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Saturday, March 24, 2012

Healthcare

The USA has a bad health system. That's a fact. Among developed nations we rank poorly with regard to obesity, infant mortality, and life expectancy. Yet we pay significantly more per person than any other country on earth (if measuring as a fraction of GDP instead of per capita, only East Timor edges us out). As a culture it would be of significant benefit to emulate the successes of our allies rather than be stuck on pride and partisan ideology.

Sweden is one example of a healthcare system much better than ours. Despite being a supposed European socialist hellhole, their system is significantly more efficient. Private insurance exists for those who want to buy it but the government is the main healthcare provider.

Details of their system aside (those can be found, at length, on Wikipedia) Sweden's healthcare system costs 9% of their GDP (this is a typical number for a developed nation). This has been stable for decades. The state pays for approximately 97% of medical costs including, in some cases, lost wage due to illness, and transportation to a medical facility. There is a limit to the health care fees that can be accumulated by an individual over the course of a year ($360, which includes prescription drugs, tests, and visits to a specialist); the rest is covered by the government. You can see any doctor in the country and collect a prescription at any pharmacy. Waiting times are guaranteed to be no more than three days for a primary care physician or ten for a specialist.

On the other hand 17% of the United States GDP is spent on healthcare, and the rate has been rising for decades (it was about 10% in 1980 and is expected to hit 20% around 2020). The government covers about half of healthcare costs total, though how that's distributed is extremely uneven. Insurance rates are rising faster than wages or inflation. Which health care facility can be visited depends on the private insurance carrier. One out of six Americans has no health insurance at all (in fact we're the only wealthy nation that does not ensure that all citizens are covered). Medical costs contribute to about half of all bankruptcies in the United States. Emergency rooms in the United States are mandated to accept anyone, regardless of ability to pay, but the mandate comes with no funding to make up the difference. The costs of medical services are inflated; we pay more despite having fewer doctors and hospital beds per capita than any other developed nation. Significant money is swallowed up by the profits of the pharmaceutical industry (profit margins around 25%, while 3% is more typical for a large corporation), private insurance administrative costs (about 7% of health care spending), and doctor salary (by far the highest of any developed nation).

Though not a huge fraction of the total cost, the average income of a doctor in the United States is something like $150k. The developed nation average is closer to $100k, with Sweden closer to $75k. However, this is significantly mitigated by the fact that college and medical school are free there, so doctors do not emerge from school saddled with debt.

For comparison, there are about 600k doctors and 60k medical students in the United States. The average cost of medical school is well under $100k per year, even accounting for books and living expenses. That means that cutting average doctor salary from $150k to $130k (which is still higher than any other developed nation) would be sufficient to make medical school completely free, with enough left over to erase all existing medical school debt within a few years.

Of course administration of a large system is a complicated issue. For one thing the United States has a much larger population than any country in which universal healthcare has been implemented. Japan is the closest at less than half our population and there are thirty Americans for every Swede. However, it's not obvious from available statistics that quality of healthcare degrades with population; Japan's healthcare system uses 8.5% GDP to pay for 70% of all medical care. It's hard to imagine that we need to be spending twice the developed nation average for care that consistently ranks badly.

Nation Comparison Statistics
Wikipedia - USA Healthcare
Wikipedia - Sweden Healthcare
Physician Income
Wikipedia - Education in Sweden
Number of Doctors in the USA
Cost of Medical School
Number of Medical Students in the USA

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