21 Dec

Why do we need to overhaul the US healthcare system?

December 21, 2009

As the Senate is starting to debate the future of 17% of the US economy, the original premise for why we need to go down this path is far from clear. A main reason cited for the need to reform the current system is the poor ranking of US healthcare compared to other countries. The World Health Organization last published a list ranking 190 countries in the year 2000. The US ranked 37th, not as good as Canada or Costa Rica, and barely ahead of Slovenia and Cuba! The methodology used by the WHO in compiling this list deserves some examination:

  • The ranking is based on an index of five factors.
  • One factor is the “health level” which is based on life expectancy, and another is “health responsiveness” which includes such factors as speed of service and the quality of amenities. Together, these factors comprise only 37.5% of each country’s score.
  • The other factors, making up 62.5% of the score, have little to do with the quality of healthcare.
  • The “financial fairness” factor, which counts for 25% of the total score, measures inequality in how much households spend on healthcare. Interestingly, the more that a government – as opposed to the private sector – pays for healthcare, the better the country scores in this measurement.
  • The other factors, “health distribution” and “responsiveness distribution”, make up 37.5% of the score. These factors measure variation in healthcare for a population, but they have nothing to do with the quality of the care. For example, a country where most people receive “excellent” care and some receive “good” care will not score as well as a country where everyone receives “poor” care!

According to this methodology, we could improve the US ranking by having the government take complete control of the system, and provide poor care for everyone! There is no doubt that reform of the US system is needed, so that good basic care is affordable and available to all Americans. There are ways to reach these goals without government takeover and without doing away with what is already working well.

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