Letter: Healthcare cost comparisons are misleading

September 24, 2014

A reader says healthcare spending in the United States can't be meaningfully compared to spending in other industrialized countries.

Regarding the comparative information on health costs published in your May 10 issue (“ACP keynote: Physicians must engage on healthcare costs to strengthen relationships with patients”): Almost all of this false information is derived from data from the OECD [Organization for Economic Cooperation and Development} which as you know involves 34 industrialized countries.

Their data do indeed show that the U.S. spends about 17% of its gross domestic product on healthcare, or about twice as much as most European countries and my native Canada. But the figures are deceptive and invalid for three reasons: accounting, legal and demographic. 

First, the accounting: Every one of the other 33 countries has a single-payer universal system (SPUN) or close to a SPUN. A great expense of delivering medical care is the collecting of operating funds.

In this country this is chiefly done by insurers (premiums) and private offices (copays) like mine, and constitutes 25% of all expenses. In a SPUN, money is collected by tax authorities, given to the SPUN which does not record it as an expense, therefore the SPUN right away appears to operate 25% cheaper. 

Secondly, every OECD nation has some form of a loser pays tort system. The U.S. is the only country which does not. Because of this the U.S. endures an endemic of frivolous lawsuits driven by barratry and champerty.

Doctors, hospitals, etc. all try to protect ourselves by practicing defensive medicine which, depending on which study we believe, adds 10% to 25% to overall medical costs. Therefore other countries can operate more cheaply.

But by far the biggest difference between the 33 OECD countries and the U.S. is demographic in four chief areas all of which generate very expensive medical care for the U.S. and its citizens:

  • 8% of Americans are military veterans with expensive physical and psychiatric disease (Other OECD members have fewer than 1%.)

  • 30% of us are minorities, African-Americans and Hispanics who suffer up to 50% higher rates of cardiac and metabolic disease (diabetes). Many OECD nations are monocultural and minorities are 1% or less of their populations. Diabetes and coronary care are very expensive diseases.

  • 10% of Americans are illegal immigrants who enter with unvetted illnesses such as cancer, diabetes, pregnancy, and tuberculosis. We treat them all anyway. On the other hand, the illegal populations of many OECD nations are 1% or less.

  • No other OECD nation shares a porous border with a third world country across which flows drugs and violence into the inner city in the form of shootings, murders, etc.

These accounting, legal and demographic differences place on the U.S. a disease burden not borne by any other industrialized country.

It is possible to compare apples and oranges. But the comparison is invalid and incorrect. So the message that the U.S. spends 17% of GDP on healthcare is misleading and unfair. In fact when adjusted for accounting, tort differences and demographics, the U.S. probably does better than most other OECD members.

The technique of repeating false facts and false comparisons so often that they morph into the truth is not new. In modern times Goebbels and Mao Tse Tung perfected the technique and conquered countries.

Mr. Doherty, Dr. Patel, and others should stop doing this. Such canards are slowly demonizing the best medical system in the world- the U.S. system. I do my best over the years to counter such false claims. I hope I have convinced you to not reflexively repeated that canard.

 

 Calvin S. Ennis, MD, FAAP

 Pascagoula, Mississippi