11/24/11

OECD data reveals shortcomings of privatized US health care

Here's the Organization for Economic Cooperation and Development's (OECD's) latest report on U.S. health care funding.
The United States spent 17.4% of GDP on health in 2009, much more than the OECD average of 9.6%.
Details: Spending per person is two-and-a-half times higher than the OECD average. Total health spending accounted for 17.4% of GDP in the United States in 2009, by far the highest share in the OECD. Following the United States were the Netherlands, France and Germany, which allocated respectively 12.0%, 11.8% and 11.6% of their GDP to health. The OECD average was 9.6%.  
The United States also ranks far ahead of other OECD countries in health spending per capita, with spending of 7,960 USD in 2009, two-and-a-half times greater than the OECD average of 3,233 USD (adjusted for purchasing power parity).
With less than half of health care funded by the public sector in the USA (compared to 72% for the 34 developed countries in the OECD) and with for-profit corporations playing a large role in U.S. health care, the US is the leading model of  privatization.  If 'leading' is the right word.

The OECD has a special report on high US health care spending.  It notes:
  • Hospital spending is higher than in five other OECD countries which spend a lot on health care (Germany, Switzerland, France, Japan, and Canada).
  • Spending on Ambulatory care providers – that is, physicians and specialists as well as dentists -- is much higher than in the other high spending OECD countries
  •  Spending on Pharmaceuticals and medical goods is higher in the US than in any other country.
  •  Spending on Public Health and Administration is particularly high – more than two-and-a-half times the average. Administration of the US health system alone accounts for about 7% share of total spending. In comparison, Canada and Japan devote around 4% of health spending on administration. (The high US administrative costs are driven, no doubt, by its inefficient, multi-payer, privatized insurance system.)
Prices in the privatized US system are high:  "the evidence suggests that prices for health services and goods are substantially higher in the United States than elsewhere."

Mark Pearson, the head of the OECD Health Division told Reuters that one reason prices are higher in the United States is that the healthcare system lacks what other countries have: an effective government mechanism that acts to keep prices down. "That's simply not there in the U.S. system. So it's a structural defect," he said.

Kaiser asks: "So what are Americans getting for their money? The U.S. has the best five-year survival rate for breast cancer and comes in second, behind Japan, in terms of colorectal cancer survival.  But the U.S. ranks 27th in life expectancy at birth, 31st in premature mortality, and 25th in the rate of cardiovascular mortality. The U.S. has the second worst rate of adult diabetes, behind Mexico, and has the highest rate of adult obesity, at 34 percent."



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