Per Capita Spending and Life Expectancy

With the Iowa Caucuses tonight, its as good a time as any to ask, what is wrong with this picture?



Health Care Spending and Life Expectancy    

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  1. Adam commented on Jan 3

    Avg. life expectancy in the U.S. lags that of many, if not most, industrialized nations. As Larry Kudlow might say, this is the most embarrassing story never told. Even more embarrassing is that no one seems to care.

    I happen to believe that government would be most effective if its stated priority was to maximize the life expectancy of its citizens, similar to a corporation maximizing profit.

  2. Nurit commented on Jan 3

    This graph is misleading. Japan, San Marino, etc. are not nations of immigrants. If you take only the US born population(in order to make a good comparison to countries like Switzerland) I would think the numbers would not be so awful. Well, the obesity epidemic also contributes to shorter life expectancy of course–junk food is abundant and cheap=hear attacks, diabetes etc are abundant and expensive:-)

  3. Ross commented on Jan 3

    Sorry but I don’t get it. Why include San Marino and exclude Russia. Someone has an ax to grind methinks.

  4. Adam commented on Jan 3

    1. There is no ax to grind. Go research the numbers on any independent website: the U.S. trails many, many nations in this important statistic.

    2. Even sadder: many current reports contend that, due to child obesity, the current generation of U.S. grade school students could be the first generation in centuries to live shorter than their parents. How could anyone argue that, if true, this does not mean we are headed in a very wrong direction?

  5. Trainwreck commented on Jan 3

    Someone should sell T-Shirts with that graph on the back.

  6. F commented on Jan 3

    I’d be much more interested to see this as a regression. The fact that it isn’t displayed that way makes me suspicious.

    As a scientist, what I see here is mostly an absence of trend, even when you exclude the US. This becomes more obvious when you appropriately scale the left hand variable. Eyeballing it, it appears that the expenditure of ~200 international dollars (whatever those are) per capita gets you about a year of life expectancy. Also the intercept is about 69.

    In other words, if you spend nothing on healthcare, your life expectancy will be 69, and you can buy a year for 200 a person. All a gross simplification, of course, but much less of a gross simplification than the graph shown.

    It’s also hard for me to care about 4 years. Out of 75.

  7. algernon commented on Jan 3

    What the chart suggests is that life expectancy has no correlation to health care spending.

    It is obvious that life expectancy has a lot to do with ethnicity & culture, to wit, genetics & how you behave.

    For instance, if you did the stats for North Dakota rather than the US as a whole it would look different.

  8. Deborah commented on Jan 3

    What’s wrong is that we’re the only western nation that doesn’t guarantee its citizens the right to buy health insurance. It’s interesting that the most vocal opponents of universal healthcare are the ones protected from medical underwriting by their employers.

  9. F commented on Jan 3

    To be clear, the shameful part to me is who inefficient we are with the amount we are spending. In my opinion, we should be spending less, rather buying a few years of life expectancy.

  10. zero529 commented on Jan 3

    Nurit wrote:
    “This graph is misleading. Japan, San Marino, etc. are not nations of immigrants.”

    But France and Germany and the UK are nations of immigrants. Or maybe these countries are too small to serve as valid examples? Or do all of their immigrants come from healthful environs?

    It is a widely held belief among my SoCal brethren that illegal immigrants are the cause of our health care woes, and any effort to increase access to health care (even when spearheaded by a Republican Governor) faces serious opposition because of this view.

  11. david commented on Jan 3

    1) Life expectancy is gamed by all countries but the US excluding births of <1kg infants as "live births." Disproportionate effect on life expectancy.

    2) Murders. The US has a higher murder rate than all developed countries. Murder disproportionately effects life expectancy as it is a young man's cause of death. No matter what your politics I think we can agree that murder should not cast an indictment on the health care system.

    3) When you look at life expectancy of those over 65, the US is #3 in the world after Japan and Switzerland and similarly ranked in terms of disability-free life expectancy. This is really the true test of a health care system.

    Can the US do better? Of course. But in the metrics that matter (less disability and long life span) we do quite well.

  12. Norman commented on Jan 3

    To put it bluntly take out the terrible statistics from African-Americans (murders, drug useage, AIDS, etc) and these numbers get normalized.

  13. Lloyd commented on Jan 3

    I didn’t know healthcare was a right. Sounds swell.

    The US sure pays too much for its healthcare as is, so let’s attack the cost side of it before writing a blank check to buy votes.

  14. Syphax commented on Jan 3

    When accounting for accidental deaths the US citizens live longer than anyone else(or at worst, a little lower than Japan).

    Not to say that our healthcare system shouldn’t be reformed, I think it should(and not in a way that moves it towards more government) but lets at least get the facts right.

    When discussing health-care quality this MUST be taken into account. It is simply dishonest not to.

  15. D H commented on Jan 3

    Forward that to the AARP for a cover shot.

  16. OldVet commented on Jan 3

    One nephew, when provided this info, told me it was a waste of money keeping old farts alive when younger folks needed their jobs. He’d rather have a new car. I intend to live better, if not longer, and leave nothing to nephew. Take that.

  17. LividLipid commented on Jan 3

    When I was a wee lad, the doctor had a nurse in a small house that served as an office. Paid cash.

    Now the doctor has 50 insurance processors and is in a pool with 4 or 5 other doctors in a big office. They have enormous “liability” policies to support the lawyer leeches and they fall right into the income bracket where the AMT eats them alive.

    Insurance is not the answer. IT IS THE PROBLEM.

    If we removed the pools of money where the leeches feed, extracted the useless middleman from the transaction stream and returned to a TRUE market system there wouldn’t be such ridiculous inflation.

    I’m not holding my breath.

