Categories:
Economics of Health Care
In this essay, I look at some data.
The United States spends more on the average poor person than [other advanced] countries spend on the average person.
In fact, the MEPS data understate spending in the United States, in part, as it is limited to the noninstitutional population. Therefore, it excludes nursing home expenditures. When those are added in, the per capita spending in the United States on those in poverty will turn out to be higher
For Discussion. What evidence suggests that the poor receive inadequate health care, the high spending notwithstanding?
READER COMMENTS
Patrick R. Sullivan
May 5 2005 at 8:49am
Well, if resources weren’t scarce, and didn’t have alternative uses, you wouldn’t have to ask the question. However, necessity…mother…invention:
href=”http://seattletimes.nwsource.com/html/nationworld/2002263435_diagnose05.html”> http://seattletimes.nwsource.com/html/nationworld/2002263435_diagnose05.html
Randy
May 5 2005 at 9:07am
Define inadequate health care. Draw the line high enough and we could spend the entire federal budget on health care and still come up short.
Nicholas Weininger
May 5 2005 at 10:08am
Playing devil’s advocate here, I can envision a couple of responses to this:
1. the old preventative care shtick. Maybe Medicaid doesn’t cover enough preventative care for the poor, so we spend so much on them because they get expensive, inefficient emergency-room care instead.
2. shifting the locus of complaint. Maybe the class that *really* gets screwed healthcare-wise isn’t the people below the poverty line, who get Medicaid, but the people just above the line who aren’t eligible for Medicaid but also can’t afford insurance.
I don’t really believe either of these (and of course they’re mutually exclusive); I don’t have data to back them up or refute them; but do you know if there are data to decide whether either might have merit?
luke
May 5 2005 at 10:31am
Nicholas,
the preventive care “shtick” is actually accurate. now, under current laws, hospitals are required to treat emergency patients even if they are unable to pay. that emergency treatment has big costs.
my father runs a charitable organization that delivers preventive care to poor and underserved areas in town. they are having remarkable success in getting hospitals to sponsor them, because the hospitals have indeed discovered that the preventive care costs less, and keeps them from having to incur larger costs when those poor patients go to the ER. why spend $5000 on a patient in the ER, when you can spend $500 to keep them from going to the ER?
I don’t agree with laws requiring hospitals to treat all patients, regardless of ability to pay, but I and at least a dozen or so hospitals around town have discovered that the preventive care advantage is very real.
David Thomson
May 5 2005 at 12:01pm
“Define inadequate health care. Draw the line high enough and we could spend the entire federal budget on health care and still come up short.”
That’s correct. We keep raising the bar. Some people now feel it is unjustified if the state does not fund their incredibly expensive sex change operations. Why can’t I demand that the government pay for medical procedures that will make me look like Tom Cruise, smart as Albert Einstein, and as athletically talented as Michael Jordan? And no, I am not being silly. When push comes to shove, many Americans will always feel cheated.
Nicholas Weininger
May 6 2005 at 10:16am
luke,
OK, a couple of followups then.
1. Do you know of national-level data indicating that lack of preventative care, on the whole, is a major contributor to high health costs for the poor? Local success stories are great– congratulations to your father on his good work– but provide little insight as to the true overall magnitude of the problem.
2. Does Medicaid really not cover preventative services? Which ones in particular does it fail to cover, and why?
spencer
May 6 2005 at 1:08pm
An oddball thought.
Maybe the reason that Europeans live longer then Americans is the point that they work fewer hours.
How is that for getting healthcare tied into other economic issues?
Does anyone know if there is any evidence or studies on this question?
Mikael
May 6 2005 at 1:51pm
Interesting data. But it raises a couple of questions. If this is correct, why is the health status among the poor far worse in the US than in some european welfare states (using conventional measures)? For example: Compare infant mortality among the poor in the US with i.e. (my home country) Sweden, that is not favouring the US. Or look at life expectancy for the poor in the US, compared to european countries.
Then either health care in the US is inefficient, or it is just so that other determinants of health are important enough to offset the higher spending on health care on the poor in the US?
Tony
May 6 2005 at 2:25pm
For the conclusion that the US provides adequate health care for the poor given its rate of spending to follow it would have to be the case that health care outcomes per dollar are equivalent in the US and other OECD countries.
