U.S. Health Care Compares Badly to Others

In his address to Congress last week, President Obama decried the failures of the American health care system, and pointed out how poorly it fares in comparison to other wealthy countries. Millions of people in this country do not have health insurance and can’t afford necessary medical care. Tens of thousands die each year from lack of such access. We are “the only wealthy nation that allows such hardship for millions of its people,” observed the President.

The sorry and disgraceful state of the American system of health care is documented in The End of the American Century (pp. 48-53), and was also the subject of a post I made on this blog a year ago (US Ranks Low on Health Care). Since then, there is a mounting pile of evidence documenting how badly America fares in health care, on multiple dimensions. This is true both in terms of general overall statistics, like infant mortality, maternal mortality, and average lifespan (reported by organizations like the World Health Organization and the United Nations), but also in more specialized areas, like survival rates for disease, patient access to physicians, and public satisfaction with health care in different countries.

The highly regarded Commonwealth Fund, for example, conducts periodic studies of such issues, comparing the United States to other wealthy countries. One such study on patient access to primary-care physicians found that Americans wait longer to see their doctors than patients in Britain, Germany, Australia, or New Zealand, Holland or France—all countries with strong public-health systems. Almost a quarter of Americans reported waiting six days or more for an appointment, compared to just 14% in the UK and 18% in France, for example.

Another study on “preventable deaths” found the U.S. ranking dead last of the 19 countries in the study. These are deaths that could have been prevented with timely and effective health care--which of course is often unavailable to millions of American citizens. The U.S. ranking on this scale actually declined from 1997 to 2003, from 15th place to 19th place. Number one in the ranking? France.

Yet another study compared five-year survival rates for various diseases in the U.S. Canada, Australia, New Zealand, and England—all of whom spend far less on health care than the U.S. Of the five diseases, on only one of them (breast cancer) did the U.S. have the best five-year survival rates.

The veteran journalist T.R. Reid has just published a new book, The Healing of America, in which he compares health care systems around the world. In a summary of the book in Newsweek ("No Country for Sick Men"), Reid observes that in health care:

“The United States is the odd man out among the world’s advanced, free-market democracies. All the other industrialized democracies guarantee health care for everybody—young or old, sick or well, rich or poor, native or immigrant. The U.S.A., the world’s richest and most powerful nation, is the only advanced country that has never made a commitment to provide medical care to everyone who needs it.”

Consequently, according to Reid,

“about 22,000 of our fellow Americans die each year of treatable diseases because they lack insurance and can’t afford a doctor.”

Many Americans express concern about the “rationing” of health care in a government-supported system. But has Reid observes, the U.S. already rations health care. It is “rationing care by wealth.” While this may seem natural to Americans, he says, “to the rest of the developed world, it looks immoral.”

The immorality of this is particularly callous in its effects on children. A study from the National Center for Health Statistics reports that poor children are 3.6 times more likely to have poor health than children from affluent families. As I point out in my book, “The United States is the only developed country in the world where children suffer poor health and die simply because their parents are poor or unemployed.” (p. 52).

One also hears concern in the current debates about the potential costs of a system of universal health care—legitimate concerns in the face of unprecedented government deficits and debt. But the U.S. already has the most expensive health care system in the world, no matter how you measure it. As a share of GDP (2006), health care constituted over 15% in the U.S., compared to 11% in France, 10% in Canada and 8% in England—all of them with universal coverage for their citizens (OECD). On a per-capita basis, the U.S. also outspends every other country in the world, by a long shot.

Many Americans assume that the largely private medical care in the U.S. is more efficient, less bureaucratic and less costly than the government-run programs in other countries. In fact, administrative costs in the U.S. are higher in for-profit hospitals than in public ones, and overall administrative costs are higher in the U.S. than in countries with government-run programs. Compared to other countries, the U.S. also comes up high on administrative costs in health care. A 2003 study in the New England Journal of Medicine estimates that administrative costs absorbed 31 cents of every health care dollar in the U.S. compared to only 17 cents in Canada, which has a universal health insurance plan paid for by the government.

By all of these statistical measures, the U.S. health care system looks bad. But what it really comes down to is not statistical comparisons but fairness, compassion and justice. And the outcome of health care reform will depend as much on these American values more than anything else. President Obama himself recognized this in his address to Congress, where he appealed to the “large-heartedness” in the American character—“that concern and regard for the plight of others.”

