By Cliff Montgomery – Jan. 7th, 2010
The most current falsehood floating around the U.S. health care debate appears to be the oldest typical neo-conservative sophism against change.
It is the lie that real health care reform–which can only mean a strong, robust public option–would cost the average American far more in taxes than what he or she now pays for medical care in this country.
The American Spark revealed the truth back in September. That’s when we uncovered a fascinating cost comparison of 30 democracies performed by the Congressional Research Service (CRS) in 2007.
The United States is the only wealthy country–and hence just about the only nation considered in the 2007 study–that does not insure all of its citizens through a government-run health care system.
The results of that difference are profound.
“The United States spends more money on health care than any other country in the Organization for Economic Cooperation and Development (OECD). The OECD consists of 30 democracies, most of which are considered the most economically advanced countries in the world,” stated the CRS study.
“According to OECD data, the United States spent $6,102 per capita on health care in 2004 — more than double the OECD average and 19.9% more than Luxembourg, the second-highest spending country. In 2004, 15.3% of the U.S. economy was devoted to health care, compared with 8.9% in the average OECD country and 11.6% in second-placed Switzerland,” added the report.
“In terms of price, the OECD has stated that ‘there is no doubt that U.S. prices for medical care commodities and services are significantly higher than in other countries and serve as a key determinant of higher overall spending.’
And as the 2007 study boldly pointed out, private insurance companies often appear to be part of the problem rather than the solution to spiraling costs. Americans currently spend far more for their health insurance than do citizens of most other democracies.
“Spending on health administration and insurance cost $465 per person in the United States in 2004, which was seven times that of the OECD median,” stated the study.
But in spite of all that spending, “among OECD countries in 2004, the United States had shorter-than-average life expectancy and higher-than-average mortality rates.”
So why are Americans’ health care costs currently so much higher than those of citizens in other wealthy democracies? And why do those other democracies enjoy a comparable or, at times, even superior service?
A new CRS report, released in November 2009, does not directly answer that question. However, it does shed light on the role played by U.S. private health insurance companies in generating many of those out-of-control costs.
“The health insurance market has many features that can hinder markets, lead to concentrated markets, and produce inefficient outcomes,” flatly states the Nov. 2009 report.
“Evidence suggests that health insurance markets are highly concentrated in many local areas. Many large firms that offer health insurance benefits to their employees have self-insured, which may put some competitive pressure on insurers, although this is unlikely to improve market conditions for other consumers.
“The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output—high premiums and limited access to health insurance—combined with high profits,” declares the November report.