  18. Grodge commented on Jan 3

    Adam says, I happen to believe that government would be most effective if its stated priority was to maximize the life expectancy of its citizens…

    Is that really the government’s “priority”? Yikes!

    David hits it on the head with his 3 points. The statistical difference between the the life expectancies among western nations is negligible; the graph is drawn to depict some huge difference which does not exist.

  19. cinefoz commented on Jan 3

    Either the graph is crap or it shows Americans live longer and spend more until the day they die.

    Over the long run, you can’t spend what you don’t have … unless the nature of humanity is to max out the plastic when you get your final exit notice. It implies that we are far more affluent than the rest of the world. Thus, we live longer and spend more.

    What’s the problem? I have no liberal guilt for being affluent.

  20. twistytop commented on Jan 3

    What is wrong with this picture?

    Answer: The “free market”.

    Getting insurance companies out of the health insurance business would go a long way to remedy the situation.

    Single Payer Baby. Single Payer.

  21. Chicago Finance commented on Jan 3

    But it’s simply not true. There are many studies of US vs foreign health systems that refute these assertions. For example, US non-Hispanic whites aged 55-64 are significantly less healthy than their British counterparts at every level of the SES (Socio-Economic-Spectrum) and taking into account age and other risk factors.

    This result cannot be explained by infant mortality, gunshot wounds, immigration or the other factors cited in previous comments.

    There is a large literature comparing how specific conditions are treated and the outcomes of these treatments. The US uses a lot of high-tech gadgets and unnecessary procedures, but I’d rather be treated in France, Germany or a Scandinavian country if I were really sick.

  22. Pat Gorup commented on Jan 3

    Easy. Corporate/individual greed and HMO’s.

  23. PTodd commented on Jan 3

    What it means is that more of our spending is for profit of the HC industry and to pay higher administrative costs due to the complexity of the system (as opposed to a single payer system), not to mention the high costs in approving treatment recommended by the doctors so as to deny treatment/payment for insured patients.

    It indicates going to a single payer system could cut HC costs by 1/2 at no reduction in quality and access. In fact, it would probably increase both, and so would life expectancy, but at the expense of industry profit.

    Most of our doctors working in hospitals went to medical schools overseas, and not the US. The number of graduates from US medical schools has not increased significantly in almost 30 years. So going to a single payer system should not affect the quality of Doctors, if anything, it would mean we would have to produce more Doctors in the US, and import less.

    But we know this government see people living longer as a burden to society, and value corporate profits more than citizens health, so we will maintain the status quo.

    As for the arguments that adjusting for accidental death (meaning we have MORE accidental deaths or other countries were not also adjusted), and live longer IF we can manage to reach 65 and qualify for medicare, means we are comparable to the longest living countries, I mean, give me a break.

  24. Bruce F commented on Jan 3

    To echo twisty –

    The problem is that vested interests want to pretend that health care must be delivered through something called the free market.

    Other industrialized countries, ones that have most if not all our problems with race, immigration and poverty, have significantly better health outcomes for much less spending.

    It’s not a matter of “reform”.

    To support this, I’m going to copy another comment that says it better than I can. It’s long but worth it.

    from comments at –

    ‘American health care outcomes look much better once we adjust for race and other demographic factors’

    Ah, the last defense used when defending America’s health care system, one which is sadly no more tenable than any of the other excuses for a system which sets world standards in how much is spent on it while returning results that would not make Italy or Portugal envious.

    ‘The researchers who were funded by several US and UK government agencies, set out to look at the social and economic factors affecting health but shifted emphasis when large differences emerged between the two countries. The study looked both at the way people reported their own health and – to guard against any bias from self-reporting – at objective biological markers of disease from blood tests. Altogether there were about 15,000 participants.

    Samples in both countries were limited to whites and excluded recent immigrants, so as to control for racial and ethnic factors.

    “This study challenges the theory that the greater heterogeneity of the US population is the major reason the US is behind other industrialised nations in some important health measures,” said Richard Suzman, programme director at the US National Institute on Ageing, which co-funded the research.

    To keep quoting from that bastion of British socialism, the Financial Times –
    ‘The researchers are struggling to explain their findings. Their analysis shows that lifestyle factors – particularly the fact that Americans are more obese and take less exercise – cannot account for the whole discrepancy. though they may provide a partial explanation.

    Different health systems may also be part of the story. The researchers note that the US spends $5,274 per head on medical care while the UK spends $2,164, adjusted for purchasing power. But Britain’s National Health Service provides publicly funded medicine for everyone, while Americans under the age of 65 have to rely on private insurance.

    Prof Marmot suggested that, while the healthcare provided by the British state health service was not superior to the private US system, it provided important psychological reassurance.

    As the researchers say in the journal paper: “To a much greater extent England has set up programmes whose goal is to isolate individuals from the economic consequences of poor health in terms of their medical expenditure and especially earnings and wealth reduction.”’

    Why let facts intrude on popularly held American beliefs, since as we all know, America has the best health care system in the world, as long as you ignore actually being healthy – shockingly, the British system, the sick man of Europe, so to speak, is returning empirically better results for lower cost.

  25. giovanni commented on Jan 3

    according to the last LA Weekly article on the issue there are about 500.000 gang members in America , maybe that is a reason of the low US life average

    in areas of the US where everyone is from germany or sweden life expectancy is the same as in Germany or Sweden

    it is the ethnic group stupid

  26. Adam commented on Jan 3

    Grodge, I understand that my theory about government and life expectancy is a radical one. I simply believe that a stated mission of guaranteeing life, liberty, and pursuit of happiness is subjective and ineffective. The only objective measure of a government’s success is how long it can guarantee the most valuable commodity: time. Able-bodied life expectancy is the only objective measure.

