G-12 Health

In Health on October 13, 2009 at 1:49 AM

The Group of 12 (G-12) is composed of 13 major industrialized nations: Australia, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States.

A valuable dataset of economic and health-related information on these nations can be found on the web in the publication “OECD in Figures”, produced by the Organisation for Economic Co-operation and Development. The most recent available data is compiled through 2006. I pull together 4 scatter plot diagrams on a variety of health variables related to spending and more.

Figure 1 demonstrates the relationship between national life expectancy and health expenditure per person. Here, U.S. life expectancy — 77.8 years — is lower than all other G-12 nations. The U.S. weighs in below the G-12 average of 79.1. Interestingly, Japan leads the way here, with a life expectation of 82.4 years, while managing to spend less per person on health relative to nearly every nation in the sample, including the U.S. Figure 1 shows that the level of health spending per person is highest in the U.S., totaling $6,714.

Economists call this type of display “diminishing marginal return,” that is, the instance in this case where higher spending levels yield lower benefits to health, as witnessed on life expectancy.

Obesity rate comparisons are just as disparaging.

Figure 2 observes G-12 national results of 10 countries compared against the U.S. result (obesity measures on Australia and Switzerland are not available in the OECD estimates for 2006). Unfortunately, the U.S. again here tops the list in terms of obesity rate –- 34.3 per cent, to be precise. The 11-country average is 14.9 per cent. Again, Japan performs best –- 3.9 per cent.

Pulling it all together: the “OECD in Figures” in essence reports that the U.S. is the most obese, the most costly, and the least life expectant of all G-12 industrialized nations.

Figures 3 and 4 consider the same health variables, i.e., life expectancy and obesity, respectively plotted against public expenditure levels of the various countries.

Publicly-insured health care has generated much hell-storm to date in the American townhall debates, and subsequent newscoverage. For instance, at least one heated citizen in a recent townhall in South Carolina cautioned politicians to “keep [their] government hands off [his] Medicare.” Medicare is a government-run insurance option that provides health care for older Americans.

While some are protective of the government option, others are more concerned about long waiting lines heard of in Canada, a nation that offers a higher level of government intervention in the health care arena relative to the U.S.

On a tit-for-tat basis, it is interesting to consider the “wait debate”. Canada has in fact struggled with long waiting lines, as numerous media outlets have reported in recent years, click here. In the U.S. we implicitly suffer a similar set back in terms of wait lines. Harvard Medical School and Cambridge Health Care Alliance researchers recently estimated that 45,000 Americans are dying per year as a result of having no health insurance, a number of deaths that happens to out-rival deaths caused by kidney disease.

According to country statistics, Canada and the U.S. offer public expenditure percentages of 70.4 and 45.8, respectively. Interestingly, every nation listed in these graphics spends more publicly than the U.S. as a percentage of overall health spending, while every nation listed in these graphics correspondingly has a higher life expectancy and more favorable obesity rate.

Continuing with some back-of-the-napkin arithmetic, one might propose the U.S. responsibly adopt the G-12 public/total expenditure arrangement, tally the difference in resultant savings, and then use the savings to re-capitalize medical resources in such a way aimed toward protecting against the Canadian-style wait line potential.

For instance, under this hypothetical the policy regime would reorganize health policy set to the G-12 public expenditure average — 73.15 per cent, take the resulting health spending per person average – $3,454.54, and then difference from the original U.S. per capita spending level.

By this process, an estimated $3,259.46 per person in savings would result, providing a means by which the re-invigorated health system might plug-in the gap by supplying resources allocated toward eliminating the long wait lines. Such an effort ought, in effect, reduce the implied waiting time endured by the uninsured in the current U.S. system and diminish the explicit waiting time endured by the insured in the current Canadian system.

The Commonwealth Fund, an independent U.S. health policy group, estimates as of June that a nationwide health insurance exchange including a Medicare-like government option could save $1.8 trillion more than if only private plans were offered.

In the words of Kenneth Arrow, Nobel prize economist, writing in a seminal 1963 paper on the subject, the medical-care industry represents a “special” featured industry, one defined by uncertainty, as seen in inconsistent demand and non-marketability of product and service.

In his analysis —

“Virtually all the special features of this [medicare] industry, in fact, stem from the prevalence of uncertainty.” Adding, “It is the general social consensus, clearly, that the laissez-faire solution for medicine is intolerable.” And ending, “The logic and limitations of ideal competitive behavior under uncertainty force us to recognize the incomplete description of reality supplied by the impersonal price system.”

Indeed, a majority of physicians are in agreement on a need for broader expansion of Medicare-style arrangement for the wider health insurance system in the U.S. Annals of Internal Medicine published research last year demonstrating that a majority of doctors –- 59 per cent –- support legislation establishing a national health insurance program.

In the English-speaking G-12 nations most often compared against the U.S., i.e., Canada and the U.K., it is interesting to note national polling results pertaining to health policy stewards.

In Canada, Tommy Douglas, father of Medicare, ranked number 1 in “The Greatest Canadian” poll conducted by the Canadian Broadcasting Corp in 2004; whereas, in the U.K., Aneurin Bevan, forerunner of the National Health Service, also tallied a high ranking in the popular consciousness, ranking as one of the “100 Greatest Britons” in a poll conducted by the British Broadcasting Corp in 2002.


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