The debate over slashing Medicare to balance the budget and the effectiveness of ObamaCare have centered to a large degree on the alleged power of the free enterprise system to drive down health-care costs. Like most debates, it is a discussion dominated by rhetoric and anecdote. And like most debates, it could benefit enormously by looking instead to actual real-life data.
What works, and what doesn’t?
For example, how have medical costs behaved in the United States compared to Canada? In 1960, the cost of providing a similar medical procedure in the two countries was essentially the same. Since then, however, cost trends for similar services in the two countries have diverged significantly.
Now let’s take a look at data dealing exclusively with the United States. Here we have two models that operate side by side. We have Medicare, which is a single-payer system, alongside a private insurance model that relies on price competition to control costs. How does the performance of those two models compare?
Some will no doubt attempt to discredit the above chart by noting that it originated with Paul Krugman, a Nobel-winning economist and a columnist with the New York Times. However, Krugman built the chart using publicly available and noncontroversial government data, referenced in the caption. If you have grounds to question the accuracy of that data, please do so. Otherwise, you’re attempting to sidestep the issue.
Finally, there’s this. It compares the percentage of national GDP consumed by health-care delivery in major industrialized countries. As such, it downplays the actual cost differential between the United States and most other countries. (That’s because in dollar terms, 16 percent of per capita GDP in the United States is significantly more than 16 percent of GDP in most other countries, since our base GDP is also higher.)
As a country, we do many things right. Containing health-care costs is not among those things.
– Jay Bookman