Posted by Bill Sandweg on 11 June 2018.
The United States spends more per person on health care than any other developed country. At the same time, our life expectancy is less than that in other developed countries. What is going on?
Let’s start with the cost of health care. According to this story from the New York Times, our cost of health care was not much different from the rest of the developed countries until about 1980. From that point, our costs began to go up compared to the others. Some of the factors which played a part are the role of government in controlling costs. Other countries rely more on governmental policies to control health care costs while we rely more on market forces. Normally, the market works well to keep costs down through competition. But markets have to be free and open to get the maximum advantage. Because of consolidation reducing the number of providers of care, secrecy about costs, political interference in the market and arms races among hospitals, the market in the United States does not function well in keeping costs down. We also have a lot of inefficiencies in the system which increase costs. For example, different insurers may require different submissions to justify payment. Drug companies use patent protections to keep prices up and sometimes conspire to keep generics from the market after their patents expire. Middlemen, called Pharmacy Benefit Mangers, play a role in the supply process and take a cut of each transaction.
On the issue of life expectancy, we can see that there is no clear relation between health care spending and overall health or life expectancy. It starts at the beginning: We rank 29th in the world in infant mortality. That is just stupid. In the Scandinavian countries, the rate of infant mortality is half of ours. Almost all of the Western European countries have a longer life expectancy than do we. Eighteen countries have a life expectancy at least three years longer than that of the average American.
Of course, very few of us are “average Americans.” We differ greatly in many ways, one of the most important of which is income. Being poor is hazardous to your health. The difference in life expectancy has been described as “staggering.” The highest earning men live on average 15 years longer than the lowest earning men. For women the difference, 10 years, is still large but not quite as pronounced as for men. Geographically, the lowest life expectancies are in the Midwest Rust Belt. The best advice for living long is to move to San Francisco and make a billion dollars in tech. If that is too far out, try moving to New York and becoming and investment banker.
Seriously, good exercise and diet habits contribute greatly to longer life expectancy. Try also to be an informed consumer of medical care so you don’t get more than you need and you pay fairly for what you do need.