Two charts that should be in every health-care discussion

January 25, 2013

"This is the chart that I think ought to dominate the conversation about public-sector health-care spending in the United States," writes Matt Yglesias, "and yet it is curiously ignored."

"The data show government health-care spending per capita in the United States and Canada. The United States spends more. And that's not more per person who gets government health insurance, it's more per resident. And yet Canada covers all its citizens, and we don't. That should be considered shocking stuff, and yet I rarely hear it mentioned."

It should be considered shocking stuff. But I actually don't think that's the chart that should dominate the discussion over government health-care spending. This is:

We spend more on government-provided health care than they do in Canada, France, Germany, Israel, Italy, Japan, Sweden or the United Kingdom. And all those countries have government-based systems that cover everybody. We don't.

What this graph is missing, though, is how much more our private-sector health care costs us. So here's that chart:

And this is, if anything, an understatement, as it doesn't count the large tax subsidies we sink into the private health-care system.

The American health-care system is simply uniquely inefficient. Typically, it's liberals railing at this fact, but the result is, to a degree that's almost universally unappreciated, a disaster for conservatives. The U.S government spends more than any other government on health care and is thus much larger than it might otherwise be. That spending also increases our deficits and requires higher taxes. So we're getting the downsides of government-run health care without the upsides of universal coverage, lower cost  and clear lines of accountability.

Obamacare will mostly fix the universal coverage problem, but it won't fix the cost problem. The reason other countries spend less is that their governments set the prices, and they set them low. The reason we spend so much more is largely because our prices are higher, and by leaving private insurers and medical providers in charge of deciding prices, we're not doing anything about that in Obamacare.

The argument you'd get for leaving prices in the hands of the private sector is that you get a much better product with much more innovation, much of it cost-saving. That's clearly not happening in American health care, as America's care is not, in general, measurably better than that of other nations. The more sophisticated argument you hear for why we need to spend so much more on health care is that by spending more, we're subsidizing the medical innovation that makes other countries' systems so good. That's a more interesting (though unproven) argument, but I doubt that Americans would be happy to hear that the reason our health care costs so much, and needs to continue costing so much, is that we have a duty to subsidize the French.

Related: The hard truth about health care: Government works.

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Zachary A. Goldfarb | January 25, 2013