“It, too, is part of the American character -- our ability to stand in other people's shoes; a recognition that we are all in this together, and when fortune turns against one of us, others are there to lend a helping hand; a belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise.”

Much of the opposition to health care reform has come from people who are worried about how the changes will affect themselves and their families. Perhaps this self-interest is normal, and part of human nature. But our fate and health as a country is as much dependent on the health and safety of others as it is on our own. Re-establishing a sense of community and common purpose—and of the American tradition of large-heartedness—is an essential ingredient in the prescription for the ailing American health care system--and in restoring the United States as a great power.

Can We Cut Defense Spending to Pay for Health Care and Education?

I received the following email, from a retired medical school professor, raising the question of budget priorities, and whether we might be able to help pay for health care reform and/or education by reductions in the military budget. My response follows the letter:

Professor Mason:

I've been reading your book, "The End of the American Century," these past
several days and am finding it very readable and informative, albeit a bit
depressing. I'm a biomedical scientist by training and trade (and a fellow
academic and resident of Indianapolis; see below), and am much in need of an
uncomplicated, understandable discussion of economic principles. Your book
meets those criteria very well and I appreciate having it available.

Now to my question. Since retiring from the university, I've enjoyed engaging
in online "discussions" of issues political from time to time. Most
recently, during a discussion of how we might pay for health care reform, I
innocently -- and sincerely -- suggested that we might consider closing a
few of our military bases around the world. I've read Chalmers Johnson's
trilogy on the American empire and am quite sympathetic to the view that
we've way overspent on the military. In any case, my opponent dismissed my
suggestion as naïve and irrelevant by citing government figures
(http://www.truthandpolitics.org/military-relative-size.php)showing that military spending--as a percentage of GDP--is a mere 3.7% of GDP and has
actually declined in recent years. His point, of course, which was not
supported by any data, was that domestic social spending far outstrips
military spending. I find this notion preposterous but I'm puzzled by the
data he cited. Should I surmise that the percentage spent on, say,
education, is several times less than 3.7%? Or is this rendering of the data
simply misleading? Can you help me to sort this matter out?

Thanks. I'm sorry to trouble you with this question, but you DID manage to
get me to pick up and read your book...

Regards,

Lynn R. Willis

-----------------------------------
Dear Lynn,

Nice to "meet" you and thanks for reading my book, and for the compliment.

On the question of defense spending, it is true that it is a relatively small share of GDP. But in terms of spending priorities--the question you are addressing--I think the more appropriate comparison is defense spending as a proportion of the budget, not the GDP. In the TruthandPolitics page you mentioned, if you scroll down to Graph 2 (Defense Spending as a Percentage of Discretionary Spending), you will see that defense spending is about half of the entire "discretionary" budget of the U.S. government. So defense constitutes more than all other categories COMBINED, and is far more than that spent for education, welfare, etc. "Discretionary" spending refers to those categories that Congress has some authority over, as opposed to "Mandatory" programs (funds already committed) for Social Security, Medicare, Medicaid, Debt Interest, etc.


You can get a better sense of this if you look at a discretionary spending pie chart, or for a more authoritative and detailed source, look at the actual federal budget summary at:
http://www.whitehouse.gov/omb/assets/fy2010_new_era/Summary_Tables2.pdf

There, you will see (Table S-3) that for 2009, the Defense Department budget is $666 billion, and ALL other programs get only $613 billion. Education (Table S-7), gets a mere $41 billion.

Incidentally, US defense spending also makes up about half of all defense spending in the world, so the U.S. outspends virtually all other countries combined.

So I agree with your point that a small cut in the defense budget could make a huge difference in some of these other programs, including education and health care.

-----------

Other comments welcome!

The Bankruptcy of American Economics

It is not just the American economy that is bankrupt, but the profession of economics as well. It is partly the interaction of these two that has led to the collapse of the American economy and the huge economic hole we find ourselves in.


Paul Krugman provides a devastating critique of his own profession in the Sept. 6 New York Times Magazine , in an essay entitled “How Did Economists Get it So Wrong?” Krugman, a Princeton economist, New York Times columnist and Nobel prize winner, believes that

American economics, as a field “got in trouble because economists were seduced by the vision of a perfect, frictionless market system.”

The profession was blind to the possibility of catastrophic failures in a market economy, he asserts.

In a June lecture at the London School of Economics, Krugman argued that most

macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst.”

