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With Healthcare Costs, the U.S. Is a Huge Outlier (Why we spend more on healthcare than any country)
RCM ^ | 08/07/2012 | Gary Burtless

Posted on 08/07/2012 7:23:26 AM PDT by SeekAndFind

In any comparison of healthcare costs in rich countries, the United States is an extreme outlier. This is true both in terms of the percentage of its income devoted to health and the absolute level of our health spending per person.

The U.S. has always been a high-spending country, but the difference with other countries has widened over time. International statistics on health outlays suggest the share of our GDP devoted to health was about 40 percent higher than the average for other rich countries in the 1970s. The differential increased substantially during the 1980s and early 1990s and then continued to widen, though more slowly, in later decades. By 2010 the U.S. health share was almost 7.2 percentage points of GDP (or 70 percent) higher than the health spending share in countries with comparable incomes. We can describe that estimate in a slightly different way: The United States spent about $7,500 per capita on health care compared to an average of $3,300 in other rich countries.

If the nation obtained better-than-average health outcomes in exchange for its much-higher-than-average health spending, we would have little reason to complain. However, there is almost no evidence U.S. health outcomes are better than those in other rich countries. A variety of statistics on mortality and morbidity suggest outcomes may be worse in this country than they are elsewhere.

The nation's ever-increasing health bill has had a little-noticed impact on our income distribution statistics. That's because of the way we pay for most health care and the way most income statistics are reported. Less than a quarter of the cost of the health care we consume is paid for with our cash incomes. Most is financed by the government or reimbursed through insurance purchased by our employers. The share of our cash household income needed to pay for health care and health insurance premiums has actually fallen over the past half century. The share paid by our employers through employee health plans has increased, and the share paid by government insurance plans has increased dramatically.

It is rare for standard income distribution statistics to reflect employer and government spending on health benefits. Nearly all the widely reported estimates of the trend in median income, for example, omit the additions in health care consumption that are paid through employer and public health plans. The omission tends to produce an overstatement in common estimates of the growth in U.S. income inequality. The reason is straightforward. The value of health insurance benefits is more equally distributed across the population than is the distribution of cash income. As Americans' incomes have become more heavily tilted toward expensive health benefits, our standard measure of income has become a more misleading indicator of the goods and services (including health care) that Americans can buy with their incomes.

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TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: healthcare; insurance; obamacare; overpaying; taxdollarsatwork

1 posted on 08/07/2012 7:23:34 AM PDT by SeekAndFind
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To: SeekAndFind

Quality.

The one word that never gets mentioned in health care debates is quality.

Quality costs money. Quality healthcare is expensive. The USA (unlike other countries) has always placed quality ahead of everything else. So much so, that Americans take it for granted that we will always strive for quality.

ObamaCare is about quantity. It is the approach taken by the rest of the world. An approach that is willing to sacrifice quality for quantity.


2 posted on 08/07/2012 7:33:46 AM PDT by Brookhaven (Freedom--tastes like chicken)
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To: SeekAndFind

Cost-shifting. The US citizen helps fund most other countries ‘free’ health care especially in pharmaceuticals and medical devices.


3 posted on 08/07/2012 7:38:24 AM PDT by yadent
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To: SeekAndFind

In my opinion we spend very little on health, but quite a bit on patching ourselves up after getting sick as a consequence of unhealthy behavior.


4 posted on 08/07/2012 7:43:24 AM PDT by Mr Ramsbotham (Laws against sodomy are honored in the breech.)
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To: Brookhaven
The US "outcomes", ethnic group by ethnic group, comparing Americans of the same ancestry as the foreigners to whom they are most closely related, ARE equal to or better than others.

Give you an example ~ Yoruba people whose ancestors are from a nation now known as Nigeria. Their health in the US is vastly superior to their health in Nigeria, or Brazil, or probably even Canada, France, and England.

Sweden does not outdo Minnesota! Denmark does not out perform the quality of medical service to whites of Danish origin in Indiana, nor do they live longer ~ even American pork is better ~ so our elderly eat better than in Denmark.

At the same time we treat cancer. Other countries provide palative care and let you die ~ relatively pain free ~ unless you are in Nederland, then they put you under and let you expire as soon as possible (kind of like euthenasia).

5 posted on 08/07/2012 7:45:17 AM PDT by muawiyah
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To: SeekAndFind

With all this talk of the cost of American health care, I find it meaningful that everyone who has the cash comes to the US for serious health concerns.