    I also believe that no government policy that is good would decrease the average life expectancy for its subjects, and vice versa.

  27. OkieLawyer commented on Jan 3

    It’s not just the quantity of life that is lacking in America (as well as the excessive costs), but also the quality of life as well. We are the only industrialized country that does not guarantee some vacation time annually for employees.

    What is the use of making more money per capita if you can’t “stop and smell the roses” once in a while.

  28. Norman commented on Jan 3

    This graph is in ‘International Dollars’ (whatever the hell that is). If it is in Euros then I would argue that the Euro is about 35% to 45% overvalued. That would bring this spike down to $3,200. Then we throw in our diverse and crime ridden population and the numbers become quite reasonable.

    What is interesting is that most all of the opinions (including B.R. implicitly agreeing that America is bad by even putting this up without a comment) that are jusing this as a comment on how bad our health care system is without hardly a look at the underlying data. Very shallow, friends.

  29. Ken commented on Jan 3

    When I was a child (in the 1940’s), my mom would take me to the Dr’s office; as we left the Dr’s office, she would pay a reasonable price for the services rendered . If that were the norm here today, I wonder what the chart would show? Is it possible that government programs and insurance companies don’t add to the quality of health care in the US? Why do so many people (like my leftist college professor son) think that government solutions will work with healthcare but blame the incompetence of the US for most of the ills of the world?
    Could it be that the chart of life span and spending is similar to the bogus information that got Gore the ridiculous Peace Prize.

  30. douglas commented on Jan 3

    This is some funny shit watching some good old fashioned fiscal conservatives defend paying two to three times as much as necessary for similar results.

  31. Ross commented on Jan 3

    If we nationalize health care, can we please nationalize the housing market? Ops Sorry, we are already doing that.

    Privatize the gain
    Socialize the risk

  32. Winston Munn commented on Jan 3

    Cook County in Chicago doesn’t seem to have this problem as 90% of their dead still vote.

  33. Ross commented on Jan 3

    GREAT one Winston.

    We must demand national house insurance NOW, tovarisch.

  34. david commented on Jan 3

    You’d rather be treated in a European country for cancer? Whoops.

    Or Canada for heart disease?

    Does murder have a big effect on US life expectancy? You betcha:

    Then they adjusted life-expectancy stats to get a rough handle on what life expectancy would have been like had the rates of these deaths been the same in all 29 countries. Their result: The U.S. would have ranked first, at 76.9 years of life expectancy — an increase of 1.6 years

    Again, the US health care system delivers better results where it counts–when/where people actually USE it. Could it be cheaper? Yeah. Would a single payer system here BE cheaper? ARE YOU OUT OF YOUR MIND???

    Does anyone think that the “breast cancer advocates” would not crucify a public official who supported cutting off treatment or denying certain treatments as they do in the UK? Or the multiple myeloma support groups sit on their hands here if Velcade wasn’t reimbursed, as in the UK?

    Get real. Show me some examples where the gov’t stepping in has resulted in greater efficiency in services. THAT’S why us “fiscal conservatives” don’t like the idea of single-payer health care. It wouldn’t work in the US, and it wouldn’t be any cheaper.

    Allow workers to get the same tax breaks as their employees to buy health insurance (or better yet, don’t have any tax breaks), allow the purchase of out-of-state, totally portable insurance products, make health insurance more like life insurance–etc.


  35. mo commented on Jan 3

    Pardon the rant but….

    This concept of long life expectancy as a good thing really gets to me. My parents, in their early 80’s, struggle each day with chronic pain. They are both losing their mental faculties and do crazy things. (If Barry gets this far- my dad has crossed Jericho Tpke, while walking with a walker, several times in the middle of the block – he’s even been warned once by a cop.) They have Long Term Care insurance, but my mother refuses to accept help. We constantly struggle with the balance between their independence & saftely. I love my parents dearly – but is this a quality life? Meanwhile my father’s remaining sisters – 86+ – are both in nursing homes, physically fit, yet mentally absent.

    FWIW – their are all Irish born and my grandparents all lived well into their 80’s & 90’s.

  36. sebs commented on Jan 3

    david, the example you are looking for is medicare.

    if you dig into the statistics, you will find that the US sucks on health care (and sucks enormously on a per $ spent basis), but not for those over 65. for those over 65, the US is as good or better than most industrialized countries. that’s medicare. a single payer, universal insurance system.

  37. Larry commented on Jan 3

    Is a significant portion of the higher health costs in the US due to the amount of R&D we do vs. other countries. (The results of which benefit other nations, I might add.)

    Could someone with knowledge about this weigh-in on the topic?

  38. touche commented on Jan 3

    But think of all the profits we’re generating!

  39. Innocent Bystander commented on Jan 3

    During a visit to my doctors office many years ago, the doctor leaned across the desk, and asked if I want to know the secret of a long life?
    I replied, yes.
    He said, ” Pick the right parents.”

    I think he is onto something.

  40. Grodge commented on Jan 3

    If the government’s “priority” is to ensure its citizens longevity, and the methods a federal government would use is law and funding, then what laws should be passed and what programs should be funded?

    1. Outlaw fast food drive-through windows.

    2. Finance jogging lanes along interstate highways.

    3. Tax corn sweetener food additives(or at least quit subsidizing them– actually NOT a bad idea!)

    4. Tax deductions for health club memberships.

    5. Mandate exercise time for employees.

    6. Place surtaxes on obesity– weigh in on April 15 and pay up.


    I’m sure you can come up with more. Big brother is counting on you!

