American Health Care

We spend so much on health care, yet don't outlive our socialist allies -- what gives?

I think it's a specious comparison. Not every dollar is spent to stave off the reaper, much is spent on quality of life. Plus there are innumerable other variables in life expectancy. Still, it is a favorite of the crowd that calls for medical collectivism. Josh at Everyday Economist links to an excellent story in the New York Times.

This innovation-rich environment stems from the money spent on American health care and also from the richer and more competitive American universities. The American government could use its size, or use the law, to bargain down health care prices, as many European governments have done. In the short run, this would save money but in the longer run it would cost lives.

Medical innovations improve health and life expectancy in all wealthy countries, not just in the United States. That is one reason American citizens do not live longer. Furthermore, the lucrative United States health care market enhances research and development abroad and not just at home.

The gains from medical innovations are high. For instance, increases in life expectancy resulting from better treatment of cardiovascular disease from 1970 to 1990 have been conservatively estimated as bringing benefits worth more than $500 billion a year. And that is just for the United States.

The author, an economics professor at George Mason University, admits the system's flaws but, like me, doesn't want to kill the engine of innovation and discovery.

Most fundamentally, the lack of good measures of health care quality makes it hard to identify and eliminate waste.

These problems should be addressed, but it would be hasty to conclude that the United States should move closer to European health care institutions. The American health care system, high expenditures and all, is driving innovation for the entire world.

Pharmaceuticals Posted by John Kranz at October 6, 2006 5:38 PM