Twenty five years ago health expenditures in the USA consumed 5% of GDP. Today that figure is around 17%. No other country comes close to this level of expenditure.
In 2015, for example, per capita spending on health in USA was $9451 compared to Australia $4420.
The USA pays more per capita for healthcare than any other country for mediocre health outcomes. In 2014, the USA ranked behind the United Kingdom, Switzerland, Sweden, Australia, Germany, Netherlands, New Zealand, Norway, France and Canada in health outcomes. The U.S. is last or near last on dimensions of access, efficiency, and equity.
First, the administrative costs of running the US health care system are astronomical. About one quarter of health care cost is associated with administration, far higher than in any other country.
Second, the U.S. spends more than other countries do on many of the same things. Drugs are the most commonly noted item. A branded drug will cost much more in the U.S. than in other countries. Doctors also earn more for doing the same thing in the U.S. than they do in other countries. And many suppliers charge more for things like durable medical equipment in the U.S. than in other countries.
Third, Americans receive more medical care than people do in other countries. This not so much in terms of doctor visits, but if a person has a heart attack in the United States, they are much more likely to get open heart surgery than they are in most other countries. There are grey areas where it is not clear whether open heart surgery is warranted. In the U.S., people will have the operation in circumstances where in Canada, for example, they will not. Yet life expectancy or one-year mortality after a heart attack is the same in the two countries.
The House of representatives in the USA has now passed Donald Trump’s repeal of Obamacare with Trump’s health care “reform”. The package is yet to be considered by the Senate.
What is the key element of Trump’s “reform”?
Trump’s scheme does nothing to restrain the excessive level of spending on health care. But neither did Obamacare. Obama’s scheme had its problems. One of these was that while it gave cover to millions that did not have cover, it failed to attack the over spending problem. It extended cover to an extra 20-25 million but still left another 20 million or so without cover.
Obama’s scheme paid for extension of health insurance by taxing high income individuals. Individuals earning more than $200,000 and couples earning more that $250,000 had to pay the new health tax on income earned above these thresholds.
According to economist Richard Wolff the main element of the Trump package is to get rid of that tax.
According to the Committee for a responsible federal budget Trump’s policy will result in about 21 million people losing health cover. This will approximately double the number of Americans without health insurance to in excess of 40 million people. The repeal of the Obama tax increases will cost $660 billion over 10 years.
Politically, the Republicans could not admit that the main element of their ‘reform’ is to remove the extra cover provided through Obamacare by cutting taxes on the rich. So they have framed their political attack on the elements of Obamacare that mandated health insurance in certain instances, labelling these as government interference with the right to individual choice.