growing rapidly: Over roughly the last 15 years, life expectancy increased by 2.34 years for men and 2.91 years for women who are among the top 5 percent of income earners in America, but by just 0.32 and 0.04 years for men and women in the bottom 5 percent of the income tables.
  • U.S. tax and spending policy does relatively little, compared with its peers in the developed world, to reduce inequality and with the new tax policies enacted by our current government this will worsen.

In the NY Times (2014) Leonhardt and Quealy note that “The American Middle Class Is No Longer the World’s Richest”.   The following interactive graph shows who many developped countries like Norway, Canada, Germany, Sweden, Netherlands are making gains for the lower 20th percentile of wage earners surpassing American incomes for this bracket.  American incomes are losing their edge, except at the top:

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It is this same bracket (the lower 20th percentile) that have such poor life expectancy dragging down the overall life expectancy for the entire country.

Finally, this study shows an interesting shift: since about 2004 the lowest quintile income group in the US is spending much less on healthcare on a per capita basis, than the highest income quintile.  One of the authors remarks that “co-payments and deductibles have bent the cost curve.  But it’s come at the expense of poor people and middle-income people.”

health care spending by income groups.png

My conclusions:

  1. efforts by the GOP to slash medicare will make things worse
  2. the new tax law will make things worse by aggravating income disparity
  3. advances in medicine benefit the health care industry and affluent Americans who have access to the newest treatments, but on average the population does not benefit as measured by life expectancy, for example.
  4. How you vote may be a matter of life or death.

About D. Posnett MD

Emeritus Prof. of Medicine, Weill Cornell Medical College
This entry was posted in ACA, American Health Care Act, Health Care, Medicaid, medicare, Pay Equality, Poverty, Tax Reform, Trump, Uncategorized, Zeldin and tagged , , , , , , . Bookmark the permalink.

4 Responses to US Healthcare: no Bang for the Buck

  1. bcolbath42 says:

    That our healthcare costs are a greater percentage of GDP is a meaningless comparison unless the relative GDPs are also factored in. If Europe’s GDPs are growing faster than ours, it would follow, all other things being equal, that our health care vs. GDP would be higher.

    Also, I wonder what the life expectancy breakdowns are for the other countries in that comparison. Less advanced drugs are available in many of those countries; less sophisticated doctors are there. We have several friends who expatriated to Europe only to return as they aged.

    When we were in Dublin a few years ago, Carol had a severe bout of hives after an allergic reaction to a drug she was prescribed here. The main hospital in Dublin told us there was a 24 hr backlog in the emergency room. I seriously doubt that would occur here.

    I continue to be a critic of those who carp about high drug prices. When you look at the advances being made here in biopharma, it’s hard to believe that such research would be undertaken if there was no ROI potential on the back end. Almost every such project has pharma backing at some point; this would disappear if a profit potential was not there. This is also a shortcoming with single payer programs that no one even discusses. Insert the state as the payer, with no profit incentive, will result in a marked decrease in research and development.

    Bruce Colbath 25 Sutton Place South; Apt. 17H New York, NY 10022 212-308-6080 (H) 917-902-0555 (Mobile)

    5 Long Woods Lane East Hampton, NY 11937 631-324-8633

    On Sat, May 19, 2018 at 6:36 PM, Resist and Replace wrote:

    > D. Posnett MD posted: ” Health care in the US is more expensive, by far, > than anywhere else on this planet. It represents greater than 17.9% of the > US GDP. Health spending is projected to grow 1.0 percentage point faster > than Gross Domestic Product (GDP) per year over the 2″ >

  2. It is not about anecdotes from Dublin! It’s about statistical averages. US healthcare is great for the wealthiest quintile as discussed, and as shown in the last graph where health care spending continues to rise for this group.

    Here is another good article (from 2015) which starts off like this:
    “Thirty-five years ago, the United States ranked 13th among the 34 industrialized nations that are today in the Organization for Economic Cooperation and Development in terms of life expectancy for newborn girls. These days, it ranks 29th.
    In 1980, the infant mortality rate in the United States was about the same as in Germany. Today, American babies die at almost twice the rate of German babies.”

    Every comparative study I have ever seen on this topic normalizes health care costs per GDP.

  3. Regarding Bruce’s concerns about normalizing to GDP, I found the following:
    “Does higher income necessarily result in greater healthcare spending? Actually, the U.S. seems to be an outlier from the overall curve between GDP and healthcare spending per capita. While most countries do spend more when they have more money, the U.S. disproportionately spends more, by about $3,000 per head.”

  4. bcolbath42 says:

    Regarding the mortality rate, no mention is made about the lack of abortion services to the needy because of the GOP’s refusal to give women the choice in many jurisdictions, even when the baby’s life is at stake. Compounding that sin, the states (and the federal government) that mandate birth over abortion then refuse to provide the new single mother family the means by which they can reasonably sustain an existence. This leads to higher social costs, higher medical expense at the ER level and higher mortality rates for both mother and child. It’s really easy to toss numbers around in the abstract; it’s far more meaningful to analyze the numbers within the societal norms that impact them.

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