Commentary—

America Spends A Lot On Health Care –

But So Does Everybody Else

By Peter Pitts

On both sides of the aisle, politicians repeatedly criticize the amount of money America spends on health care.

They’ve got a point. America’s $2 trillion health care tab is quite steep. But America’s not alone — every other developed nation, even those with universal healthcare systems, struggles with high health care costs.

Indeed, people in other health care systems often pay more than Americans do, once taxes are taken into account. Add in the high nonmonetary costs of rationed or denied care and waiting lists, and suddenly the vaunted European systems commonly touted as models for the United States don’t seem like a good deal at all.

Let’s dive into the numbers.

In America this year, a family of four with an employer-based PPO will face about $15,609 total in health care costs. Of this amount, the employer will pay on average $9,442, and the employee will contribute $3,492 in premiums and $2,675 for co-pays and other expenses. Employee premiums are about six percent of the median family’s annual income — less than what that family spends on food.

In Canada, while the percentage of taxes used to provide health care varies, it is estimated that 22 percent of taxes collected went to the health system in 2004. Several provinces, including Quebec, Ontario, Alberta, and British Columbia, also charge additional premiums. Canadians may spend their own money to receive private treatment for procedures or drugs that are not covered by the government system.

Citizens of the United Kingdom pay 11 percent of each pound they make in weekly income between $198 and $1,326 for care through the state-run National Health Service, plus an additional one percent of income over $1,326 per week. That’s nearly double what Americans pay.

The co-pay for drugs is low, but many drugs are not covered, often because they are not considered cost-effective enough to justify inclusion in the government’s plan.

But what if you need one of those drugs? Well, you can kiss your NHS benefits good-bye. Anyone who uses his or her own money to buy drugs outside the NHS will find him or herself shut out of the system.

In Germany, coverage from a public sickness fund currently can range significantly in cost, from around 12.2 to 16.7 percent of income, with the employee paying a bit under half. This coming fall, premiums are set to be standardized — and health care experts anticipate that they will be set around 15.5 percent. Private patients can generally expect to pay more than they would in the public system.

In France, employees contribute only 0.75 percent of their salaries towards medical care, but they also pay a 7.5 percent General Social Contribution, the majority of which is earmarked for the health system. This base coverage reimburses people for the bulk of costs for doctor visits and for a portion of the costs of medications. On top of the government coverage, almost all French residents have supplementary coverage from a mutuelle, which costs approximately 2.5 percent of salary.

When compared to the US, the fact is that the health care systems in Europe and Canada don’t save citizens much at all.

Health reform is urgently needed in this country, and cost-cutting will be a critical component of any reform efforts. Despite its supporters’ claims to the contrary, government control of the health care marketplace is anything but a ticket to a lower-cost health care paradise.

(Peter J. Pitts is president of the Center for Medicine in the Public Interest and a former FDA Associate Commissioner.)