  41. Mike G. commented on Jan 3

    How about this thought. Much of the spending (and more and more of it as each year progresses) is in medicines. The US develops many (most?) new medicines and they are extremely expensive. But when the US goes to sell them to Europe, the EU says, “Sorry, we’re not paying for development costs. Only manufacturing costs etc.” Or the US develops AIDS cocktails and is told to basically give it away to those who need it most i.e., Africa (which I’m sure was the plan all along when they sunk the billions into the meds in the first place!) or the WTO or whatever will let someone else make them regardless of any patents. So the US develops the medicines and then gets stuck with ALL of the developing costs. Just a thought.

    Or, it could just be that people know we have the best healthcare and they come here in their final years :)

  42. Grodge commented on Jan 3

    One last point:

    The grossly out of line spending on health care in the USA is partly explained by the poor health of our population, as noted in the JAMA article referenced above by Chgo Finance:

    The amazing thing to me is that despite all the diabetes, obesity and violence in our culture, our longevity is still within error of other cultures… but it does cost money.

  43. sebs commented on Jan 3

    larry, i am not an expert on whether the R&D expenditures themselves get factored in here somehow. I do know that the differences in R&D expenditures themselves, however, are not that big. my memory is that they are in the order of $200 billion per year for the USA and $175 billion for the EU.

  44. Larry commented on Jan 3

    sebs: Thanks. Do you know if those R&D numbers you mentioned include drug development?

    Mike G had essentially the same thought/question I did, but was more articulate than I. It would be interesting to see an unbiased study calculating US-subsidized drug-related (and other) healthcare benefits received by other nations. In real terms, our placement might not be as bad as the graph indicates.

  45. David Merkel commented on Jan 3

    What is missing here is the level of elective and cosmetic health care, which can make the lives of many people more pleasant, but aren’t available in health care systems in other countries to nearly the same degree.

    Things are much better here than most people realize. If the US health care system did not exist in its present form, many other nations would have a hard go of it, because cases that won’t be treated by their systems often come here.

  46. donna commented on Jan 3

    Honestly why do Americans fight the obvious? We pay too much for health care and need a national single payer system for basic health services and catastrophic coverage. If you want insurance for extra care above and beyond that, great, buy it. Why is this so difficult and so much of a fight? Do you think you don’t pay for the uninsured? Oh, but you already do, you really do.

    LOOK at the graph, people! UNDERSTAND what it is saying!

    Wake up, already.

  47. Marcus Aurelius commented on Jan 3

    I only read about a 3rd of the posts in this thread before I had to jump in and say that people are mighty touchy and defensive about this subject.

    What struck me first was cuba vs. the US. Make of it what you will (Cuba is world renowned for its production of Doctors).

    Also, among the professions, it’s interesting to note that the practice of medicine has been overtaken by business administrators. The practice of law has remained in the hands of he lawyers, who direct their administrators. Once again, make of it what you will

  48. Grodge commented on Jan 3

    David Merkel,
    You say, If the US health care system did not exist in its present form, many other nations would have a hard go of it, because cases that won’t be treated by their systems often come here.

    You’re dreaming. Which “cases” MUST come to the US? Do you have a reference?

    France, for example, not only spearheaded laparoscopic surgery and minimally invasive procedures, but they also devised a system that enables those who need care to get it. They also developed robotic surgery and have been on the cutting edge of nearly every technological advance in medicine. I guarantee they don’t send “cases” to the US.

    Canada? Nope. In fact, their access to health care is equal to or better than US counter parts:

    Overall, 13% of Americans reported an unmet health care need, slightly more than the 11% of Canadians who did. The difference was much higher when Canadians were compared with uninsured Americans.

    If Canadians come to the US, it’s middle class Canadians who choose to pay for the convenience of quicker access… not out of necessity. Immediate access is not always the most cost-effective option.

    I think Donna nails it– pay now, or pay (more) later– and the US seems to be choosing the more expensive option.

  49. Mike Anderson commented on Jan 3

    In my prior career I was a demographer who specialized in mortality, and I can tell you that a huge chunk of the US-vs-world disparity is most certainly due to the high rate of infant mortality in the U.S.

    Look at life expectancy remaining after age 1, and you’ll see this.

    That certainly doesn’t make it excusable of course, especially since there are fairly cost effect measures that can be taken to lower infant mortality rate (e.g. neonatal care, basic education of the mother, efforts to fight low birth weight). BTW, there is a HUGE disparity in low birth weight by race, and low birth weight is the strongest predictor of infant mortality.

  50. Bob A commented on Jan 3

    What the chart shows is that national healthcare, as practiced in MOST civilized countries, does NOT cost more than our system, while the results are overwhelmingly BETTER in terms of lifespan.
    Contrary to the BS spouted by the right.

    What is also shows is the people who eat the CRAP that most Americans eat die younger than they might otherwise.

  51. MP commented on Jan 3

    This (link below) is a thought-provoking piece (on healthcare) by Professor Mankiw that was in the NYT a couple of months back. I think the message is valuable in that we often have to unpack the numbers to see what they are really telling us. I’m not sure it’s quite so binary. Given the # of U.S. deaths due to guns, obesity, and drunken driving, I would want to control for numerous variables and disaggregate by SES before coming to some homogenized conclusion. We have our issues, but it may be more gray than the chart depicts.

  52. sebs commented on Jan 3

    i am a professional health systems researcher. i have NEVER seen any data to suggest that people coming to the US for health care has anything to do with anything.

    in fact, as someone who has lived abroad extensively, the whole idea is a joke. if you have ever received medical care in a third world country, you would know that there is no chance in hell anyone who can afford to pay for the care there would chose to come here instead. if you can actually afford to pay US health care system rates out of pocket, you can get five start service in the third world that would blow your mind. i am talking about having your doctor’s cell phone and home numbers, team of physicians at your beck and call, solicitous service, and in general a system that treats you like you are the customer and you are always right. the only people who would come here for care are people who can afford that lever of service here also and for whom money is no object. think saudi princes and corrupt politicians.

    in fact, people are increasingly traveling from here to the third world for care, not the other way around.