I’m no expert in matters either of economics or medicine, but it seems to me that’s significant somehow.


6 posted on 08/07/2012 7:47:06 AM PDT by Jack Hammer
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To: SeekAndFind

IMO, it is because we have three entities standing in between our doctor and us. First is the government, second is an insurance company, and third is our employer. This is a ridiculous model. It makes our spending go up for comparable services because we as consumers have virtually no say in what types of coverage we get, what our deducibles/co-pays, etc are, and in the end, the financial impact is little as it is ‘free’ under our coverage.

We have to break the employer based model so we can go out, select the right type of coverage for our families, and stick with that plan regardless of employment decisions. This also is the primary source of our ‘pre-existing condition’ problem. An employee gets laid off, and their coverage ends. They cannot get on a new plan because of current treatments, or it is so expensive it cannot be purchased.

This goes back to personal responsibility, and family planning. We all go get car insurance, life insurance, home owners or renters insurance on our own, and those markets are much easier to manage and server the customers better.

The other poster’s discussion of quality vs. quantity is extremely relevant, too, in the discussion. We simply have better health care and less cost-management decisions than government-controlled systems, where universal coverage trumps individual care.


7 posted on 08/07/2012 7:51:41 AM PDT by ilgipper ( November cannot come soon enough)
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To: Brookhaven
Yep. As with everything, you get what you pay for.

You and I need a procedure right now, the doctor's office (typically) says "Sure, will tomorrow or Thursday work better for you?"

Under socialized medicine, the question will be "Sure. Can you wait for six months, or we do have a slot available 5 states over if you can get there by 9:20 am tomorrow?".

But it will all be free, so it's better. Assuming that we live long enough to spend all of the money we're saving.

8 posted on 08/07/2012 7:53:20 AM PDT by wbill
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To: SeekAndFind
Two words:
  1. Trial

  2. Lawyers

9 posted on 08/07/2012 7:53:54 AM PDT by E. Pluribus Unum (Government is the religion of the collectivists.)
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To: E. Pluribus Unum
Two words:

Trial

Lawyers

Third word:

Bingo!

10 posted on 08/07/2012 8:11:26 AM PDT by CMAC51
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To: SeekAndFind
Of course the U.S. pays more for health care than any other nation on the planet.all one has to do is look at all of the non-Americans bleeding our system dry and our government;both parties refuse to do anything about if.

One party wants the blood suckers to come here to get more votes.The other party wants these blood suckers to come here to provide cheaper labor.

Meanwhile the Native born Americans(Citizens)are ignored and bled dry.

11 posted on 08/07/2012 8:16:32 AM PDT by puppypusher (The World is going to the dogs.)
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To: SeekAndFind

It is not the business of Government to be involved in what we choose to spend on anything, including medical expenses.


12 posted on 08/07/2012 8:17:29 AM PDT by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: SeekAndFind

It is not the business of Government to be involved in what we choose to spend on anything, including medical expenses.


13 posted on 08/07/2012 8:17:46 AM PDT by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: yadent

You’re right, the manufacturers can recoup their investment in new drugs and devices through U.S. sales, after that, they have to cover only the direct material and marketing costs in their foreign sales.


14 posted on 08/07/2012 8:22:14 AM PDT by kenavi (Obama doesn't hate private equity. He wants to be it with our money.)
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To: muawiyah

What about the Ibos?


15 posted on 08/07/2012 8:23:50 AM PDT by kenavi (Obama doesn't hate private equity. He wants to be it with our money.)
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To: SeekAndFind
Our medical costs:

  1. Funds more R&D than any other country.
  2. Funds many non-paying participants.
  3. Funds more tort action that any other country, and therefore higher liability insurance for medical providers.

Think about this: your anesthesiologist probably pays more in insurance premiums annually than probalby 90% of the country makes in total household income. Where do people think they get their premium payment from?

16 posted on 08/07/2012 8:25:09 AM PDT by 5thGenTexan
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To: SeekAndFind

This article has several distortions and misses the point regarding health care costs.

“However, there is almost no evidence U.S. health outcomes are better than those in other rich countries. A variety of statistics on mortality and morbidity suggest outcomes may be worse in this country than they are elsewhere.”

Most outcome measures for cancer and heart disease show that US healthcare is superior in terms of survival rates. Life expectancy figures are a refelction of many other variables unrelated to medical care.

