US Ranked #54 in Health Care Efficiency – Should We Be Surprised?

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Bloomberg came out with a report last week showing how poorly America stands on the health care front. In These Are the Economies With the Most (and Least) Efficient Health Care the US ranked #54 in health care efficiency.

I think they’re on to something.

That’s a very different way of measuring health care, and one we can all get behind. The US has an excellent healthcare system in some ways. But affordability and widely diverse levels of care make the point of inefficiency obvious.

US Ranked #54 in Health Care Efficiency – Should We Be Surprised?
US Ranked #54 in Health Care Efficiency – Should We Be Surprised?

Now I must confess, I’m not exactly partial to these kinds of international surveys because I think they intentionally try to make the US look bad. But this one is prepared by Bloomberg itself, and not by some agency of the UN or some other international board bent on painting us ugly. It’s one we need to take seriously.

Why Health Care Efficiency May Be the Most Important Measure of the System

American health care undoubtedly turns out many of the greatest advances in medical science the world has ever known. The critically ill from all over the world come to this country for the most advanced treatment. If medical innovation were the sole deciding factor, the US would be the world’s health care heavyweight champ.

But health care efficiency measures something much more fundamental, and that’s bang for the buck. I think most of us realize that’s where American healthcare falls apart.

The Bloomberg analysis measured the health efficiency index of countries with lifespans of at least 70 years, per capita GDP of at least $5,000, and a minimum population of 5 million people. The analysis develops an efficiency score based on a combination of life expectancy, and both relative cost percentage and absolute cost in dollars for health care in each country.

The study is based on information reported in 2015, which isn’t entirely up to date, but it’s close enough. And it measures the US health care system in the second full year of Obamacare.

What I like about this analysis is that it squarely measures what we’re getting for what we’re paying. And the results aren’t good.

One of the complaints I’ve leveled against the US health care system in the past is that we have the patented American view that we can solve the nation’s ills by throwing more money at the problem. This isn’t working with health care. What we have instead is a chronically expensive system that’s long on promises and short on performance.

The Biggest Surprises in the Bloomberg Analysis

The biggest take away of the analysis is that the US ranked #54 in healthcare efficiency, despite spending considerably more money on a per capita basis. This is the bang-for-the buck issue. We’re simply not getting the return on our health care dollars that we assume.

According to the analysis, the US spends $9,536 per person on health care, second only to Switzerland at $9,818 (but ranks #12 in health care efficiency). A 2016 survey put US per capita health care spending at $10,348. It’s certainly higher still in 2018.

More important, US per capita health care spending is roughly twice that of other rich countries.

But despite all that extra spending, the average lifespan in the U.S. is just 78.7, ranking us just #26 in the world in life expectancy. That puts us behind Canada, Japan, South Korea, Australia, Taiwan, Israel, New Zealand, and most countries in Europe. It also puts us behind Lebanon (79.4), Costa Rica (79.6), and Chile (79.3).

Mistaken Assumption: We Can Have the Best Health Care in the World if We Spend the Most Money

Below is a screen shot of the 10 countries judged to have the most efficient health care systems from the Bloomberg analysis:

Keeping in mind the U.S. spends around $10,000 per capita for health care, notice that the top six countries – Hong Kong, Singapore, Spain, Italy, South Korea, and Israel – all spend less than $3,000 per person. That’s less than one-third what we spend for a health care system that ultimately provides us with shorter lifespans. Australia spends roughly half what we do, but provides longer lifespans.

This points to another issue I’ve been highly critical of in the past. Virtually all discussions on fixing US health care center on funding, and not cost reduction.

Given that we already pay more for health care than just about anyone else, funding is clearly not the answer. The fact that other countries can provide similar or better levels of care at half or less than the cost we’re paying makes it clear that funding is not the issue.

We’re already spending too much on health care, and that’s the core problem. Efficiency is important in all human endeavors. No matter what it is we want to do – or how noble it seems – we always have to measure the cost.

That’s what’s missing from all public debates on health care in the US. Obsessed with finding more funding, the cost spiral goes unquestioned.

Health care spending reached more than 18% of the US economy in 2016, and is probably a bit higher now. Will health care be “fixed” (what ever that implies) if we spend 20%? Or how about 25% – or even 30%?

The answer is clearly NO. But few in America seem to comprehend that how much we spend is increasingly irrelevant.

Why Health Care Efficiency Matters More than Technology and Brilliance

The basic problem is when technology and costs are high, the distribution of health care is constrained. To deal with rising costs, health insurance companies are not only raising premiums, but also increasing copayments, deductibles, and coinsurance provisions.

It’s not at all unusual for people to take health insurance plans with deductibles of $5,000 or more, or even $10,000.

While that kind of deductible makes the basic insurance premium more affordable, it essentially leaves the consumer with no coverage for most treatments. A person even might forgo treatment because he has to pay an out-of-pocket deductible of $3,000 for a single treatment. And in a country where 61% of the population can’t come up with $1,000 for an emergency expense, that’s no small problem.