  53. Norman commented on Jan 3

    RE: Innocent Bystander

    “””During a visit to my doctors office many years ago, the doctor leaned across the desk, and asked if I want to know the secret of a long life?
    I replied, yes.
    He said, ” Pick the right parents.””””

    Sorry, IB but longivity has the worse genetic predictive power of almost anything. A correlation coefficient of about 0.02. This is from the twins study at the University of Minnesota. In fact on average identical twins die about ten years apart.

    Further, from my own anectodal findings to live longer stay away from harmful substances (drugs, booze, tobacco) and pay attention to your own health care by going to the doc when you detect something wrong and changing docs if you aren’t happy. These two factors account for two-thirds of the premature deaths in people that I have known.

    Another point on National Health Insurance: In England 40% of the doctors get assulted by patients at least once per year. The Brits aren’t happy.

  54. sebs commented on Jan 3

    Norman, i suspect that 40% figure you refer to is from the BMA studies that i think was originally done a few years back and recently updated.

    just to be clear, what you report as “assault” was reported as “workplace violence” by the BMA, and included things like verbal abuse. also, i believe the response rate for that study was dismal, which generally means that substantial response biases were at play.

  55. m3 commented on Jan 3

    i have to say i’m appalled at the racial ignorance in these comments, and moreover the way they are tolerated as fact.

    how on earth anyone could blindly say that 10% of the population (african-americans) could account for the vast majority of these findings is ridiculous. wow.


    i completely agree. i know quite a few people who live in the US and can afford US healthcare, but routinely go to mexico when they need treatment. it’s very common in the border states.

  56. ken arrow commented on Jan 3

    We Americans do often overspend for healthcare. And insurers are a BIG problem – especially publicly traded ones (ever try to deal with United Health about a claim?). Still, to be fair, moral hazard is a big problem. When people are educated about their health and healthcare availability they tend to over-utilize the system.

  57. sebs commented on Jan 3

    oops. posted to fast. still responding to norman:

    patient satisfaction surveys across nations generally show US patients are less satisfied than most others. specifically, less satisfied than even UK patients.

    that said, most health care experts informally agree the UK has a pretty bad system. france is probably the example we would want to emulate.

  58. sebs commented on Jan 3

    ken, just fyi, there is not credible data to support that statement. what has been shown repeatedly (and reported as evidence of over utilization) is that people will consume less health care if they have to pay for it or pay more for it. the fact is, we don’t know what percent, if any, of that is over utilization. we do know that many people who make choices not to use health care for financial reasons suffer real health care consequences later. further, we even have some evidence that those health care consequences can end up being more expensive for the system than the original savings.

    the whole idea of moral hazard is based on the economics 101 premise that health care is like any other widget and that people will want more widgets if they can afford them. so, if you would have one colonoscopy at $100, you might have two colonoscopies at $50. and if you don’t charge a co-pay, people will willingly go waste half their day sitting at their doctor’s office. to me these assumptions are utter nonsense. most people will have the least amount of health care possible, even if it is totally free. only an economist would thing otherwise.

  59. wnsrfr commented on Jan 3

    I have learned a lot from these comments, but I still picture a fat American guy with an erection lasting over four hours calling for an ambulance…

    We probably spend more per capita on E.D. Television commercials than Cuba spends on maternity facilities.

    Yeah, that’s it. E.D. medicine expenses explain that sharp uptick in the chart when it reaches the U.S.

  60. Eric Davis commented on Jan 3

    This is a huge issue….
    I love all the posts about it.
    If you realize that the average hourly wage is $18 an hour, and if you get decent health care(deductible under $5000), The cost is $10 per hour(roughly).. employees receive more in benefits, than they do in wages per hour.

    When you realize that “most jobs” supposedly in this economy are from small business, that don’t give Health Care, and just pay the $18 an hour.

    Pulling so many healthy people, out of the Insurance pool, driving up costs.

    over 50% of the costs of health care are “Administrative”

    Anyone who has been insured, and had the insurance company refuse to pay, requiring 200 hours of form processing, and dispute resolution.

    Health care almost looks to be an indictment of the system and a clear failure of capitalism.

    Honestly, I think I’d be excited to see cash system, where I can go to a doctor and pay him $50 to say, “Put an ice pack on it, and if it doesn’t get better come back”

    Or a Privately run MRI, or CT machine. that you just wait in a little line and pay $200 for.

    When all is said and done, a decent surgeon doesn’t “net” more than $2000 per surgery.

    The cash costs of health care, would be much more affordable than the $1000 per month for “insurance”

  61. Bob A commented on Jan 3

    “Another point on National Health Insurance: In England 40% of the doctors get assulted by patients at least once per year. The Brits aren’t happy.”

    Here we sue them. There they just beat the crap out of ’em.

    Based on the amount spent on malpractice insurance and awards here, we’re not all happy with our healthcare here either.

  62. B commented on Jan 3

    The legend on the graph says “Per Capita Spending.” Spending on WHAT? Doesn’t say healthcare. Is this just per capita spending in general? If so the graph means nothing. Everyone here seems to think it is Per Capita Health Care Spending but graph doesn’t say that.

  63. ef commented on Jan 3

    Agree with OldVet. Similar expression. Fun looking at old family birth certificates and cheap hospital bills. Recently went to a vet. Cost $300, and nothing much to show for it. But vet couldn’t do much without them, so they say. They were heavily pushing insurance. God help our pets. The insurance industry will ruin pet healthcare too.

    It’s interesting to play around with the numbers at the WHO.

