Here I go again – lets talk about health care

Twice in two days! That’s how many times someone said (to me) some variation of: “don’t people who live in countries with universal health care have almost half of their pay taken in taxes, to pay for their health care?”

If this was just one person who said it twice, or even one person who was relaying it from someone else, then I wouldn’t be writing this post. But no… I heard it from two people who didn’t know each other, were not involved in the same conversation, and would have no idea what the other said.

Naturally, I’m going to take it out on you, the (mostly) innocent.

I’m going to throw out some statistics and I’m going to tell you why I think they’re important. The conclusions I make from these statistics may be total crap, but I’m counting on you to let me know (I promise I don’t bite). Some of these stats will be referenced, and some will not. Those that are not come from several sources which, unfortunately, I can’t readily recall or locate. However, almost all of them are covered in a book: Sick, by Jonathan Cohn.

First of all, I can’t argue what kind of taxes (or how much) are taken out of people’s paychecks in other countries; I just don’t know. However, even if they do pay more in taxes, I don’t think it tells the whole story – not by a long shot. Most of our health care cost is not attributable to health insurance premiums deducted directly from our paychecks (by a wide margin). Health insurance premiums for families in the United States (and by that I mean total insurance premiums) averages $11,480 per year, or $956.67 per month. I don’t know about you, but that’s not what shows up on my pay-stub every month. I’ll bet it doesn’t show up on your’s either. In fact, the average amount that people pay directly is $2973 per year, or $247.75 per month. Employers pay the difference, but they don’t do this out of the goodness of their heart. It’s part of their total cost of employing someone, and it’s part of the reason that some private contractors (or consultants) are “paid more” for doing the same job that a salaried person might… because the employer isn’t spending a chunk on benefits. If your employer could pay you more money if they didn’t pay for those benefits – then in essence, you’re paying for it. You know what else? We pay taxes too. Federal Income Tax ranges somewhere between 10 and 30 percent, with payroll taxes (Social Security and Medicare taxes) adding up to another 7.65 percent. Then, depending on which state you live in, you may pay an additional percentage of your paycheck for state tax withholding.

Ah, but $900 – $1000 per month in health insurance premiums, Federal Withholding, payroll taxes, and state income taxes don’t add up to half my paycheck. (Remember, I don’t know what they pay in taxes in other places.) Well… what we pay for insurance premiums doesn’t add up to our total health care expenses either. Consider that the U.S. spends A LOT more per capita on health care than ANY other country. If I recall, the next closest country spends something like 65-75 percent (per capita) of what we do, with many countries spending even less (and they all have universal care). Now you may be thinking to yourself, we’re a wealthier country… if we’ve got more money, we’re probably going to spend more money on things… because we can. Well, I think there’s a way to control for wealth… look at what countries pay for health care as a percentage of GDP.

In the U.S., we spend about 15% of our GDP on health care.

http://www.frbsf.org/publications/economics/letter/2005/el2005-10.html (figure 1)

Compare that with Germany (less than 12 percent), France (around 10 percent), Japan or the UK (both around 8 percent).

http://www.frbsf.org/publications/economics/letter/2005/el2005-10.html (figure 2)

Forget about how much people in other countries pay in taxes. You’re looking at apples and oranges. Any way you slice it, we’re paying more in the U.S. for health care (per person) than any other country… period.

Some of you will argue that you get what you pay for, and we’re paying a lot… for superior care. Well, I’m afraid I’ve got to burst that bubble too. By most measures of quality… infant mortality, life expectancy, diagnosis rates, and how long we live after being diagnosed, our care is not superior. In fact, there are some measures which suggests it lags behind other countries with universal coverage. (There are other measures for quality of care, which are complicated, and supposedly are more independent of quality of life issues. They’re explained better in that book I mentioned.) I’ve heard some conservatives in the media say that prostate cancer has a much better diagnosis and prognosis record in the U.S. than in other countries (with universal care), suggesting this is proof of the superiority of our care. This is both true and misleading. While the statistic is accurate, it’s misleading because the same CAN NOT be said for almost EVERY other type of cancer.

Someone suggested to me that the U.S. already has universal health care. Anyone who’s on death’s doorstep is guaranteed care. Due to death or bankruptcy, many of these people don’t pay for this care. But make no mistake, someone pays for it (and it ain’t your employer, out of the goodness of their heart). I think it’s pretty safe to say that if you pay for insurance and your own care, you’re paying for it – just too late to do any good. Many will claim that people have to wait longer for non-emergency procedures in countries with universal care. First of all, I’m not sure that’s true of all universal health care systems; but let’s assume it is, for argument’s sake. Imagine the uninsured person with diabetes who can’t afford their medication, and loses their sight, an appendage or two, suffers all kinds of associated health problems, and dies prematurely. Or, imagine the uninsured adult that doesn’t have that lump checked out, in part because they’re in denial (worrying about the financial ruin that would follow a cancer diagnosis), and subsequently dies a painful, horrible and avoidable death. Imagine all of the illnesses people suffer, and in some cases die from, because they don’t have insurance. Wouldn’t eliminating these things be a fair trade for longer waiting times for non-emergency procedures?

As I see it, we pay more for the care we get, we don’t get more for the money, and some people don’t get any care at all (until they die, or are near death).

Is this really the best way to provide health care? Is this really the best way to spend the vast sums of money we already spend?