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US Pays More for Health Care, Puts 50% of Burden on Private Payers

Premiums on the Affordable Care Act individual marketplaces are going down, but one of the attendees at my public forum last night claimed that one of his relatives is paying $4,000 (a month? the speaker wasn’t clear) for insurance. The attendee also claimed that he has a pre-existing condition and never had trouble buying individual insurance before the Affordable Care Act, a claim I find incredible based on statistics and my own conversations with my own individual market insurance agents back in the bad old days before ObamaCare.

Nonetheless, I agreed with the commenter that health care costs too much in the United States and that we should do something about it. Our Rube-Goldberg combination of public coverage and hundreds of private insurance providers still has us paying far more for health care per person and as a share of our economy than any other industrialized nation:

OECD health spending per capita and as share of GDP
Bars: per capita in USD PPP. Diamonds: in % of GDP. “Spending on Health: Latest Trends,” OECD, June 2018.

High spending on health care is not apparently driven by government spending. Private spending covers half of America’s health care expenses; public financing covers over 70% of health care costs in 15 of the 22 OECD member nations charted here:

Higher government spending does not correlate with higher per-capita or per-GDP health spending.
Higher government spending does not correlate with higher per-capita or per-GDP health spending. OECD 2018.

Canadians pay about the same amount of taxes as Americans, and they don’t have to pay high insurance premiums or worry about unexpected medical bills bankrupting them.

If my forum guest last night doesn’t like high premiums, many of our neighbors offer a solution. Working together as a community to pay for everyone’s health care helps lots of other countries pay less overall for health care.

12 Comments

  1. Jason 2018-10-30 07:19

    Healthcare appears to cost less in Canada than in the United States partly because Canadian government health insurance does not cover many advanced medical treatments and technologies that are commonly available to Americans. If Canadians had access to the same quality and quantity of healthcare resources that Americans enjoy, Canada’s government health insurance monopoly would cost much more than it currently does.

    http://www.aei.org/publication/the-trouble-with-canadian-healthcare/

    According to a study released this week by Vancouver’s Fraser Institute, despite heavy investment in health care, the quality of Canada’s care is “moderate to low” by most measures.

    https://torontosun.com/2016/10/29/canadian-health-care-is-high-price-yet-low-quality/wcm/799c4b0d-ad84-4767-bb52-a8036d6ebffc

  2. Porter Lansing 2018-10-30 10:35

    Jason’s post if incorrect. The treatments and technologies he references aren’t available to American’s either, without expensive approval from insurance panels aka death panels. His post is from American Enterprise Institute, which has an invalid strongly biased political affiliation. Furthermore, the article is ten years old.
    According to world standards Canada has better, cheaper and more widely available healthcare than USA.
    As far as Cory’s commenter in last night’s forum. The person may have thought he had that coverage because he never had to access it. Insurance agents have a “Jason’s” grasp on the truth, which means they’ll say whatever you can make up to trick people. I can assure you that my late wife was dropped from her Blue Cross insurance at the end of the year she was diagnosed with breast cancer and no other carrier would insure her. Medical bankruptcy and death followed. Obamacare stopped this profit driven tactic by insurance companies.

  3. Jenny 2018-10-30 10:51

    Canadians love their healthcare system and Jason is not stating the truth. There are studies that show that Canadians are happy with it and don’t want the horrors of an overpriced American system where one going bankrupt over medical bills is common.
    Also, I can vouch for Mayo Clinic and say that Canadians can come to Mayo for second opinions and surgeries and Mayo gladly accepts the Canadian singly payer payment plan from them.
    Nice for Canadians, isn’t it.
    Studies have shown most Canadians don’t bother coming to the States for surgeries even when their Government Healthcare Plan pays for it.
    Also, Congratulations to Canada for legalizing Cannabis!

  4. jerry 2018-10-30 11:07

    The highest premium that I can see is for a $1,750.00 deductible and for a 64 year old smoker would be $2,024.11 per month for the 2019 plan year.

    Claiming to have a pre-existing condition such as a prior c-section, would mean that any new pregnancy would not be covered under any pre ACA plan.

    Infant mortality in the United States is not very good at all. Cuba has better results in that regard as well as Canada and a host of other countries.https://www.infoplease.com/world/health-and-social-statistics/infant-mortality-rates-countries

    I think it is clear we spend, per capita, more for less than any of these countries. We do not do a very good job with the resources we have.