  64. Will Lewis commented on Jan 3

    Simple. Our spending drives innovation. Once we, who are better suited to pay than the rest of the world, have financed the start up costs, then the products become cheaper and available to rest of the world at a cheaper cost. It would be interesting to see an ROI dollar figure, or number of patents figure on what we have seen from our health care expenditures.

  65. sebs commented on Jan 3

    B, you are right!

    but, they look a lot like per capita health care spending for sure. no idea for what year or whether adjusted to 2007 dollars or what.

    i believe the numbers if you looked at them today would be a bit tighter since the euro has shot up in value so much, but the message is pretty much the same. we spend the most, and get the least for our money.

  66. zero529 commented on Jan 3

    Larry asked: “Is a significant portion of the higher health costs in the US due to the amount of R&D we do vs. other countries. (The results of which benefit other nations, I might add.)”

    It is generally the case that drugs still covered by patents are more expensive in the US than abroad, but it is also true that generic drugs are generally less expensive in the US than abroad. On balance, I’m not sure whether we end up paying more or less.

    It is, however, one reason why it’s worth keeping an eye on how the FDA decides to handle generic biologics (which are probably most important in cancer treatment and immune disorders). There are valid concerns about quality, but the regulations may end up making it effectively impossible to produce generic biologics with any cost benefit to patients.

  67. Chicago Finance commented on Jan 3

    People don’t understand our health care providers aren’t required to guarantee minimal standards of care and that the biggest gains in health care come at very little cost. Consider the recent 100,000 lives campaign coordinated by IHI (Institute for Healthcare Improvement) – that overachieved its goal of saving 100,000 US lives in one year simply by enforcing basic proper medical procedures – things which everyone knows but does not do. This is being expanded to a 5 million lives campaign

    * Patients presenting with possible heart attack still do not routinely get aspirin.

    * Doctors and patient care staff do not wash their hands between patients (gloves make them invincible – especially first year residents).

    * Operating rooms are too cold for patient safety for the comfort of the surgeons and the OR teams.

    * Patients develop pneumonia in ICUs and other patient care units simply because their beds are not elevated.

    * Patients experience adverse drug effects because the prescribing physician does not determine what other drugs patients are receiving.

    * Patiens are transferred between units haphazardly – patient comes from an OR to an ICU with no bed ready. Some hospital systems such as Geisinger have reduced complications incredibly merely by designing and enforcing good handoffs from one department to another and one work shift to another.

    Talk to any hospital infection control officer about his/her experiences and you might be afraid to step into a US hospital again.

    The one positive note is that hospital and healthcare administrators are now beginning to take quality of care seriously as a result of Core Measures (of patient care quality), the Leapfrog initiative of purchasers of care (insurers, companies), JCAHO changing accreditation requirements to quality measures, the mandated state QIOs (Quality Improvement Organizations).

  68. ef commented on Jan 4

    I’ve wondered how has Patch Adams and his Gesundheit Institute been fairing, and can it serve as a healthcare model in any fashion for the US. (Robin Williams played Patch in the movie.)

  69. R commented on Jan 4

    Insurance and medical liability are causing healthcare to be as expensive as it is here.

    I went to the emergency room on New Years day for bronchitis, they ran tests to see if:

    1.) I was having a heart attack
    2.) I had a rare, genetic disease that would cause a blood clot in my lung
    3.) I had a hole in my esophagus

    Guess what? They found out I only had bronchitis. 14 hours after arriving I left with a prescription for antibiotics and Robitussin.

    I blame two factors. One, excessive liability makes them always check for exceptionally rare problems that may cause death. Two, the insurance company was paying, so why not make some extra $?

    Other countries are less litigious than the U.S., that may be one reason they spend so much less.

    BTW, unless you need something sewn back on, don’t go to the ER.

  70. sebs commented on Jan 4

    R, the litigation excuse is just that. an excuse.

    if you had presented with the exact same problems in the afternoon of a regular day at the ER, and they would have performed the exact same battery of irrelevant tests. however, you could have instead gone to any walk in urgent care clinic and gotten none of those tests. they would have diagnosed you with bronchitis after (maybe) an x-ray and sent you home with the correct prescription.

    the difference is not that urgent cafe facilities are somehow immune to lawsuits. they have a different business model. they have to compete for customers and give them the best product at a reasonable cost. they know that if you walk out of there with a $3,000 co pay for a bronchitis you are never coming back. the ER has an entirely different model. they don’t really want you back. if you are there, their goal (if you are insured) is to try to extract as much medical care from you as possible, partly because their overheads are enormous and partly because so many of the people they see are uninsured. that’s the difference. it has nothing to do with litigation.

  71. al commented on Jan 4

    Perhaps the amount spent on Health Care in the US includes a lot of fat. The fat being exorbitant profits earned by the health care industry.

  72. al commented on Jan 4

    Perhaps the amount spent on Health Care in the US includes a lot of fat. The fat being exorbitant profits earned by the health care industry.

  73. Hawk commented on Jan 4

    I am from Canada. I know If I get sick I’ll be ok. I won’t lose all my hard-earned money on health expenses.
    This is a great relief. If I was a US Citizen I would be dead from anxiety. It should be very stressful. I’m just sorry for my fellow Americans who are in this situation.

    What is my point? This effects life expectancy.

    Another point, immigrants spend less money on health in US. So spending should be much more even though life expectancy goes higher (if you take out the immigrants from the picture)

  74. Mike G. commented on Jan 4

    Finally! Someone mentions litigation! For this graph to be truly meaningful, you would have to also somehow tie in a graph of litigation costs. This is the tricky little twist to the “healthcare” problem in the US. Much of the problem isn’t a healthcare problem at all, but a tort problem.