And remember, the individual or family is already paying thousands of dollars each year for health insurance premiums. (Which not coincidentally, is a major reason why they can’t come up with $1,000.)

Ultimately, it doesn’t matter if you have what is technologically the best medical treatment in the world. If many or most citizens can’t afford it, it’s not efficient, and it isn’t working.

One sign of the stress is Medicaid. There are currently almost 74 million people enrolled in the program. That’s nearly one-third more than the 56.5 million who were enrolled just five years earlier. That currently takes in nearly a quarter of America’s population.

With both the overall cost of healthcare and Medicaid enrollment rising, we have definitive proof the entire system is beyond inefficient. We must even consider the possibility that the entire US health care system could somehow blow up.

It may not be a spontaneous implosion, but more likely a significant weakening of the general economy, that renders the entire health care system unaffordable.

What Can We Do About This on an Individual Level?

I’d love to say there’s some secret solution floating around out there waiting to be discovered. I somehow doubt it. I’m of the opinion that all we can do is muddle through until some sort of blessed metamorphosis takes place.

The entire U.S. health care system has become so bloated and convoluted that it’s unlikely anything can be done until it collapses into the dust. At that point, we’ll have an opportunity to rebuild with entirely new options. Ones that will be more closely correlated to basic need.

I’ve laid out some thoughts on this topic in What Will Replace Health Insurance After Obamacare Blows Up, but here’s the summary:

  • An expansion of Medicare and/or Medicaid.
  • A public/private hybrid – already in use in other countries, and here with Medicare/Medicare supplements.
  • Boutique health insurance for the wealthy, with a Medicaid equivalent for everyone else.
  • Private plans based on Christian health sharing ministries.
  • A return to the pre-Obamacare system.

And while it’s touched on in the article, I personally believe universal health care won’t work in the US for a number of compelling reasons.

In the meantime, the evidence is mounting that our health care system is close to its terminal stages. We can continue pretending that we can go along as we always have. But with the U.S. ranking #54 in health care efficiency, it’s clear the day of reckoning is fast approaching.

In a country that prides itself on being #1 in everything, being #54 in a category as important as health care should have us all shaking in our boots, and seriously investigating potential alternatives.

How do you think this will all play out?

( Photo by Fortius Clinic )

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10 Responses to US Ranked #54 in Health Care Efficiency – Should We Be Surprised?

  1. Thanks for the well written article AGAIN!. I am not sure that ranking the efficiency by comparing life expectancy is an accurate way to compare. The US is one of the fattest nations on the planet and Americans work some of the longest hours and takes the least amount of vacation time. All 3 of these have proven to reduce life expectancy.

    There is no doubt that our system is in a complete melt down, especially over the last 10 years, when what was enacted was not a healthcare plan but a complete method and means to have the government control the entire health care system. We over medicate, give unnecessary procedures and labs just to prevent a law suite and never gave the patients a way to “shop around” for a better deal. Just try to call up your doctor and ask how much something cost, I have, and you can’t. Both my wife and I are retired pharmacist and have elderly parents and see the waste that the system has, all in the name of “covering ones ass”. Also I have two perfect examples of waste, first my son is away at college and is a collegiate athlete, he got an ingrown toe nail and since his feet are so important to his athletic pursuit we wanted him to see a specialist to remove the nail, it took 4 appointments to get the nail removed. FOUR appointments! I was pissed. Of course in the Obamacare world we paid out of pocket for each and everyone. Boy I miss the good old days of co-pays. The second is my father in law, he has kidney failure and has been on dialysis for over 7 years and is probably in his last year on this great planet, yet they still do cataract surgery on him and are talking about a knee replacement and he is in the doctors office twice a month for non kidney related issues. I am not in favor of “death squads” but when someone can barely walk and is obviously on his/her last leg, we need to as a society realize that enough is enough. I have a 3rd. As a pharmacist I worked on long term care, we pumped countless drugs down these poor people, there were people getting 6-10 drugs everyday and when you went to the nursing homes over half the people did not even know you were there, and could barely swallow the pills they were being forced to take. Thanks

  2. Hi Rick – I agree with you that not all the longevity factors relate to medical care. Economics and personal behavior have a much greater effect on longevity than health care. But that’s really the point. Why are we spending so much on health care that’s completely unnecessary? It’s turned into a profit generating mill, and that’s all that matters. I even think the CYA argument doesn’t fully explain this. It’s really economics. If health care is 18% of the economy and growing, the industry naturally wants it to keep going. And government wants it to grow and thrive out of fear that a serious decline in health care spending will collapse the economy and cause tax revenues to crater.

