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The US Government ALREADY spends as much as the UK and Canada on healthcare

With the healthcare debate raging in the United States, we found the following chart from the OECD to be interesting:

Many Americans fear that we are heading towards a government-controlled, socialized medical system.  But what few seem to realize is that we are essentially already there, at least by some measures.

The governments of Canada and the United Kingdom — the two countries most often mentioned — spend 7.0% and 7.3% of their respective GDPs on healthcare.  The United States, via Medicare, Medicaid, and other smaller programs, also spends 7% of GDP — and a MUCH larger GDP at that!

Private spending, paid by patients and insurance companies, more than doubles the US total with an additional 8.3%.  Combining public and private health spending, healthcare in the United States is VASTLY more expensive than anywhere else in the world.  And as both statistical measures AND casual observation attest, the average American is not any healthier than the average European or Japanese citizen.  (We find it almost mind-boggling that Japan — despite its enormous population of elderly citizens — spends barely half what the United States does relative to GDP.)

With this in mind, let us now consider the Obama health plan.  We oppose the plan because we believe it to be unrealistic, intrusive, and simply unaffordable given the current level of the budget deficit and the national debt.  But in defending the status quo, the Republicans are also wrong.   The current system is absolutely indefensible.  There is no justifiable reason for our health system to be roughly twice as expensive as Canada’s and the UK’s while simultaneously leaving a large minority of the country uninsured.   What exactly are we getting for our money?

Rather than simply say “no” to the Obamacare plan, the Republicans should  make themselves useful by promoting real reform.  Former President George W. Bush, for all of his many faults, managed to stumble on to a good idea with Health Savings Accounts (”HSAs”) coupled to high-deductible policies.   The former president also proposed making employer-provided insurance “taxable” (though with an offsetting tax credit) in order to make Americans better realize the true cash value of the benefits that they have come to view as “free.”

HSAs and tax accounting gimmicks are by no means a comprehensive solution, but they were a step in the right direction.  If the Republicans really want to make a positive impact on the country’s long term health (and fiscal health too, for that matter), they will show Americans that their only two choices are not a dysfunctional status quo and an Obamacare “solution” that will bankrupt the country.  There are other alternatives.

Note: download the free HS Dent Special Report on Healthcare here: Healthcare: A System at the Breaking Point

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy