Our health-care system is like Coca Cola

October 24, 2013
441px-World-of-coca-cola

Here’s David Cay Johnston, interviewed by Joshua Holland (link from Joseph Delaney), in response to a question about “why we have a very low tax burden overall, relative to other wealthy countries, but a lot of Americans feel that they’re being taxed to death?”:

Well, one of the reasons some Americans feel they’re being taxed to death is that if you add up our taxes, which are low compared to other modern countries, and then you add in private expenditures for things the tax system pays for in other countries — a lot of our health care costs, higher education costs, admissions and fees and tickets and licenses for a lot of things — lo and behold, we end up being a relatively high-tax country. But it depends on how you analyze the data.

And let me give you one killer figure: We spend so much money on our health care in this country — or as I prefer to think of it, sick care in this country — that for every dollar that the other 33 modern economies spend for universal coverage, we spend $2.64. And this is done using something called “purchasing parity dollars,” so they’re truly comparable. So we spend $2.64 per person and still have almost 50 million people with no coverage and 30 million with limited coverage, and these other countries spend far less with universal coverage.

This, of course, is not new, and in fact is well enough known that Greg Mankiw went to the trouble to call it “schlocky” to compare life expectancies between countries.

But what interests me (and Delaney) here is the difficulty of putting a line between public and private spending. I’m reminded of the article from Spy magazine some decades ago, where they likened the endorsement deals paid by Coca-Cola etc. to the tax that Britons pay to support the queen.

(Above image: World of Coca-Cola, Las Vegas, Nev. Photograph taken by Michael Reeve,  March 24, 2003. Original picture by English Wikipedia user MykReeve.)

The image I really wanted to use, which I found via a Google search on *”spy magazine” “michael jordan” queen tax*, is subtitled, “Opening spread for a story comparing celebrity spokespersons to England’s royal family, who benefit from a tax on all goods sold in Great Britain. These celebrities’ enormous fees are paid for by consumers via inflated prices for the products they pitch. In essence, it’s a ‘Fabulousness-Added Tax’ (F.A.T.) The top celeb spokespersons were portrayed as monarchy in paintings fashioned after royal portraiture. Candice Bergen and Michael Jordan were crowned King and Queen.”

Andrew Gelman is a professor of statistics and political science at Columbia University. His books include Bayesian Data Analysis; Teaching Statistics: A Bag of Tricks; and Red State, Blue State, Rich State, Poor State: Why Americans Vote the Way They Do.
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Nolan McCarty · October 24, 2013