The US Health Care System IS the Most Efficient in the World

It takes only one graph to show this

As you can see the United States spends more resources per capita on health care than any country in the world. If you were worried about possible government distortion compare the light blue and dark blue bars.

The light blue are private expenditures on Health Care, the dark blue are public expenditures. As you can see private US spending easily outstrips every other country in the world.

That in-and-of itself establishes the US as the most efficient system. One does not need to look at outcomes to determine Why?

Well, we know that patients like to spend money on health care. We can see that as they are provided more insurance, they spend more money. We can see that as they become wealthier, they spend more money. We can see that as they are exposed to the market mechanisms – compare private insurance to Medicare – they spend more money. Spending more money on health care seems to be inline with satisfying consumer preferences.

Yet, couldn’t this all be a waste. Don’t outcomes matter for efficiency? No, they don’t.

They don’t because patients themselves do not look at outcomes and satisfying consumer preferences is the gold standard of efficiency.

From Death and Reputation: how consumers acted upon HCFA mortality information

From 1986 through 1992, the Health Care Financing Administration (HCFA) released information comparing patient death rates at individual hospitals. This was viewed widely as an effort to aid consumers in selecting hospitals. This study evaluates how the release of this information affected hospital utilization, as measured by discharges. It finds a very small, but statistically significant effect of the HCFA data release. A hospital with an actual death rate twice that expected by HCFA had fewer than one less discharge per week in the first year. However, press reports of single, unexpected deaths were associated with an average 9% reduction in hospital discharges within one year. HCFA was justified in eliminating its mortality report, not because it was being used by consumers to choose hospitals, but because it was not. Implications for report cards are discussed.

Patients in this study did not really care if the hospital killed them.

From Is More Information Better? The Effects of ‘Report Cards’ on Health Care Providers

Using national data on Medicare patients at risk for cardiac surgery, we find that cardiac surgery report cards in New York and Pennsylvania led both to selection behavior by providers and to improved matching of patients with hospitals. On net, this led to higher levels of resource use and to worse health outcomes, particularly for sicker patients. We conclude that, at least in the short run, these report cards decreased patient and social welfare.

Patients in this study, used increased information to choose more resource intensive hospitals, which were in fact more likely to kill them

From CONSUMER REPORTS IN HEALTH CARE: Do They Make a Difference?.

Studies were selected by conducting database searches in Medline and Healthstar to identify papers published since 1995 in peer-review journals pertaining to consumer report cards on health care. The evidence indicates that consumer report cards do not make a difference in decision making, improvement of quality, or competition.

The authors engage in some PC handwaving at the end but the core conclusion of their data is that consumers don’t use information on effectiveness.

The best that can be said for patients and health information is the following From Systematic Review: The Evidence That Publishing Patient Care Performance Data Improves Quality of Care

Forty-five articles published since 1986 (27 of which were published since 1999) evaluated the impact of public reporting on quality. Many focus on a select few reporting systems. Synthesis of data from 8 health plan–level studies suggests modest association between public reporting and plan selection. Synthesis of 11 studies, all hospital-level, suggests stimulation of quality improvement activity. Review of 9 hospital-level and 7 individual provider–level studies shows inconsistent association between public reporting and selection of hospitals and individual providers. Synthesis of 11 studies, primarily hospital-level, indicates inconsistent association between public reporting and improved effectiveness. Evidence on the impact of public reporting on patient safety and patient-centeredness is scant.

We can go on and on with this and rest assured, I will.

However, ask yourself this question. When is the last time you heard someone say: I chose Surgeon Johnston because he has lowest mortality rate in the country.

The issue is this: the word efficiency has positive affect. It makes you think of something good. Yet, the US health care system looks like its doing something bad. Thus people reject the notion that it is efficient.

But efficient does not mean doing something good. Efficiency is a measure of good a system is at satisfying consumer preferences. Consumers seem to value spending money on health care. They very much want to do it and are upset when they cannot do it.

Yet, consumers do not seem to value better health care outcomes. When given the alternative between a system with good outcomes and one with bad outcomes they behave as if they do not care which one they get.

Thus a system that spends lots of money with little regard to outcome is highly efficient: it gives people more of what they want.