Not the Best Healthcare in the World

Robert Samuelson has the numbers from the latest OECD report:

U.S. health spending (about $7,960 per person in 2009) is in a league of its own. It’s 50 percent higher than Norway’s ($5,352), the next costliest. U.S. spending is more than double Britain’s ($3,487), France’s ($3,978) and the OECD average ($3,233).

Despite this, Americans aren’t notably healthier than people in other advanced countries, the study reports. Life expectancy in the United States (78.2 years) lags behind Japan’s (83 years) and the OECD average (79.5 years). It roughly equals Chile’s and the Czech Republic’s. . . .

What propels U.S. health spending upward? The OECD’s answer comes in two parts: steep prices and abundant provision of some expensive services. In 2007, an appendectomy cost $7,962 in the United States, $5,004 in Canada and $2,943 in Germany. A coronary angioplasty cost $14,378 in the United States, compared with $9,296 in Sweden and $7,027 in France. A knee replacement was $14,946 in the United States, $12,424 in France and $9,910 in Canada. Knee replacements in the United States were almost twice as common per 100,000 population as in the rest of the OECD. So were MRI exams and angioplasties.

This is a devastating portrait. At times, the U.S. health care system delivers the worst of both worlds: pay more, get less. Unfortunately, the message isn’t new. America’s fragmented and overspecialized health system maximizes returns to providers — doctors, hospitals, drug companies — but not to society. Fee-for-service reimbursement allows providers to reconcile their ethical duty (more care for patients) and economic self-interest (higher incomes). The more they do, the more they earn. Restraints are few, because patients and providers both resist limits on their choices. Government regulators and private insurers are too weak to control costs.

I disagree with Samuelson about almost everything, but in this case I think he nails the choice we face: we can either try to create real competition between health care plans, which means giving private health insurers the freedom to cover only certain services, and to include only certain doctors and hospitals, or we go to a single payer system in which the government sets costs for all services and limits what it will pay for. For reasons I explain here, I think competition will never work in health insurance. That leaves a single payer system, or some other system in which the government fixes prices, as the only real alternative.

Either way, somebody other than doctors and patients has to decide which treatments will be covered. Americans' sacred faith that these decisions should always be made by doctors and patients, with somebody else picking up the tab, has to be abandoned.