Thursday, July 04, 2013

American Health Care costs more than its benefits justify!

Source: "OECD Health Data 2013: How Does the United States Compare"

The United States spends more of its GDP on health services than any other country. That is because we spend more per capita.
Most OECD countries have enjoyed large gains in life expectancy over the past decades. In the United States, life expectancy at birth increased by almost 9 years between 1960 and 2011, but this is less than the increase of over 15 years in Japan and over 11 years on average in OECD countries. As a result, while life expectancy in the United States used to be 1 ½ years above the OECD average in 1960, it is now, at 78.7 years in 2011, almost 1 ½ years below the average of 80.1 years. Switzerland, Japan, Italy and Spain are the OECD countries with the highest life expectancies, exceeding 82 years.
 Source: "American Way of Birth, Costliest in the World", By ELISABETH ROSENTHAL | Published: June 30, 201, The New York Times.

Economists tell us that if the demand for services goes up and the supply doesn't keep up with the demand, prices go up. The demand for health services is largely determined by the physicians who prescribe them. Physician remuneration is in part determined by the inflation in health service costs. Patients depend on expert advice on their health service needs, and don't really understand the costs and benefits of alternatives.

We pay for health service either through insurance or through taxes, more than through fee for services. Much of the cost of health insurance is payed by employers, is partially tax financed, and is invisible to the person making the payment. Medicare and Medicaid similarly distance the payment decision from the services provided.

Lets hope Obamacare begins to make fundamental changes in the system to reduce the portion of GDP spent on health care or at least its rate of growth.

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