Why Americans spend so much on health care: The big picture

Stimulated, like a lot of people, by Bernie Sanders' single-payer healthcare plan, I spent some effort this week speculating about how the U.S. might attain affordable healthcare for all. Government efforts focus mainly on how to strain out wasteful care, how to coordinate care, how to pay for performance. To my mind, a possibly more important question is: how to gradually squeeze down payment rates for hospitals, doctors, and pharmaceuticals?  How to move toward all-payer if not single payer -- that is, phase out or reduce healthcare providers' divide-and-conquer leverage?

3 a.m. this morning,* looking for something else on my Kindle, I stumbled on a book I'd bought and forgotten about that offers a very different answer as to why the U.S. spends so much more on healthcare than comparably wealthy countries. The authors made quite a splash with their central hypothesis four years ago**, and their insight is no secret, but it had faded into the background for me.

The book is The American Health Care Paradox: Why Spending More is Getting us Less, by Elizabeth H. Bradley and Lauren A. Taylor.  Their answer: we spend more because we're sicker, and we're sicker because we spend less than peer countries on social services that have a bigger impact on health than medical care does: housing, nutrition, education, the environment and unemployment support. Here's the core argument:

If we view the national expenditure data while keeping the social determinants of health in mind, the United States’ spend more, get less paradox begins to unravel. The United States is spending an extraordinary amount on health care as narrowly defined by the OECD, and a substantial amount of time, energy, and money reforming the way in which this health care is paid for and delivered. But the United States is not spending as much as other industrialized countries on fortifying crucial social services that help make people healthy. For instance, it spends less than 10 percent of its GDP on social services, while France, Sweden, Austria, Switzerland, Denmark, and Italy all spend about 20 percent of their GDP on social services (see Figure 1.3); the inclusion of the US nonprofit sector in the analysis does not begin to close this gap. 54 When researchers look at how the United States is doing in these other areas— providing reliable housing, ensuring nutritious food sufficiency, and safeguarding against harmful exposures— they find the performance lackluster. Between September 30, 2008, and October 1, 2009, roughly one in two hundred Americans used an emergency shelter. 55 The year 2010 represented an all-time high in the number of households (17.2 million) reporting food insecurity, meaning they did not know where their next meal would come from, 56 and these numbers are not improving. 57 And as recently as 2009, the New York Times reported that violations of the Safe Drinking Water Act had potentially contaminated the water delivered to more than 49 million Americans (about 15 percent of the population) with illegal concentrations of chemicals, such as arsenic, or radioactive substances, such as uranium; in addition, dangerous bacteria was often found in sewage (Kindle locations 402-416). 

At the current moment, this intuitive but massively supported hypothesis resonates with the news out of Flint. We poison and disadvantage so many of our children (and so, adults) in so many ways. I believe, too, that our collective under-investment in the chief determinants of health is traceable to our legacy of slavery and racism.  As Jonathan Chait recounted in April 2014:

A few months ago, three University of Rochester political scientists—Avidit Acharya, Matthew Blackwell, and Maya Sen—published an astonishing study. They discovered that a strong link exists between the proportion of slaves residing in a southern county in 1860 and the racial conservatism (and voting habits) of its white residents today. The more slave-intensive a southern county was 150 years ago, the more conservative and Republican its contemporary white residents. The authors tested their findings against every plausible control factor—for instance, whether the results could be explained simply by population density—but the correlation held. Higher levels of slave ownership in 1860 made white Southerners more opposed to affirmative action, score higher on the anti-black-affect scale, and more hostile to Democrats. The authors suggest that the economic shock of emancipation, which suddenly raised wages among the black labor pool, caused whites in the most slave-intensive counties to “promote local anti-black sentiment by encouraging violence towards blacks, racist norms and cultural beliefs,” which “produced racially hostile attitudes that have been passed down from parents to children.” The scale of the effect they found is staggering. Whites from southern areas with very low rates of slave ownership exhibit attitudes similar to whites in the North—an enormous difference, given that Obama won only 27 percent of the white vote in the South in 2012, as opposed to 46 percent of the white vote outside the South. 

None of this is to suggest that healthcare payment systems and delivery systems don't matter. Americans pay more per procedure and per drug than residents of peer nations (and by some measures, our health care utilization is not particularly high) . But as with our education system, there's only so much that can be done on a provider level. And one system's pathologies feed another: poor education breeds poor health. From the broadest view, we simply lack the social cohesion to invest adequatelyin the health and well being of our people. That will change glacially, if at all.

I've only read a couple of chapters of Paradox, and I obviously don't bring any particular expertise to it. But its insight strikes me as so fundamental that's it's easy to lose sight of it repeatedly, particularly for those immersed in the workings of the health care system per se.

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* I'm not a night owl or insomniac, but every now and then I wake up mid-cycle, can't get back to sleep and read for an hour or two.

** The authors dislike the headline the Times attached to this op-ed: "To Fix Health Care, Help the Poor." As they point out, Americans of every socioeconomic status and ethnicity perform worse on core health measures than their counterparts in peer countries.