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March 18, 2008

March 18, 2008



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Critics of the U.S. health care system fre-quently point to other countries as models forreform. They point out that many countriesspend far less on health care than the UnitedStates yet seem to enjoy better health outcomes.The United States should follow the lead of those countries, the critics say, and adopt a gov-ernment-run, national health care system.However, a closer look shows that nearly allhealth care systems worldwide are wrestling withproblems of rising costs and lack of access to care.There is no single international model for nation-al health care, of course. Countries vary dramati-cally in the degree of central control, regulation,and cost sharing they impose, and in the role of private insurance. Still, overall trends from nation-al health care systems around the world suggestthe following:
Health insurance does not mean universalaccess to health care. In practice, many coun-tries promise universal coverage but rationcare or have long waiting lists for treatment.
Rising health care costs are not a uniquely  American phenomenon. Although othercountries spend considerably less than theUnited States on health care, both as a per-centage of GDP and per capita, costs are ris-ing almost everywhere, leading to budgetdeficits, tax increases, and benefit reductions.
In countries weighted heavily toward gov-ernment control, people are most likely toface waiting lists, rationing, restrictions onphysician choice, and other obstacles to care.
Countries with more effective nationalhealth care systems are successful to thedegree that they incorporate market mech-anisms such as competition, cost sharing,market prices, and consumer choice, andeschew centralized government control. Although no country with a national healthcare system is contemplating abandoning uni- versal coverage, the broad and growing trend isto move away from centralized government con-trol and to introduce more market-oriented fea-tures.The answer then to America’s health careproblems lies not in heading down the road tonational health care but in learning from theexperiences of other countries, which demon-strate the failure of centralized command andcontrol and the benefits of increasing consumerincentives and choice.
The Grass Is Not Always Greener
 A Look at National Health Care Systems Around the World 
by Michael Tanner
 Michael Tanner is director of health and welfare studies at the Cato Institute and coauthor of 
Healthy Competition: What’s Holding Back Health Care and How to Free It
(second edition, 2007).
Executive Summary 
No. 613March 18, 2008
In his movie
, Michael Mooreexplores problems with the U.S. health caresystem and advocates the adoption of a gov-ernment-run, single-payer system.
Moorecompares the U.S. system unfavorably withthose of Canada, Great Britain, and France.Economist and
 New York Times
columnist PaulKrugman also thinks the health care systemsof France, Britain, and Canada are better thanthat of the United States.
Physicians for a National Health Program points out that theUnited States is the “only industrialized coun-try without national health care.”
These and other critics of the U.S. healthcare system note that countries with such sys-tems spend far less per capita on health carethan the United States does and, by some mea-sures, seem to have better health outcomes.These critics contend that by adopting a simi-lar system the United States could solve many of the problems that currently afflict its healthcare system. As Krugman says, “The obviousway to make the U.S. health care system moreefficient is to make it more like the systems of other advanced countries.”
There is no doubt that the United Statesspends far more on health care than any other country, whether measured as a per-centage of gross domestic product (GDP) orby expenditure per capita. As Figure 1 shows,the United States now spends close to 16 per-cent of GDP on health care, nearly 6.1 per-cent more than the average for other indus-trialized countries.
Overall health care costsare rising faster than GDP growth and now total more than $1.8 trillion, more than Americans spend on housing, food, nationaldefense, or automobiles.
Health care spending is not necessarily bad.To a large degree, America spends money onhealth care because it is a wealthy nation andchooses to do so. Economists consider healthcare a “normal good,” meaning that spending
To a large degree,America spendsmoney on healthcare because it is awealthy nationand chooses todo so.
0 2 4 6 8 10 12 14 16JapanSpainNetherlandsNorwayCanadaFranceUnited States
Figure 1Total Expenditure on Health Care as a Percentage of GDP
Source: Organisation for Economic Co-operation and Development, “OECD Health Data 2007: Statistics and Indicators for 30 Countries,” (Paris: OECD, July 2007); 2004 data.
is positively correlated with income. Asincomes rise, people want more of that good.Because we are a wealthy nation, we can anddo demand more health care.
But because of the way health care costsare distributed, they have become an increas-ing burden on consumers and businessesalike. On average, health insurance now costs$4,479 for an individual and $12,106 for a family per year. Health insurance premiumsrose by a little more than 6 percent in 2007,faster on average than wages.
Moreover, government health care pro-grams, particularly Medicare and Medicaid, arepiling up enormous burdens of debt for futuregenerations. Medicare’s unfunded liabilitiesnow top $50 trillion. Unchecked, Medicaidspending will increase fourfold as a percentageof federal outlays over the next century.
 At the same time, too many Americansremain uninsured. Although the number of uninsured Americans is often exaggerated by critics of the system, approximately 47 million Americans are without health insurance at any given time.
Many are already eligible for gov-ernment programs; many are young andhealthy; many are uninsured for only a shorttime.
 Yet there is no denying that a lack of insurance can pose a hardship for many  Americans.
Finally, although the U.S. health care systemcan provide the world’s highest quality of care,that quality is often uneven. The Institute of Medicine estimates that some 44,000–90,000annual deaths are due to medical errors,
whilea study in
The New England Journal of Medicine
suggests that only a little more than half of  American hospital patients receive the clinicalstandard of care.
Similarly, a RAND Corpora-tion study found serious gaps in the quality of care received by American children.
Many critics of U.S. health care suggest thatthe answers to these problems lie in a single-payer, national health care system.
Undersuch a system, health care would be financedthrough taxes rather than consumer paymentsor private insurance. Direct charges to patientswould be prohibited or severely restricted.Private insurance, if allowed at all, would belimited to a few supplemental services not cov-ered by the government plan. The governmentwould control costs by setting an overallnational health care budget and reimburse-ment levels.However, a closer look at countries withnational health care systems shows that thosecountries have serious problems of their own,including rising costs, rationing of care, lack of access to modern medical technology, andpoor health outcomes. Countries whosenational health systems avoid the worst of these problems are successful precisely becausethey incorporate market mechanisms andreject centralized government control. In otherwords, socialized medicine works—as long as itisn’t socialized medicine.
Measuring the Quality of Health Care acrossCountries
Numerous studies have attempted tocompare the quality of health care systems.In most of these surveys, the United Statesfares poorly, finishing well behind otherindustrialized countries. This has led criticsof the U.S. health care system to suggest that Americans pay more for health care butreceive less.There are several reasons to be skeptical of these rankings. First, many choose areas of comparison based on the results they wish toachieve, or according to the values of the com-parer. For example,
cites a 2000 WorldHealth Organization study that ranks the U.S.health care system 37th in the world, “slightly better than Slovenia.”
(See Table 1.)This study bases its conclusions on suchhighly subjective measures as “fairness” andcriteria that are not strictly related to a coun-try’s health care system, such as “tobacco con-trol.” For example, the WHO report penalizesthe United States for not having a sufficiently progressive tax system, not providing all citi-zens with health insurance, and having a gen-eral paucity of social welfare programs. Indeed,much of the poor performance of the United
A closer look atcountries withnational healthcare systemsshows that thosecountries haveserious problemsof their own.

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