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Our embarrassing health care ROI

By Jay MacDonald · Bankrate.com
Tuesday, April 10, 2012
Posted: 10 am ET

While Americans spend far more than other industrialized nations on health care, our return on that oversize investment, or ROI, is downright embarrassing.

A new report from the global Organization for Economic Co-operation and Development once again confirms that spending nearly four times the median average of most of the other 34 OECD nations on health care has failed to make Americans any healthier.

According to the OECD, Americans spend $7,960 per capita on health care, or 17.4 percent of gross domestic product, the highest among the OECD members. By contrast, second-highest-spender Norway shells out $5,352 per capita, or 9.6 percent of GDP.

Life expectancy here: 78.2 years. Yay, we're 27th out of 34!

Life expectancy in Norway: 81 years, tenth among the countries surveyed.

Japan, the OECD longevity leader at 83 years, spends a mere $2,878 per person.

Sure, America's highly privatized health insurance system could have something to do with the disparity. In the U.S. and Switzerland, another privatized system that ranks third in spending, the government pays less than 65 percent of total health care costs, while in the rest of the OECD, that figure nudges up above 70 percent.

But in 3 of the top 10 big spenders – Luxembourg (5th), Denmark (7th) and Austria (8th) – the government picks up more than 84 percent of the health care bill.

The high cost of pharmaceuticals also contributes to our lackluster outcomes. In four of the most expensive countries, drug costs average at least $600 per person per year, with the U.S. again the leader at more than $950 per capita annually.

OECD Chief Media Officer Matthias Rumpf says expensive tests and treatments such as MRIs and elective knee surgeries tend to drive up costs. Some countries, such as Germany, penalize citizens who see a specialist without first consulting their primary care physician.

Alcohol and tobacco use and lack of physical exercise also were cited for their negative impact on health care ROI.

The Affordable Care Act attempts to address our poor ROI by simultaneously reining in health insurance rates, expanding coverage to the uninsured, promoting preventive care and changing the fee-for-service paradigm by tying medical compensation to health care outcomes.

Some say health care reform oversteps its powers; others say it doesn't go far enough. By midsummer, the Supreme Court is expected to decide the fate of the Affordable Care Act.

But few can dispute the need for better outcomes from our health care investment.

After all, who wants to wear a T-shirt that says, "We're 27th!"

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