If you have heard it once, you have heard it hundreds of times. “The United States spends too much on health care.” This is not a partisan point. You can hear this from Republicans as well as Democrats. “We know that our families, our economy and our nation itself will not succeed in the 21st century if we continue to be held down by the weight of rapidly rising health care costs,” President Obama said in 2009. Representative Paul D. Ryan, Republican of Wisconsin, agrees: “There is no serious dispute — on either side of the aisle.”
Unfortunately, few people really understand how much we spend on health care, how much we need to spend to provide quality care, and the difference between the two. Do we spend too much? Would cutting costs require rationing, or worse, death panels?
Let’s begin with the costs. In 2010, the United States spent $2.6 trillion on health care, over $8,000 per American. This is such an enormous amount of money, it’s difficult to grasp.
Consider this: If we stacked single dollar bills on top of one another, $2.6 trillion would reach more than 170,000 miles — nearly three-quarters of the way to the moon. Or, compare our spending to that of other countries. France has the fifth largest economy in the world, with a gross domestic product of nearly $2.6 trillion. The United States spends on health care alone what the 65 million people of France spend on everything: education, defense, the environment, scientific research, vacations, food, housing, cars, clothes and health care. In other words, our health care spending is the fifth largest economy in the world.
Our health care spending is the fifth largest economy in the world.
Or compare it to the second largest economy in the world, China. China’s G.D.P. is $5.9 trillion (compared to America’s $14.6 trillion). So the United States, with a population a quarter of the size of China’s, spends just on health care slightly less than half of what China spends on everything.
It is not just how much the United States spends on health care that is important, it is also how fast that amount is growing. For more than 30 years, health care costs have been growing 2 percent faster than the overall economy. That means every year we spend ever more on health care and therefore have to spend less on other things — or borrow money to pay for the extra health care.
If we continue at this rate of growth, health care will be roughly one-third of the entire economy by 2035 — one of every three dollars will go to health care — and nearly half by 2080.
This level of spending on health care is high, but is it worth it? Does it make us healthier?
The fact is that when it comes to health care, the United States is on another planet. The United States spends around 35 percent more per person than the next highest-spending countries, Switzerland and Norway.
The New York Times Source: Organization for Economic Cooperation and DevelopmentSome economists say this comparison is inaccurate because it does not correct for the facts that brand name drugs cost more, and doctors and nurses earn more, in the United States than they do in other countries. But even correcting for these differences in prices, the United States still spends 15 percent more than the next highest-spending country — and about a quarter more than countries with some of the best health care systems in the world, like Germany and France.
What this means is that there is so much money in the American health care system, we can control spending without having to ration care. No one seriously claims that France or Germany ration care. We could get down to their level of spending without forcing Americans to wait in lines for heart surgery or cataract removal.
This level of spending on health care is high, but is it worth it? Does it make us healthier?
The truth is, the United States is not getting 20 or 30 percent better health care or results than other countries. While there are peaks of greatness, especially at some of America’s leading academic health centers and in integrated health care plans, the quality is uneven. And quality is a problem that affects all of us, rich and poor. Almost no matter how we measure it — whether by life expectancy or by survival for specific diseases like asthma, heart disease or some cancers; by the rate of medical errors; or simply by satisfaction with health services — the United States is actually doing worse than a number of countries, like France and Germany, that spend considerably less.
Even if you do not like comparing the United States with Europe, it is widely acknowledged that within the United States there is no clear link between higher spending on health care and longer life, less disability or better quality of life. A 2003 study published in Annals of Internal Medicine found that Medicare patients who lived in areas with higher health care spending did not get better results. In some cases, more spending even appears to equal poorer health. A 2004 study in Health Affairs found that there was actually worse care in states with higher Medicare spending.
The $2.6 trillion the United States is spending on health care is too much, and we can reduce it without rationing or sacrificing quality.
This article has been updated to include a chart. The figure in the article comparing health care spending in different countries has been adjusted to reflect the 2009 numbers in the chart.
This is the first in a series of articles by Ezekiel J. Emanuel on the cost of health care. Next week he will examine a number of common money-saving proposals, and explain why they won’t really help.
A version of this column will appear in print on Sunday, October 30, 2011.