Others besides Krugman are dissecting the economics field, and finding serious problems with it. Britain’s influential Economist magazine had a cover story (7/18) on “Modern Economic Theory: Where it Went wrong—and how the crisis is changing it.” They quote the LSE’s Willem Buiter saying that a training in modern macroeconomics was “a severe handicap” at the onset of the financial crisis. The main problem was that in many macroeconomic models, insolvencies simply cannot occur.
So much for those models.

The problem of economics is even worse, I think, because the discipline has been so intolerant of dissenting views. Modern economic theory is as much an ideology as anything else, with a faith in the market that ignores both reality and those who challenge the dominant paradigm. As the New York Times put it in a story last March:

“For years, economists who have challenged free market theory have been the Rodney Dangerfields of the profession. Often ignored or belittled because they questioned the orthodoxy, they say, they have been shut out of many economics departments and the most prestigious economics journals. They got no respect.”

I saw this firsthand at my university a decade ago, when we were attempting to create a department of economics within the college of liberal arts and sciences. I was on the search committee to hire an economics professor to begin building that program. But it soon became clear that there was a basic inconsistency between the goals of the liberal arts curriculum—free inquiry, critical thinking, competing ideas—and that of the economics profession. The candidates we considered most interesting , with provocative ideas and wide-ranging interests, were largely outcasts in their own discipline, which favored narrow specialties, and strict adherence to the free market ideology. “They got no respect” from the economics discipline, so didn’t have the necessary credentials, and couldn’t be hired. Eventually, the university gave up on trying to create an economics department in the liberal arts college.

Not only is the narrow ideology of modern American economics inconsistent with the traditions of critical thinking, it has proved totally incompetent at predicting the crisis, or figuring out how to get out of it. There are a few exceptions, like Paul Krugman, Yale’s Robert Schiller, and Columbia’s Joseph Stiglitz—all Nobel laureates—and some economics writers like the New York Times’ David Leonhardt. But until now, most of them have been voices in the wilderness, trying unsuccessfully to point out the problems of mounting debt, growing inequality, and neglect of economic and social infrastructure.

President Obama , I believe, recognizes the problems and is trying to remedy them, but he is caught in a vise between huge accumulated needs of the U.S.—for example in health care and education—and the unprecedented level of government and consumer debt.

From an outsider’s perspective—that of a non-economist—it seems to me that the problem is pretty obvious and simple, and the solution is equally obvious and simple, but horribly painful. The problem is that for a generation, American government and citizens have both been living well beyond their means, borrowing to pay for the plethora of consumer goods most of us enjoy. But in the meantime, we have neglected the poor, the schools, the health care system, infrastructure, the environment, and most of the rest of the world. We have lots of goodies, but the society is ailing, and we have passed the buck to the next generation.

The painful solution is that Americans will have to spend and consume less, pay more in taxes, and be prepared for a long-term contraction in the economy. There is evidence of this already, with people finally beginning to save, and to practice “consumer thrift.” But more saving and less spending simply contributes to a contraction of the economy. Banks, retailers, the service and entertainment industry have all depended on people borrowing to spend. As this changes, all these industries will decline, and the economy will decline.

Most American economists, including those with the President, are predicting an imminent end to the recession, and a relatively quick economic recovery. So far, virtually all such predictions have proved overly optimistic and wrong. I think those predictions are based on flawed economic models, and do not account for the depths of the hole we have dug ourselves into. We are in for a very long slog.

While I agree with President Obama and Professor Krugman on most things, I disagree with them that the solution is more spending, by government and consumers, to prime the economy. What we need now is belt-tightening, and a return to a more modest standard of living—perhaps comparable to what we had in the 1970s. This will entail a continuing and severe contraction of the U.S. economy, to return to equilibrium. In the long run, though, it will be best for both the U.S. and the rest of the world.

But you won’t hear this from many economists

Entering A Systemic Revolution

The collapse of the United States as the global hegemon constitutes a “systemic revolution” that will transform both the U.S. and the rest of the globe. Such a revolution is different from “normal” political revolutions, which entail an overthrow of the government. A systemic revolution ushers in even broader and more enduring changes in economy, society and culture, and it also transcends national boundaries, affecting other countries and the global system itself. It is a global paradigm shift, and we are right smack in the middle of it.

This is the opening paragraph of my article "Entering a Systemic Revolution" which appears in the online journal Logos: A Journal of Modern Society and Culture (volume 8, issue 2). The article can be accessed here through my Selected Works page.

The article is a revised version of a lecture I gave in March at a conference on "The Past and Future of Revolutions" at Northeastern Illinois University.