    I also think we’re battling American optimism here too. People are prepared to spend unlimited amounts of (other people’s) money on health care, in the hope that we’ll live longer, and maybe even forever. We’re chasing our tails with that, but I think it figures massively in the equation. People will vote for politicians who support increasing funding. No one will vote for anyone who promises to cut costs.

    That’s why I’m convinced implosion will be the only outcome. There’s no real groundswell for the types of reforms that would save the current system. And increasing funding is just increasing the problem. I don’t see us engineering our way out of this. It’s like we’re facing check mate with every move. And when humanity refuses to make deliberate and needed change, it’s usually forced on us by reality.

  3. The US ranks much better in terms of Cause of Deaths. I believe the medical community is the THIRD leading cause of deaths in the US. A few years ago I sliced the tip of a finger in a kitchen mishap. Although I NEVER saw a physician at the ER the brief visit was $900. Imagine my surprise when I saw $450 of that charge was for a 30 second? interaction between the nurse and some doctor-at-a-desk. Around 1982 the charge for a few stitches by an actual doctor was $125. Adjusted for inflation that would be $300. Hmmmm. No doctor $900 in 2015 vs doctor service $300.

  4. I’ve gotten similar bills George. A bill for a doctor who was on staff when I was at the hospital, even though I didn’t see him. The whole system has become so complex that there’s no accountability, or even a sense that there needs to be a justification for charges. A hospital bill can be several pages long, written in some language other than English, leaving the patient stupified. What’s worse is that the insurance companies – who work for us, and should be looking out for our interests – approve all these add-on charges. But then, insurance company profits are based on a percentage of claims paid (I think it’s 20%), so it’s in their interest to not represent our interests, and simply approve the charge.

  5. Yes College and Health Care both taken over by the left both in disastrous over inflated circumstances. And which party would be the one to cut it??? Only the evil heartless doesn’t care for children or old people one. And when people do not have to pay, like you said Kevin, they are more than willing to spend other peoples money. President Trump should have let if implode in upon itself and not try to do anything, for all he did was give the left someone else to blame other than obama. T

  6. This sounds capricious on my part, but I’d like it to blow up when dems are in control. It’s they’re plan, let them get the blame. And I’m saying that even though I’m not a republican.

  7. But we are the best in the world at making medical industry executives, doctors, lawyers and drug company execs very wealthy. That seems to be the main focus and goal of so called medical care in the USA. In a nutshell, they will cure what ails you but will use the system to totally take every cent you have or ever will have to pay for it. Our current system is certainly number one in the world in that regard. Our insurance companies are the real “death panels” Sarah Palen should have been pointing at but did not. They have the gall to second guess your doctor’s decisions and deny treatment just to boost their profits. Blood is surely on the hands of those greedy and unnessary middle men.

  8. Hi Daniel – I agree with all you’ve written. But I think what happens is people don’t see the blood on their hands when they’re part of a large organization. It’s one thing to see the evil of a dictator, and depose him. But how do you depose a bloody system? That’s the dilemma we face, and I think it’s getting more obvious all the time, as this survey shows.

  9. I didn’t have a primary care physician until age 62 and that was for a general check-up and blood profile. Do not relish the prospect of an illness requiring extensive interaction with the medical community. However, I witnessed the “problem” when a parent had a stroke at 84. The ambulance driver inexplicably took the longest route to the hospital over RR tracks at 2am. Gate malfunction blocked the road. I had to signal him to get going and he followed the directive despite the fact ambulances are prohibited from ignoring gates that are down. I won’t address his lame reason for taking that route. Hospital staff never attempted to feed my parent. It was much simpler to insert an IV drip for hydration. Patients can survive with that method but cannot thrive, which lessens their chances of being admitted to skilled nursing facility for 20 day period. Nursing staff informed me, “we put out a granola bar but she didn’t touch it”. Despite a promise to respond to my lack of feeding concerns hospital administration never followed through. Parent began eating immediately after returning home but a second stroke proved too much to overcome. Upon being admitted to hospice her room was an intolerable 80 degrees. I diplomatically inspected empty rooms until finding one with acceptable temperature. It proved necessary to scrutinize every aspect of her treatment from the ambulance to hospice, seemingly confirming the abysmal ranking presented.

  10. So far I haven’t experienced care at such a low level. Though one time I did go to the ER about 10 years back and was forced to wait in the waiting room for 45 minutes, despite being the only patient in the ER. It turned out to be gastritis, but if it was something worse, I could have died without ever seeing a doctor. But I think these outcomes are inevitable. The hospitals are jammed and short-staffed, and the right decisions aren’t always being made. I may have an emergency situation, but there are 27 other emergencies they’re dealing with at the same time.

    I don’t expect miracles, but for the amount of money we’re collectively paying for health care you’d think service would be better. And the fact that no medical provider will supply an estimate of expenses in advance of a schedule procedure speaks volumes about how convoluted the whole system has become. It represents a lack of accountability to the patient/customer, which is symptomatic of of bureaucratic ineptitude.

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