Just How Bad Is U.S. at Controlling Health-Care Costs?

Thursday, May 7, 2009

“You can’t fix the economy,” President Obama has said, “without fixing health care.” Which makes sense, given the soaring costs and wastefulness of the American health-care system, right?
Wrong, says Shikha Dalmia, a senior analyst at the Reason Foundation. After crunching some numbers at Forbes.com, she concludes that countries with universal coverage have fared worse economically than the United States in recent years as well as during the current financial crisis. And she says these countries generally haven’t done a significantly better job of controlling health-care costs, either:
Indeed, between 1990 and 2003, the rate of growth of America’s per capita spending [on health care] was 3.6%, only a little bit higher than France, Germany and Japan’s–but significantly lower than England’s 4.2%. That’s striking given that England engages in the most aggressive rationing known to the free world, routinely delaying care to patients unless they are critically ill.
However, Canada, which too indirectly rations care for many specialized treatments by putting patients in queues, has succeeded in limiting per capita spending to 2.4%. At best, then, universal coverage has a mixed record in controlling health care spending increases, even after resorting to rationing.
All in all, there is no major industrialized economy with universal coverage that has performed as well–let alone better–than the United States in the last decade. Universal coverage might not be the cause of their inferior performance. But the crucial point is that there is zero evidence that it has put them on a more solid footing. Before applying this exotic therapy to America, Obama needs to offer more than mere hunches that it will work. He needs to offer actual evidence.
Do you agree? Or can you provide the evidence to support Mr. Obama is right?