U.S. Health Care Is (Still) Bad and Expensive

Last month the Institute of Medicine (IOM) released an exhaustive survey of U.S. Health Care in International Perspective, measuring the United States against sixteen peer countries (other high-income democracies) on a wide range of health outcomes. The results—summed up in the report’s subtitle, “Shorter Lives, Poorer Health”—are not pretty, but they aren’t surprising. The IOM’s Report is accompanied by an interactive graphic, ranking the United States on specific causes of death (from drowning to diabetes to dengue fever), on which the country persistently falls near the bottom of the pack.

The bigger tragedy, of course, is that while underperforming all of our peers we manage to spend more—indeed, a lot more—than any of them. The graphic below plots the IOM’s basic health metrics (deaths, deaths from communicable diseases, deaths from noncommunicable diseases, life expectancy at birth) against the most recent data from the OECD on health spending. The United States is in red, its sixteen peers are in blue (hover over the dots to identify individual countries), and the dotted black lines plot the basic trends. On each measure, the United States is a stark outlier—spending more and getting less in return than any of its peers.

The relationship between spending and outcomes is complicated. Some of the spending differences reflect background differences in wealth: the United States spends more per capita on health because it is a rich country (it spends more per capita on cars and breakfast cereal too). And some of the outcome gaps (such as the high American rates of traffic accidents or gun violence) reflect factors other than the reach or effectiveness of the health care system. But even accounting for this, the gap between what we spend and what we get is jarring.

The sources of that gap are familiar. As a rule, we pay more than our peers for the same health care goods and services (especially drugs). Much “health spending” is wasted on administrative overhead, on marketing, and on the important business of figuring out who is insured and who isn’t. And that spending is starkly uneven, lavishing services on those with good insurance coverage and bypassing those without.

Most of these problems, unfortunately, will remain even when the Affordable Care Act (ACA) is fully implemented. In papering over some of the gaps in private coverage, the ACA’s mandates and subsidies are unlikely to do much to rein in costs. The recent IRS ruling, holding that the “affordability” test for job-based coverage would be based on individual rather than family coverage, is likely to leave many uninsured or underinsured. Expanded coverage, in turn, seems likely to be accompanied by a simultaneous decline in quality.

When we look at these same measures three or five years from now, it is unlikely that the United States will have moved any closer to the pack—on what we spend (or squander) and what we get (or don’t get) in return.