I am not an expert on this subject but the data I am familiar, such as infant mortality or life expectancy, does not point to any evidence that the US health care system is particularly efficient on an outcome/dollar basis. Given that at nearly twice the median OECD rate of expenditure on health care for results that are average at best (I know that these statistics aren’t controlled for immigration which is one reason a direct comparison is a little simplistic) then the fact that spending on the poor is barely above the OECD median does indicate that within the US the poor receive too little health care spending.
Lawrance George Lux
May 6 2005 at 2:32pm
Exclusionary Pricing of Medical services. They are priced to capture to last marginal dollar of Those able to Pay, not to supply the greatest medical benefit to the Population. The Poor suffer.lgl
dave
May 6 2005 at 5:50pm
I don’t know what Arnold is smoking, but I want some:
“If the United States does not lag in spending on health care for the poor, then this undermines one of the arguments for adopting a more European or Canadian style health care system.”
Who, exactly, is arguing this? Show me a single scholarly article that argues that U.S. healthcare spending (even for the poor) is inadequate, relative to nationalized systems. The issue, as Arnold is well aware, is that the $2,900 or so spent per impoverished citizen in the U.S. delivers far, far less utility to the consumer than the same amount of money spent in other countries.
Consider two patients in two different countries, each of whom requires surgery. In one country, the surgery costs $1,000, and in the other it costs $2,000. Can the patient in the high-cost country be said to be receiving more health care? I imagine Arnold would say yes.
Dan Morgan
May 7 2005 at 1:33am
A system of mandatory Health Savings Accounts would provide universal health care yet keep the health care system private. Here is a proposal:
http://nospeedbumps.com/?p=77
Also, see comments on this proposal here:
http://www.windsofchange.net/archives/006761.php
Jon
May 7 2005 at 6:35am
Luke wrote:
If you were mugged and left without unconcious without your wallet (hence no insurance card), would you want the hospital to wait until they proved you could pay to treat you? If you had a heart attack, would you want to be spending time calling around finding a hospital that would accept you and your insurance (or possible lack of such)?
Luke, tell us what you propose that would at least deal with this.
Jon
May 7 2005 at 6:39am
In addition to Dave’s comment, we have to define “poor”. In the US if you are employed and lack adequate insurance, as soon as you have a major medical problem you are almost certain to be poor! In countries with socialized health systems, your treatment dollars would not be categorized as healthcare for the poor.
richard
May 7 2005 at 10:06am
The US gov’t spends at least as much per capita as other developed countries. This is not just per poor person, this is for every person. In other developed countries, individuals spend a bit in addition to govt spending. In the US, individuals spend a lot in addition to govt spending. By any statistical measure, US health is no better (life expectancy, wait times, etc.).
Accordingly, it’s no surprise that “The United States spends more on the average poor person than [other advanced] countries spend on the average person.”
On the other hand, survey data I’ve seen shows that the poor and seniors (ie, the ones with govt provided healthcare) are much happier with healthcare than others in the US.
Nicholas Weininger
May 7 2005 at 2:48pm
Tony: if you’re going to cite infant mortality and life expectancy as indicators of health system effectiveness, you ought at least deal with Prof. Kling’s arguments (in a TCS essay linked to from this blog) that neither of those is a particularly good indicator.
And, contra Richard, it is not true that “by any statistical measure” US care is no better than socialist systems. See e.g.
http://www.cato.org/pubs/pas/pa532.pdf
for statistics showing better cancer survival rates and lower incidences of long waits for surgery in the US.
Bernard Yomtov
May 7 2005 at 9:07pm
If you were mugged and left without unconcious without your wallet (hence no insurance card), would you want the hospital to wait until they proved you could pay to treat you? If you had a heart attack, would you want to be spending time calling around finding a hospital that would accept you and your insurance (or possible lack of such)?
Luke, tell us what you propose that would at least deal with this.
Jon,
You obviously don’t understand. The market will fix it. One more question like that and you’ll be marked as a heretic. Be careful.
Tobias Schmidt
May 12 2005 at 11:57am
I’d be interested to know the standard deviations on the two numbers you cite which might make quite a difference for the perception of inadequacy of health care.
kathleen reynolds
May 12 2005 at 10:42pm
The World Health Organization’s 2000 report ranks the US health care system as 37th in the world, after Costa Rica. See http://www.photius.com/rankings/healthranks.html for the rankings, and http://www.photius.com/rankings/who_world_health_ranks.html for the report summary.
A big part of the ranking is because health care for the US poor is on a par with the poorest developing nations.
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