  75. Eric Davis commented on Jan 4

    I couldn’t follow the “nation of immigrants” and some kind of Genetic argument. Our gene pool should be more robust, and healthier, besides putting us at a disadvantage for “Mutational” advances, a Healthy Gene pool should make us healthier, overall.

    and, Doctors should get assaulted:

    nothing like a little Pavlovian learning. For people who say “I think it’s broken.” get an x-ray. or “I think it’s the Flu” Drink Fluids, and get some Nyquil.

    I’m very surprised that some software program, hasn’t outsourced them by now.

  76. Roger Thatchery commented on Jan 4

    Eric Davis said:

    “I couldn’t follow the “nation of immigrants” and some kind of Genetic argument. Our gene pool should be more robust, and healthier…”

    Hmmm, Eric…uh, don’t tell the Thought Police, but there’s a common genetic characteristic shared between 90% of the nations on the chart. Hint: The vast majority of our modern immigrants in Western nations don’t share this characteristic.

    “…more robust”? Put down the Alon Ziv and study intro level statistics, demographics & genetics. Focus on the concept known as “regression toward the mean”. Today this knowledge is mostly heresy in public schools and colleges of course. So you’ll have to do it on your own time at a bookstore or on the internet.

  77. Francois commented on Jan 4

    To paraphrase Mark Twain, before distorting the facts as you please, get them straight first.

    To those who are “man enough” (with apologies to the ladies here) to confront their belief systems (a tough thing to do) I strongly suggest :

    Discount illegal immigration, African-American statistics, the lack of regression on the graph, murders and accidental deaths all the hell you want, the fact remains that the USA has a very inefficient allocation of health care dollars compared to any developed nation on this planet.

    It is truly amusing, as well as amazing, to read the tsunami of justifications aimed at defending the status quo. I guess there are a lot of people that buy the notion that any call to improve our health care cannot be anything else than an attempt by the International Communist Cabal to weaken the power of the almighty USA.

    Anyone has a particular problem with the notion that our health care system COULD, MAYBE, PERHAPS, work better, with LESS waste, while providing meaningful access to more, if not all the US population?

  78. danf commented on Jan 4

    Does anyone else find it interesting that Cuba spends about 200-300 and has almost the same life expectancy as the US which spends about 4,500? I guess the money spent on health care has much less effect on life expectancy than other factors.

  79. Eric Davis commented on Jan 4

    I’ll see your High school statistics, and raise you the “origins of species”, and 600 years of genetic science….

    I have honestly looked for whatever
    90% genetic similarity your talking about, and besides the Genetics of Pocket book size. I’m just not seeing it… Does it involved Jews and the international bankers and the black helicopters?

    I thought the Heresy in school was science. I know my High school was trying to keep me Stupid and Ignorant, at the behest of all the religious Zealots and the “Jesus Magic”.

    Don’t let me stop you, from those books keeping you …..

    Sorry, I’m better than this… interesting opinion Sir and good luck, if your not achieving some kind of understanding, fulfillment and happyness. If your not, in your shoes i’d try Broaden my horizons. My bet would be, that the only one keeping you down is you.

    Further note: I’ve read both the Turner Diaries, and Mein Kampf… the latter was OK(as a read, but not as a philosophy), but that dude had a deteriorating case of Syphilis, and the Former, I want those hours back.

    I assume this is what you’re dancing around.

  80. Ironman commented on Jan 4

    Okay, you’re all wrong. Including you, Barry Ritholtz! ;-)

    The average life expectancy data used in the chart is affected by things that are in no way associated with health. Or spending. Or spending on health. They incorporate the average life expectancy reducing effects of things of which the U.S. has a disproportionately high number compared to other nations, such as motor vehicle accidents.

    Here is the life expectancy data corrected for those non-health-related causes of death, aka “natural life expectancy“. And while we’re at it, here’s the true correlation between health care expenditures and per-capita GDP by nation, which for the sake of argument, we can assume is proportionate to per-capita spending by nation.

    As for Cuba, since it’s been brought up, generally speaking, once you can control parasitic and bacteriological disease sources (mosquitoes, etc.) in a region, life expectancy will jump to near first-world levels. That’s easier to do on an island than it is in places like equatorial Africa and largely accounts for the differences between the two, despite similar levels of spending between the two.

    Sheesh! You’d think people who get so worked up by international health care comparisons would actually know something about them!…

  81. e_b_a_l commented on Jan 4

    A few months ago my wife had pregnancy complication. She had to undergo a routine surgery. It was conducted by her gynecologist, it took about half hour for the operation, and 5 hours or so to recover. She was out of the hospital in six hours. She is not insured so we got all the bills. Her doctor charged $1,500, the anesthesiologist charged $1,000, the hospital bill was $12,000, of which $6,000 was for the use of op. room, $4,000 for recovery room, $1,000 for anesthesiology?, and $1,000 for other small things. Maybe someone here can explain these numbers, because I can’t. This is more than annual average income for most countries in the world, and more than most people here in the US spend annually on most things.

  82. F. Fain commented on Jan 4

    I’m with Mo, above. This obsession with longevity without regard for quality of life is ridiculous. I’m 68 and I’m starting to fall apart. I damn well don’t want to live to be 86.