“Most is financed by the government or reimbursed through insurance purchased by our employers. The share of our cash household income needed to pay for health care and health insurance premiums has actually fallen over the past half century”

This is undoubedtly true. However, when the author goes on to state that other countries (with socialized health care) pay substantially less for health care, he fails to state the reason for this fact which seems to undercut the purpose for writing the article, that is high health care costs. The obvious reason that socialized countries spend less money is rationing and limited access.

The real problem with high healthcare costs is the involvement of 3rd party and government payers. By reducing the out of pocket costs for consumers, there has been historically, little incentive for providers and consumers to control costs. As governemnt increases control, it will, out of necessity, ration services.

What we really need is less 3rd party intervention from insurance companies and the government. Healthcare insurance should be real, catastophic insurance, not pre-paid healthcare or a government program. People need to rely on their own savings and health care savings accounts for routine expenses and deductables. We also need to allow healthcare providers the freedom to create delivery systems that compete for consumers on the basis of cost, just like other industries. Encouraging competition for direct consumers dollars would go a long ways towards reducing overall unit costs while improving quality and access for most people. Reducing administrative expenses arbitrarily imposed by 3rd party and government payers is one immediate benefit. This would have advantages for all consumers including government purchasing (which could be a voucher) for safety net programs.


17 posted on 08/07/2012 8:30:01 AM PDT by grumpygresh (Democrats delenda est; zero sera dans l'enfer bientot.)
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To: yadent
Cost-shifting. The US citizen helps fund most other countries ‘free’ health care especially in pharmaceuticals and medical devices.

Thanks. This is one significant factor that is seldom mentioned. The medical consumers in the US fund R & D for pharmaceuticals and medical devices for the world.
18 posted on 08/07/2012 9:01:27 AM PDT by khelus
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To: SeekAndFind

When you consider that a large number of nations have populations that many don’t have any access at all to health care, and those that do - it is through sub-standard and often horrible... they don’t spend a lot... in total or per person.

And even in the so-called “1st world”, where health care is relatively “advanced”, many of those nations ration health care. You put folks off long enough, they don’t need that expensive transplant, heart surgery, cancer treatment, etc.

And lest we forget - the cost of medical care for those here illegally, as well as those who never pay their bill - all gets included in that cost.


19 posted on 08/07/2012 9:28:49 AM PDT by TheBattman (Isn't the lesser evil... still evil?)
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To: SeekAndFind

If legislators would can the employer-paid insurance model and rewrite the laws so that we could obtain and keep our own personal health insurance policies, costs would very likely drop significantly as most of us chose high-deductible policies due to the price difference compared to present policies.

And frankly, if I’m paying for my own health care, and the associated health insurance, I don’t give a rat’s butt what people in other countries are spending on health care. It will be my personal decision as to how I manage my own health needs, as it should be.


20 posted on 08/07/2012 9:41:51 AM PDT by Norseman (Defund the Left-Completely!)
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To: Brookhaven
The article points out US "outcomes" (their word for "quality") are not better than comparable nations paying less.

You, your employer and other tax payers pay a premium for mediocrity and feel good about it because this is the United States of America. We're #1. /s

21 posted on 08/07/2012 10:04:55 AM PDT by newzjunkey
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To: grumpygresh

The real problem with high healthcare costs is the involvement of 3rd party and government payers.


Don’t forget the impact of State Government mandated coverage such as pregnancy, birth control, abortion, behavior modification, acupuncture, drug rehabilitation chiropractors, etc. These are services that everybody is required to pay for that many wouldn’t pay for voluntarily.

Mandated services increase costs in two ways: first, everybody must pay for them, and secondly, people may use the services that they wouldn’t use if they paid for them out of pocket.


22 posted on 08/08/2012 2:28:54 PM PDT by Mack the knife
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To: grumpygresh

The real problem with high healthcare costs is the involvement of 3rd party and government payers.


Don’t forget the impact of State Government mandated coverage such as pregnancy, birth control, abortion, behavior modification, acupuncture, drug rehabilitation chiropractors, etc. These are services that everybody is required to pay for that many wouldn’t pay for voluntarily.

Mandated services increase costs in two ways: first, everybody must pay for them, and secondly, people may use the services that they wouldn’t use if they paid for them out of pocket.


23 posted on 08/08/2012 2:38:28 PM PDT by Mack the knife
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