America! We're No. 1! We're No. 1!
You might not be too proud of this award, though.
A new report from the OECD provides updated data on something we've known for a while: The U.S. spends way more on health care than any other developed nation -- 141% more than the OECD average.
Focus on the blue line. Most industrialized nations provide universal coverage for all citizens at a lower per-capita cost than the U.S. government spends covering its elderly (Medicare) and poor (Medicaid) alone.
If that isn't a sign of inefficiency, I'm not sure what is.
Our medical industry is the most innovative and advanced in the world. Companies like Pfizer (NYSE: PFE ) and Intuitive Surgical (Nasdaq: ISRG ) invent tremendous lifesaving breakthroughs. But technology is only relevant to those who can afford it. Far too many Americans can't even afford basic coverage, let alone the latest breakthrough. Just look at our health results compared with other nations. The U.S. ranks 50th worldwide in life expectancy, barely ahead of Bahrain and Libya. We're 47th worldwide in infant mortality, with a rate twice as high as France, Hong Kong, and Sweden. It's pathetic.
What's going on? And how do we fix it?
I'll ask for your help in a second. First, here are a few recommendations from various policy experts and research reports on how to put the brakes on our health-care costs.
Put the patient in control
Most of my life I had really good employer-provided health coverage. It paid for almost anything I wanted with few out-of-pocket costs. For the past four years, however, I've purchased an individual policy with a high deductible and co-insurance.
During which period do you think I hunted for bargains and questioned whether a treatment was really necessary? The latter. Of course. With more skin in the game I became a smarter, more informed health-care consumer rather than a blind health-care recipient.
We need more of this. One study finds that, "when patients actively shared in decisions about whether to have surgery, the rate of surgery fell 23% and satisfaction and outcomes both improved." Another shows that becoming aware of probable cost-benefit outcomes "reduced the preference for the more intensive treatment by 21% to 42%."
Tone down the heroism
"Three out of every 10 Medicare dollars are spent for people in their last year of life," said former Comptroller General David Walker last summer.
The cost of unnecessary heroisms is off the charts. It's also somewhat unique to America. Other nations seek to avoid the problem by limiting taxpayer-provided coverage for ailments with a high probability of becoming fatal. Private coverage and personal payments can take over once a limit is reached.
How this policy gets implemented is, admittedly, very tricky. It smells too much like "death panels" to many, even though private funds can still be used after taxpayer coverage tops out. Dr. Atul Gawande brings up another excellent point in his book Better: "Analysts often note how ridiculous it is that we spend more than a quarter of public health-care dollars on the last six months of life. Perhaps we could spare this fruitless spending -- if only we knew when people's last six months would be."
Make coverage mandatory
This is about as controversial as it gets, but there's merit to it.
A minimum amount of health coverage should be mandatory.
I know. People shouldn't be forced to buy something they don't want. I get it. But the uninsured get sick. They rack up hospital bills. It happens to everyone. Those without assets are often pushed into bankruptcy. What happens to their hospital bills then? Part is covered by a host of federal and state reimbursement programs, and part is passed on to people who have insurance. It's called cost shifting. Doctors and hospitals have to get paid one way or another. You might not want to be forced to buy insurance you don't want, but I don't want to be forced to carry your weight through higher premiums, taxes, and health-care costs.
Force Medicare to say "no"
As my colleague Seth Jayson put it, "It's not the death panel you need to fear, but the 'everything-if-that's-what-you-want' panel that already exists in government." He continued: "The solution is rationing. It has always been rationing. That's what the private insurers do already, and it's what any public insurer will have to do. Everyone can't have everything. It's that simple."
David Leonhardt of The New York Times has detailed Medicare's whatever-you-want culture better than anyone. Last fall, he profiled a $50,000 Medicare-covered prostate cancer treatment that has no evidence of being more effective than a less-complicated $10,000 treatment, among several other examples. "Genentech has not shown that its expensive vision-loss drug is better than a cheaper alternative," writes Leonhardt, "but taxpayers still pay the bill."
Emphasize prevention over treatment
In his book Getting Better, Charles Kenny notes that, "Worldwide, there are now as many people overweight as malnourished (1 billion)."
The cost of obesity in the U.S. is nearly $300 billion a year. That's outrageous for something mostly preventable. The cure for an untold number of ailments isn't a new drug or surgery. It's a banana and a brisk walk.
You take it from here
I want your opinion. How would you fix our health-care system? Or are you happy the way it is? Let loose in the comment section below.
Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.