Statistical Consultants Ltd

Healthcare Spending as % GDP

The graph shows USA to have much higher healthcare spending (as a percentage of GDP) compared to all other OECD countries (at least in 2006).  This is despite many Americans being unable to afford health insurance.

Unlike most developed countries, USA has taken largely a free market approach to healthcare over the years.  The US does have some government intervention, such as Medicare and Medicaid, but government intervention is very small when compared to most other developed countries.  Most developed countries use tax payer money to make healthcare affordable for everyone.  Some governments spend huge amounts on healthcare, resulting in completely public systems.  Most developed countries have mixed systems, where there are both private and public healthcare providers. 

Opponents of state funded healthcare often assert that a purely private system is more efficient.  In reality, a purely private system is not only inequitable, but also inefficient due to monopolistic outcomes.  When looking purely at cost effectiveness, mixed systems are the most efficient.  The publicly funded hospitals (or state run insurance companies) would reduce the demand for private hospital care (or private insurance), which would ultimately reduce the cost of healthcare.  This effect is so significant that Americans have travelled to countries with mixed healthcare systems to have surgery done at private hospitals.  Despite the high travel expenses, some have saved thousands of dollars. 

In addition to hospital care, there is also the cost of primary healthcare and pharmaceuticals.  Many developed countries have agencies that bulk buy pharmaceuticals.  The monopsonistic (few buyers, many sellers) effect these government agencies have, reduces the overall cost for pharmaceuticals.  Again, this is a situation where a completely private system is far less efficient than one with government intervention.

Some opponents of universal healthcare in the US (including Sarah Palin), have said that universal healthcare would mean ‘death panels’ would decide who lives or dies.  This is simply untrue.  In a typical mixed system, there are such things as hospital waiting lists, but that is only for non-emergency care.  Those needing emergency care, skip the waiting lists and are treated immediately.

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