    Finland has universal healthcare and is a leader in research and treatments of cancer

    “A clear statement of the premium quality of Finnish cancer treatment is presented by the EUROCARE Study, which is the most comprehensive source of European statistics on cancer patient survival. The statistics have been collected on a regular basis since 1989, and they provide accurate statistical information on survival rates for different types of cancer in different European countries. The latest published statistics, EUROCARE 5 ( 2000–2007) includes information on more than 21 million cancer cases, covering 30 European countries.”

    A lot more for a lot less. We pay too much here in the United States and we have so much to lose when the doo doo hits the fan. You do not go bankrupt in the rest of the world because you get sick. Only here.

  5. Debbo 2018-10-30 15:34

    I’ve exhaustively checked sources and compiled a complete list of nations that adopted universal health care, but then dropped due to citizen dissatisfaction.

    1.
    2.
    3.
    4. . . . . . . . . . . . . . . . .

  6. Buckobear 2018-10-30 21:05

    Can’t figure out why a 3% gross income requirement (and maybe a reasonable -say $10 — co-pay) wouldn’t work.
    I’ve been on “government/socialized healthcare” since I was 22 years old. It saved my life and cured my cancer ($450,000) and paid for my late wife when her brain exploded – congentical/pre-exiting – condition. She was allowed to exit this life, but the cost was over $200K. The care for both of us was thru Johns Hopkins — one of the best health-care organizations in the country( especially for brain injuries).
    Get over it — just because YOU don’t need any care doesn’t mean someone else does. Sooner or later, you (or your family) WILL need it!
    Today, I’m not bankrupt or in debt.
    Pay the 3% — you’ll never mis it!

  7. Porter Lansing 2018-10-30 21:59

    OS & Jason … In Internet slang, a troll is a person who starts quarrels or attempts to upset people on the Internet to distract and sow discord by posting inflammatory and digressive, extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the intent of provoking readers into displaying emotional responses and normalizing tangential discussion, whether for the troll’s amusement or a specific gain.

    If you think this post is directed at you, you’re probably correct. But, have a nice evening anyway. ✌

  8. Debbo 2018-10-30 22:31

    This comes from an eloquent FB post in response to a complaint about paying taxes for health care one doesn’t need: (I’ve edited the profanities.)

    “This is wild to me though. ‘This doesn’t benefit me personally, so why should I pay taxes for it?’

    “The VA doesn’t benefit me, so fu** those 25 year olds with traumatic brain injuries. Medicare doesn’t help me out, so Grampa can get bent. I don’t watch Sesame Street, so PBS? Fu** ’em.

    “Listen you putrid chuckleheads, we’re trying to have a society here, and part of that is taking care of your fellow human beings. Paying taxes for things you might not use is part of that. And if you view that as theft, you’re a dumb sh** who can go live on your own in the tundra and see how well you do.”

    A wise millennial is the one quoted here. She or he apparently has a better grasp of what US citizenship means than many of her or his predecessors.

  9. Cory Allen Heidelberger Post author | 2018-10-31 06:57

    Paying 3% of my income for family health insurance that no private company can rescind would be a steal.

    Buckobear, I’m glad we all were able to help keep you around.

  10. MD 2018-10-31 21:32

    Price, Quantity, Quality – the 3 basics of economic decision making.
    We continue to purchase healthcare with asymmetric information. We consume healthcare with little knowledge up front of what the final bill may be. When we do not have full information about the cost, we make poor decisions about our care, and tend to over consume health care.

    If there is any hope for our health care system in a multiple payer system (in an ACA or non-ACA set up), consumers need full information, so they can make informed decisions about our healthcare.
    The other option? Single payer. We will get more value for our money, but we will make trade offs.

    Where else do we make such crucial and expensive decisions without this information symmetry?

  11. jerry 2018-11-01 12:41

    If you want to hear and see heartbreak, ask social workers how not expanding Medicaid has hurt our families and loved ones. Example, you have something like a stroke and you lose some of your capabilities to the point you qualify for disability. You start drawing Social Security, but you have to wait for two years from that award to qualify for Medicare because Republicans took away the Medicaid Expansion. Your family has to cover your medical costs because you may live in a rural area like Mitchell, South Dakota that does not have a sliding scale community health center. Closest one is in Plankington, South Dakota which is 26 miles away. You are disabled and you cannot drive, so then what?

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