In the article, I compare the current global situation to previous "systemic revolutions", among them the French Revolution of 1789, the Industrial Revolution, the Darwinian Revolution, and the anti-communist revolutions of 1989. Like those epochal changes, the domestic and international decline of the U.S. will affect both the United States and the rest of the world, and will bring fundamental and global changes in politics, economics, culture, and ideology.

Ovation, Inc.: Speakers on Issues That Matter

I am now involved in a speaker's agency, Ovation, Inc., that is "a small but highly selective agency representing an array of affordable speakers addressing pressing issues of our time." Many of the issues raised in The End of the American Century, and on this blog, are topics available for lectures, classes, workshops, etc. by me and other experts on the Ovation roster. Take a look at the site at www.ovationagency.com.

Can America Fail?

In its spring 2009 issue, The Wilson Quarterly featured a series of articles entitled "Decline or Renewal?" addressing the "scenarios for postcrisis America." The lead article, "Can America Fail?" was written by Kishore Mahbubani of the National University of Singapore, and the author of The New Asian Hemisphere: The Irresistible Shift of Global Power to the East (2009). The subtitle of that article is "A sympathetic critic issues a wake-up call for an America mired in groupthink and blind to its own shortcomings" which, in my mind, is also a pretty accurate description of yours truly!

Mahbubani believes that the U.S. has been "engulfed by a culture of individual irresponsibility" and sees many of the country's policies as deeply injurious to the rest of the world. Our policies on the Middle East, the invasion of Iraq, our double standard on nuclear proliferation, and our policies (or lack of them) on global warming "have injured the 6.5 billion other people who inhabit the world." Mahbubani thinks Americans need to be able to see our country the way others see us, to recognize and address our own shortcomings, and to be prepared to work harder, consumer less, and--especially--to sacrifice.

The two other essays in the Wilson Quarterly are a counterpoint to Mahbubani's article, but also illustrate exactly the problem Mahbubani addresses: Americans "mired in groupthink" and blind to their own shortcomings. The article by Tyler Cowen, Professor of Economics at George Mason University, asserts (without any evidence provided) that "today, the rest of the world is looking to the United States to pull it out of a recession." He also asserts, astoundingly, that the current financial crisis "has underscored the continuing strength of American global influence." Equally questionable, and more fodder for Mahbubani's observations, is Arthur Herman's assertion that "America is still the most innovative and creative economy in the world."

The editors of The Wilson Quarterly invited me to submit a response to these three articles, and a version of the following appeared in their "Letters" section in the Summer 2009 issue (page 6).

.............................
On the question of U.S. decline, Kishore Mahbubani hits the nail on the head by pointing to the inability of American thinkers and policy-makers “to listen to other voices on the planet.” Indeed, his point is illustrated by the contributions by others in the same issue who seem to assume that other countries want the U.S. to lead and who believe that the American economy is still the most dynamic in the world.

If one simply asks other people in the world what they think, these casual assumptions wither away. Global opinion surveys conducted by Pew, BBC and others show little enthusiasm in other countries for “American-style democracy,” for American ways of doing business, or for the spread of U.S. ideas and customs. Though global opinion about the U.S. has improved somewhat with the election of President Obama, far more people worldwide continue to see U.S. influence on the world as “mostly negative” rather than “mostly positive.” On this scale, among 15 countries, the U.S. ranks 10th, below Germany, Britain, Japan and China, according to a recent BBC poll.

It is difficult to see how the U.S. economy could be seen as so vital, innovative and creative at a time when the core parts of it are collapsing under the weight of innovative stagnation and stupefying levels of incompetence, greed, corruption. Manufacturing has steadily declined as a component of GDP, replaced increasingly by financial services. The U.S. does not actually produce much any more. Now the financial sector has proven a hollow shell, after fostering and encouraging record levels of both consumer spending and debt. This can no longer be sustained, so the U.S. economy is bound to decline, and probably by a lot. As Professor Mahbubani astutely points out, “the time has come for Americans to spend less and work harder.”

New Global Powers Emerge From Crisis: Shanghai Daily Interview

I was interviewed in Shanghai by Joyce Pan for The Shanghai Daily, an English-language newspaper in China's largest city. Entitled "New Global Powers Emerge From Crisis," the interview focussed on the impact of America's economic crisis on China and other "rising powers." On the same page is an interview with French actress Isabelle Huppert, which should add to the number of hits that this blog gets!

Shanghai Daily Interview