Why we fell behind in health care

We (the U.S.) devote much more of our economic resources to health care than any other nation, yet our health care outcomes aren’t better for it. In 1980, this wasn’t the case. At that time we were spending about the same as other countries and our life expectancy was also about the same. But by the mid-2000’s we were spending more than other countries and were at the bottom of the life-expectancy pack. What happened?

According to the experts, the oil price shocks of the 1970's hurt economic growth, straining countries’ ability to afford health care. At the same time, high inflation contributed to growth in health care spending. Unlike other countries that had constraints in place to control spending, constraints in the U.S. were negligible. It all goes downhill from there.

• Other countries put limits on health care spending whereas we rely on market forces. Because of this, prices for health care goods and services are much higher in the US. What’s more, when we have periods of rapid growth, health care markups also grow rapidly.
• In the U.S., medical facilities become ensnared in a “medical arms race,” in which they compete by investing in the latest technologies, which, by the way, don’t necessarily translate into better outcomes.
• The US has higher health care administrative costs than other wealthy countries. It’s because we have so many insurers, each requiring different billing documentation.
•  The U.S. spends less on those at the bottom of the economic ladder, even though the most efficient way to improve overall health is to focus on that population. In 1980 we spent 11 percent of our GDP on social programs, excluding health care, while members of the European Union spent an average of about 15 percent. In 2011 the gap had widened to 16 percent versus 22 percent. 

Ideas anyone?

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