US Health Care: Quality comes at a price

Arnold Kling argues, in an superb article The Myth of Massive Health Care Waste, that Americans are getting better health care compared to other developed countries. The article is full of gems like this:

Instead, I am prepared to make the following bet: ten years from now, it will be objectively clear that the United States provided significantly better health care to its citizens between 1990 and 2005 than did other developed countries. From the vantage point of 2015, the policy blunder of the past fifteen years will not be that the United States spent too much on health care, but that other countries spent too little. The socialized systems, forced to ration health care because tax revenues are not sufficient to pay for state-of-the-art care, are constraining their citizens from being diagnosed and treated as well as Americans.

He explains the reasons why health care is expensive in US:

Physicians are paid more than twice as much in the United States as in other developed countries. Because physician services are about one fourth of all health care spending, we could eliminate one eighth of our health care spending by reducing doctor salaries to the levels of other countries.

The other big factor is utilization of high-tech procedures, such as MRI's, CT scans, and open-heart surgery. If Americans would cut back on the utilization of these procedures, that would reduce health care spending by hundreds of billions of dollars.

The question is whether our medical care would deteriorate if we were to pay our doctors much less while at the same time reducing our utilization of expensive capital resources. It seems reasonable to conjecture that the quality of diagnosis and treatment ultimately would suffer.

On measures of health care quality:

Longevity calculations are not a sensitive measure of improvement in medical care. In my essay on lifespan, I showed how the longevity number is calculated as a peculiar weighted average of the survival rates for different population cohorts. I produced a simplified example in which the longevity number came out to be 68.9 years. In that example, suppose that 10 percent of the people who otherwise would die at age 60 instead receive treatment that allows them to live at least to age 80, when they die at the rate of other 80 year-olds. In that case, the overall longevity number would increase by less than 1.5 years, to 70.3 years. In international comparisons, such an increase easily could be swamped by other demographic and genetic factors.

Moreover, even if we controlled for other factors, the increase in longevity due to medical treatment will take many years to work its way into the actual longevity calculations. For example, my wife was treated for breast cancer a few years ago. If she had not been treated, she might still be alive today, but she would almost certainly have died by age 55. As of today, therefore, her successful treatment counts for no increase in longevity as it is conventionally calculated. In twenty or thirty years, however, the difference will be quite noticeable (certainly to me).

In another ten or fifteen years, it may be possible to document a significant increase in life extension for people over the age of 55 in the United States compared to what is now occurring in other countries. However, as the example of my wife illustrates, superior medical care will not necessarily show up in the backward-looking statistics that are calculated currently.