Tuesday, November 1, 2011

Health Numbers We Can Do Without

I was looking forward to reading Ezekiel Emanuel's opinion piece in The New York Times online about health-care costs. Looking forward, at any rate, to banging my head against the wall as he made the arguments that brother Rahm should have suggested to his boss two years ago. I was disappointed.

Instead, Emanuel first tries to give an idea of the size of health care costs with the hoary old stack-of-dollar-bills image so dear to Ronald Reagan. Can we please stop doing this? You can use it about virtually any number concerned with the US economy, and it sounds huge.

Actually, all it shows is that we're a big country. In population we're now the third-largest country in the world: there's China and India, and then us. If you stacked  up all Americans head to foot they would reach from here to the moon and beyond (assuming an average height of 4.5 feet, which seems conservative). If you put the whole U.S. GDP into one dollar bills, it would make a stack from the earth to the moon, back to the earth, back to the moon, and halfway back to earth. Or we could put it into pennies, and then it would go from here to Saturn and halfway back. Does this actually tell us anything? Americans' spending on things to read would form a pile of dollar bills four times the height of the International Space Station. Is that a lot or a little?

Emanuel has more comparisons, and again, all they prove is that the US is a big country. We spend as much on health care as France spends on everything. But we spend as much on cosmetics as Iceland spends on everything. Again, so what?

Here is what you need to know about health care spending in the US in a nutshell:
  1. Over the next ten years, we'll spend about $30 trillion on health care. 
  2. The cost of the health care reform bill is about 3% of that. Since almost half of all health care spending goes through the Federal government, the cost of Obamacare is about 6% of current Federal spending on health care.
  3. We spend about $2500 more per capita than the next-most-expensive health care system in the world. That's $10,000 for a family of four. The next-most-expensive health care system in the world has universal care and better health statistics than we do.
  4. Implication: It's not at all hard to believe that Obamacare, while covering tens of millions more people, could improve efficiency enough to decrease total Federal health care spending (and, a fortiori, total US health-care spending).
Throw in the fact that we rank between 30th and 40th in the world in life expectancy and infant survival, and you've got everything you need to hold your own at your next cocktail party.

[Notes: A dollar bill is about 0.1 mm thick. A penny is 1.5 mm thick, so a dollar in pennies is about 1,500 times as thick as a dollar bill. The average distance from the earth to the moon is about 384,000 km; the minimum distance from the earth to Saturn is 1.2 billion km. The 2010 US GDP was about $14.5 trillion.]

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