Monday, April 11, 2011

Budgets and Health Care

I direct your attention to a nice post from the Wall Street Journal's economics blog on this report from the OECD on heath care spending across advanced nations.  You may know that the US does poorly in terms of the control of health care costs, but this points out just how poorly we do.  We spend 141% more than the OECD average on health care.

From the post:

A new report finds that the U.S. spends far more on health care than any of the other 29 OECD nations, and gets less health for its money. 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.

Improving the health-care system could go a long way toward fixing the U.S. government’s finances. The OECD estimates that if the U.S. reached the efficiency level of the best-performing countries, the government could save the equivalent of 2.7% of economic output every year. That’s enough to solve about a third of the country’s budget-deficit problem.

The hard part is figuring out how to make the system work better. Here, the report attempts to derive some guidance from the experience of the most successful countries.

Interestingly, the type of system doesn’t seem to matter much. Countries with state-run systems do about as well on average as countries with private systems. Among the things that do matter: Consumers need to have some skin in the game, through mechanisms such as co-payments; care needs to be well-coordinated among doctors’ offices, hospitals and nursing homes; providers of care need incentives to do a better job, such as pay for performance; and the price and quality of services should be better monitored and easier to see.

Many of those features are included in the health-care law the U.S. passed last year, though much has yet to be implemented. Improvements are undoubtedly possible. Whatever we decide to do, it’s time we did something.

The health care reform act was a powerful step in the right direction and I think it behooves those opposed to it on budgetary grounds to explain how other reform, like health care vouchers would both guarantee access to basic health care and control costs.


GeoGeek said...

Well, they don't explain how vouchers, or other reforms would benefit the economy, because they can't. There's not a shred of evidence to support the idea.

It's boggling to me that we, in the US, are so utterly unwilling to learn from other countries. The dutch have a system that's not too dissimilar from that created by the recent health care reform and they spend 9.6% of GDP on health care vs. our 16% (both numbers from the OECD from 2007).

Back when I last looked at the numbers (in 2009), that added up to about $800 billion/year in unnecessary costs to the US economy. I mean if you want to remove a the burden from business, I can't think of a better way than to essentially give them $800 billion/year in lower costs.

Yet somehow, that's completely anathema to our political class.

It would be frightening, if it weren't so sad.

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