  83. sebs commented on Jan 4

    the explanation is that it is “silly money”. the hospital is not thinking of billing you. it is thinking of billing the insurance company. the insurance company already knows how much it is willing to pay for these services and will just wave the rest of the charges away, all of which has been previously agreed upon with the hospital.

    the sticking point comes when there is no insurance company. you have to pay the un-negotiated prices, which can easily be 2x to 10x the “real” prices the insurance company would pay. in a way, it is almost as if they expect you not to pay. of course if you are a middle class person who can be intimidated by collection agencies, then you might just pay and end up in deep financial trouble. the hospital really seems to not care about that.

    i have spoken to many people about this and have yet to figure out exactly what the rationale is for the exorbitant un-negotiated prices. one explanation is that they want to build up their losses somehow. if you ever look at hospital finances, they are always losing money. this may serve to make the case. the other is that they bill you for not just yourself, but for all the other uninsured people who did not pay their bill. so if they get a sucker who actually pays the bill, that person is paying for 3 or 4 uninsured patients. the last explanation is that they are just crooks, but that is not very kind.

  84. Mike G. commented on Jan 4


    Very good link! I’ll have to poke around that site some more!

  85. Ironman commented on Jan 4

    Mike G:

    Thanks for your comment! For what it’s worth, we have plans to revisit the topic of health care sometime later this year, although I can’t say when. With the exception of Fridays (and occasionally Saturdays) when we review the best blog posts from various business and money-related blog carnivals, there’s no set schedule we follow. What you see on the days we post is simply what we have ready to go!…

  86. e_b_a_l commented on Jan 4

    Thanks sebs, it makes a lot of sense.

  87. Grodge commented on Jan 4


    Sebs is pretty much correct. Fees are set arbitrarily with the thought that some individual may actually pony up the full amount, but nobody ever does. There was a time when a few insurance carriers paid 80% of the fee, no matter what is was; those days are gone and all fee schedules are negotiated up front.

    The mark-up is 1.5X to 2.5X the usual negotiated fee or the Medicare fee, and hosptials and doctors will almost always negotiate their fees down with you based on your ability to pay. Sebs is a bit too cynical in his surmise, but that is understandable with so much negativity out there.

    My advice is to talk to the hospital billing department and see if you qualify for emergency Medicaid or other assistance. If not, then negotiate the fees down. Same goes for the doctor– he/she will be understanding especially if they are in private practice; the last thing they want is nothing for their effort.

    The last thing– what the heck are you doing without insurance while your wife is pregnant?! Almost every state has very lenient needs requirements for Medicaid benefits for pregnant women– in other words, they raise the income thresholds for pregnancy care.

    Good luck, my friend. The last thing you need is such a hassle when your pregnant wife is having a problem.

    (My feeling is that everyone should be required to have insurance at all times– either state subsidized or not; single payer or single-payment or whatever works. But the current hodgepodge only works for insurance companies who can cherry pick the healthiest and wealthiest customers.)

    Best wishes to you.

  88. Whammer commented on Jan 4

    Ironman, very interesting. Remarkable that we have so many violent deaths as a % of our population that it can have such an impact on the numbers.

    And, of course, you are correct regarding basic sanitation and how that impacts overall life expectancy through infant mortality rates. I don’t have the numbers at hand at all, but it would be interesting to see the change in average life expectancy from age 20 (say) in the US since 1900 or so. Correcting for wars, while we’re at it…..

  89. softwarenerd commented on Jan 4

    To be visually meaningful, the LHS scale should start at ZERO rather than 74.

  90. freejack commented on Jan 4

    On your numbers for health care expenditures and per-capita GDP, are the 40 million without health insurance included in the ‘per-capital” part?

  91. e_b_a_l commented on Jan 4

    Thanks, Grodge.

    She can’t have insurance. We have no problem to pay for the services and we usually do. However in this particular case the fee is simply ridiculous so the hospital will have to eat it.

  92. Mike G. commented on Jan 4

    On your numbers for health care expenditures and per-capita GDP, are the 40 million without health insurance included in the ‘per-capital” part?

    Posted by: freejack | Jan 4, 2008 4:06:35 PM

    I would hope not, because that 40M number is a total canard. That is, I believe, the # of people who are without insurance for any part of a year (a day, a week, a month, no matter). It also includes a substantial # of young healthy people who choose not to have insurance (hey, I wouldn’t do it, but some do). The # I hear most often is that there are probably 16M people who have no insurance for extended periods that are not by choice. A large part of these are probably illegal aliens and while they don’t have insurance, they DO have healthcare.

  93. Grodge commented on Jan 5

    Mike G:

    I know this thread is quickly becoming ancient, but I have to comment on your entry.

    At any given time 40 million people do not have health insurance, which means that 40 million are not paying premiums; yet they are still vulnerable to getting sick. It may not be the same 40 million throughout the year, but the fact remains that a significant number of potential patients do not have insurance at any given time.

    As you said, they get health care if its needed– they just don’t pay for it. Going without insurance should not be an option– especially for the young and healthy.

    This is a problem. Those with insurance are paying more to make up for the costs for those without insurance who will still get sick and need care. If doctors and hospitals cannot choose to withhold care without payment, then I conclude that everyone should have the ability to pay at all times.

  94. Mike G. commented on Jan 6


    That is not my understanding. My understanding is that the “40M” is 40M for the year total of all people who were uninsured for any period during the year. I have no direct knowledge of the derivation of the number. Just repeating what I’ve heard (and the fact is brought up in such articles because it is part of the deception of the “40M” number).

  95. freejack commented on Jan 6

    “That is not my understanding”
    Too bad. Reality is not gonna change just for you.
    “Although nearly 47 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens”

    “Researchers found that 68 percent of the undocumented immigrant adults they studied had no health insurance. This compared with 17 percent of the native-born Americans, 23 percent of immigrants who had become citizens, and 38 percent of immigrants who are permanent legal residents.”
    U.S. Population in 2005 was about 280,000,000. Do the math.
    If he has included the whole US population Ironman’s per capita costs are artificially low (and no E.R., visits are not health coverage anymore than a visit from the Fire department is fire insurance)

  96. msm2 commented on Feb 5

    This chart is 8 years old – year 2000 Data

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