NCPA - National Center for Policy Analysis


May 11, 2009

Taken at face value, international statistics show that the United States spends more than twice as much per person on health care as the average developed country.  But these statistics are misleading, says John C. Goodman, President and CEO of the National Center for Policy Analysis.

  • Other countries are far more aggressive than we are at disguising and shifting costs -- for example, by using the power of government purchase to artificially suppress the incomes of doctors, nurses, and hospital personnel.
  • This makes their aggregate outlays look smaller when all that has really happened is that part of the cost has been shifted from one group (patients and taxpayers) to another (health care providers).
  • This is equivalent to taxing doctors, nurses, or some other group so that others may pay less for their care.

Normal market forces have been so suppressed throughout the developed world that the prices paid for medical services rarely reflect the services' actual cost.  As a result, adding all these prices together produces aggregate numbers in which one can have little confidence.  One gets a better measure of how much countries spend by looking at the real resources used; and by that measure, the U.S. system is pretty good, says Goodman.  For example:

  • We use fewer doctors than the average developed country to produce the same or better outcomes.
  • We also use fewer nurses and fewer hospital beds, make fewer physician visits, and spend fewer days in the hospital.
  • About the only thing we use more of is technology.

Spending totals aside, the United States has been neither worse nor better than the rest of the developed world at controlling spending growth.  The average annual rate of growth of real per capita U.S. health care spending is slightly below the Organization for Economic Co-operation and Development (OECD) average over the past four decades (4.4 percent versus 4.5 percent).  It appears that other developed countries are traveling down the same spending path we are, says Goodman.

Source: John Goodman, "Socialized Failure; Dissecting health care data from Britain, Canada, and elsewhere," National Review Online, May 25, 2009.

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