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Who Says We Spend ‘Too Much’ On Health Care? | Stock News & Stock Market Analysis

Health Reform: Any time there’s a debate about health care reform, someone will invariably declare that the U.S. spends “too much” on health care. How do we know that? We don’t, it turns out.

It has become a long-standing cliche in the reform debate. “We spend more on health care than any other industrialized nation and we get worse health care outcomes.”

Sen. Bernie Sanders uses this is a justification for his “Medicare for all” socialized medicine plan. President Obama used it to justify ObamaCare. So does everyone pushing for a greater government role in health care. Other countries have government-run systems and spend less money and have better quality care. We should, too.

The second part of that claim regarding health outcomes is based on highly unreliable international comparisons of infant mortality rates and longevity, which is a subject for another time.

But what about the claim that we spend too much?

There’s no question that the U.S. devotes far more resources to health care than any other country. Health spending in the U.S. accounts for more than 17% of GDP. Among industrialized nations, the next closest is Sweden, where health care is 12% of its economy. In Canada, health care spending is less than 11% of GDP. In the U.K., it’s 9%, according to the World Health Organization.

So what? The U.S. is a very rich country, and as a result, Americans spend more on just about anything than any other country in the world.

The U.S. spends more per capita on advertising, more on national defense, more on information and communications technology, more on leisure activities.

The country also gives far more to charities than any other nation in the world. According to the Charities Aid Foundation, charitable donations in the U.S. equals 1.44% of GDP. The next closest country is New Zealand, at 0.79%.

Does that mean the U.S. spends “too much” on charity? After all, despite all those charitable donations, we still have poor people and distressed communities and a drug addiction crisis.

International health care spending comparisons fail to take into account one important fact: Once people take care of basic necessities, they’re going to spend a bigger share of each additional dollar on things that improve their quality of life. Things like recreation, entertainment, education, and yes, health care.

Take a look at spending growth rates within the U.S.

As the accompanying chart shows, between 1990 and 2016, consumer spending on financial services, higher education, travel and accommodations, and spending by nonprofits, all climbed at a far higher rate than health care spending. And all of these categories climbed faster than overall GDP.

But look at spending on the basics — household supplies, groceries, clothing, furnishings — these all climbed at a rate slower than overall GDP.

The fact that the U.S. spends a bigger share of its GDP on health care than other countries tells us nothing, in and of itself, about our health care system, other than that the U.S. is a rich country. Plus, much of the money is going to finance breakthroughs in medical technology and treatments that far exceed what other countries are doing.

Could health care delivery be more efficient? Could it better protect more people against catastrophic health costs? Sure. But as any doctor knows, you have to diagnose the problem first, before deciding on a treatment. Simply saying we spend a lot on health care isn’t an adequate diagnosis.

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