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Friday, July 15, 2011

US health care bang-for-buck declining over time and relative to other rich countries

Lane Kenworthy has a great post (http://lanekenworthy.net/2011/07/10/americas-inefficient-health-care-system-another-look/, h/t Matthew Yglesias) comparing health care spending and life expectancy. He goes beyond a simple scattergram of rich countries on the two variables to look at what has happened over time in 20 OECD member states. It plots how each country's health care spending per capita and life expectancy have increased over time.




Notice how divergent the U.S. curve is. Not only does it have lower life expectancy than the other 19 countries graphed, it is gaining less in life expectancy for each dollar per capita of increased health care spending. As Kenworthy notes, this is especially true "after the early 1980s when we reached expenditures of about $2,500 per person (in 2005 dollars) and life expectancy of around 74-75 years." Since then, spending in the U.S. has more than doubled to over $6,000 (constant 2005 dollars), but we have only gained four years or so in life expectancy. Japan only spends about $2,500 per capita today, yet has achieved a life expectancy of about 83 years.

 Kenworthy points out that using changes rather than levels of life expectancy and spending lets us factor out some of the differences between countries, citing higher U.S. murder rates, obesity rates, and geographic dispersion. I'm not sure these are such big drivers of differences in life expectancy; one major factor is the difference in infant mortality rates. According to the CIA World Factbook's 2011 estimates (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2091rank.html), the U.S. has an infant mortality rate of 6.06 per 1,000 live births; the other 19 countries are all below the U.S., with Sweden and Japan having rates of less than half that. Moreover, geographic dispersion does not seem to make much difference within the United States: Of the top 20 states for life expectancy (http://en.wikipedia.org/wiki/List_of_U.S._states_by_life_expectancy), nine of them are also among the 20 least densely populated states (http://en.wikipedia.org/wiki/List_of_U.S._states_by_population_density), suggesting that if there is a correlation, it is likely to be small.

That said, Kenworthy's chart gives us a striking illustration of the inefficiency of the U.S. health system and how its relative efficiency has declined over time.

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