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Commentary

A Lesson From Europe On Health Care
David Leonhardt, The New York Times, 10-18-06

David Leonhardt offers an interesting reflection on health care spending trends in the U.S. and Europe.

A few weeks ago, I wrote a column arguing that this country's increased medical spending over the last half–century has, on the whole, been overwhelmingly worth it. Thanks to new treatments for everything from premature births to heart attacks, human life has continued to lengthen—defying expectations—even without major improvements in public health. Yet, strangely, we talk about medical spending as if it were nothing more than a drag on the economy, rather than an investment in the most important thing of all: our well–being.

I received about 500 e-mail responses from readers, and the most common reaction was a version of a simple question. "Why do Americans spend so much more than folks in most other developed countries while getting worse results?" as Sumati Eberstadt of East Greenwich, R.I., wrote.

In Greece, the government and individuals combine to spend about $2,300 per capita on health care each year, and the average life expectancy is 79 years. Canada, where the hospitals are probably cleaner, spends about $3,300, and people live to about 80. Here in the United States, we spend more than $6,000, yet life expectancy is just below 78.

The answer to this riddle turns out to be fantastically complicated—but also fantastically important. Health care costs are already rising at an unsustainable rate, and baby boomers are now entering the most medically expensive years of their life. So if the rest of the world has something to teach us, we should be taking it seriously...

One good way to understand the problem is to look at the share of health spending that the elderly account for in different countries. In the United States, people 65 and older have Medicare, which has administrative costs roughly as low as those of other countries' universal plans. Younger Americans, by contrast, have private insurance, with all its inefficiencies. Yet elderly Americans' share of national health spending is similar to that of the elderly in other countries, as Arnold Kling, an economist, has noted.

So something beside administrative costs is at work here, and it involves a basic cultural difference. Americans seem to be less willing to take no for an answer and more willing to try almost anything, no matter how expensive or how slim the odds, to prolong life.



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