5.6 - World Comparisons
The rest of the world is way ahead of us. “The United States remains the only Western nation without universal health insurance coverage,” writes Rick Mayes in his book, Universal Coverage: The Elusive Quest for National Health Insurance. Two-thirds of the 191 countries tracked by the World Health Organization pay a higher percentage of their citizen’s total healthcare costs than the U.S. does.23
Yet we, as a country, spend more on healthcare than any other nation in the world, a whopping $5,274 on average per capita,24 and we don’t have the best health outcomes, not even close. In fact, countries with the same mortality rate the United States has for children under five, spend a fraction of what the U.S. spends per person each year: Estonia ($263 per person); Slovakia ($265 per person); Poland ($303 per person); the UAE ($802 per person); and, the United States ($5,274).25
Our lack of complete healthcare coverage, coupled with these high costs has many shaking their heads in confusion. More money should equal more coverage and better care, right?
Not so. One big difference between the United States and other nations is that we are spending our health dollars mainly through prepaid private sector health insurance plans (In 2002, 65.7 percent of health expenditures came from private prepaid plans in the United States).26 Few countries have such a high percentage of health expenditures through private prepaid plans. In fact, only seven other countries in the world had more than 50 percent of their health expenditures through private prepaid plans in 2002: the Bahamas, Chile, France, Nambia, the Netherlands, Slovenia, and South Africa.27
Private healthcare plans are notoriously inefficient with dollars, particularly since, more often than not, different prices are set for the same procedures and care based on what has been negotiated with various private health insurance coverage plans. The administrative effort it takes just to keep up with billing and accounting (since, for example, there can be a veritable multiple choice of prices for each medical procedure) adds significantly to the total healthcare cost. Not to mention the fact that it’s quite difficult for a healthcare consumer to do “comparative shopping” when the prices aren’t set.
by Dr. Bree Johnston, Associate Professor of Medicine, UC San Francisco; Co-President, California Physicians’ Alliance
The U.S. spends about twice as much per person on healthcare as any other industrialized nation. Despite this, the U.S. is ranked thirty-seventh in terms of health system quality by the WHO, and many health indicators in the U.S.—infant mortality, life expectancy, and access to care—are worse in the U.S. than in other comparable nations. Forty six million Americans have no health insurance, and millions of others are underinsured. It is estimated that 18,000 adults die in the U.S. because of lack of health insurance. Half of bankruptcies are related to illness and medical bills. How can we spend so much and get so little?
One reason is that the U.S. operates the most logistically complex healthcare system in the world. We have over 7000 private health plans, and physicians and hospitals need an army of billing personnel to negotiate the complexity of their requirements. Studies have found that between 1 in 4 and 1 in 5 healthcare dollars are spent on administration. Many health plans are for-profit, and thus need to keep an eye on maximizing profits for their shareholders. So our system spends a lot of health dollars on elements that do not contribute to healthcare services at all.
Every other industrialized nation has some sort of universal health insurance coverage. The only thing that keeps the United States from doing the same is the powerful influence of the insurance and pharmaceutical industries, who are making out like bandits under the current system and would face huge financial losses under a new system. It will take a mass coalition to overcome these special interests. It is time to build that coalition.
This increased administrative spending through private insurers can be seen by comparing the administrative costs between public and private ventures right here in our own country: 12 percent of money spent by private insurers is spent on administrative efforts, while only 4 percent of money spent by Medicare (a public program) goes to administrative efforts.28 Management salaries in private insurance firms have become more and more inflated, and profit may also have a hand in the difference. Many of the top CEOs from non-governmental, private health insurance companies are making tens of million dollars per year. For example, in 2004 the CEO of Aetna, Inc., a large health insurance company, brought home $10,119,290 in compensation including stock option grants. This particular CEO has another $164,722,382 in unexercised stock options.29
Canada offers a good example in how administrative costs differ between private and universal plans. Canada’s national healthcare system offers universal health coverage paid by the government, as a single-payer; while the doctors, hospitals, and other medical service providers are still independent from the government (much as if our Medicare was expanded to cover our entire population). In 1999, on average, each person in the United States racked up $1,059 in administrative costs related to healthcare, while an average Canadian incurred $307 in administrative costs.30 Australia, Denmark, Finland, Iceland, Sweden, and Taiwan have similar single-payer health plans.31 It’s important to note this coverage is not linked to a citizen’s employer, as private coverage often is in the United States.
A 2004 study in the International Journal of Health Sciences found that such healthcare systems are significantly more efficient. “Our data help explain why Canadians spend 40 percent less on healthcare, yet receive more hospital care and make more doctor’s visits and enjoy better access to care. Trimming U.S. administrative costs to Canadian levels would save at least $209 billion annually, enough to cover the uninsured and improve coverage for the tens of millions who are currently underinsured.” The study also concludes that such reductions would be, “. . . enough to fund universal coverage.”32
While many point to the Canadian single-payer system as a template for solutions to our healthcare problems, there isn’t a consensus as to what is the best healthcare solution for the United States at this time. To be perfectly clear, while we are advocating for universal coverage (particularly for children), we are not endorsing one healthcare solution, such as a single-payer system, over another. However, comparing Canada’s healthcare system to our own is useful. Canada is a nation with a similar standard of living that enjoys a healthcare system that is serving its citizens more effectively by objective measures.
Dr. Reichter points out, “We can pick and choose features from around the world, it doesn’t have to be Canada—we can pick the prevention and public health structure from Japan, or the primary care choices in England and Sweden. The thing people have to recognize is that a universal healthcare system is inevitable. There is no other way out of the crisis than to have a universal healthcare system that includes everyone, contains costs, and is publicly financed.” Clearly, when the time comes for change, there will be no lack of ideas for solutions.
