Time March 2–9, 2020INEQUALITY| HEALTH CARE
AmericAns spend vAsT sums on heAlTh cAre. cer-
tainly, health care is expensive all over the world, and it
makes good sense for rich countries to spend large amounts
to extend their citizens’ lives and to reduce pain and suf-
fering. But America does this about as badly as it is pos-
sible to imagine.
Health care can sometimes harm people, through medi-
cal mistakes, or the overprescription of opioids. But there
is also harm to people’s lives from its extraordinary and
unnecessary costs. The percentage of national income that
is absorbed by health care has grown over the past half-
century, from 5% in 1960 to 18% in 2017, reducing what is
available for anything else from 95% in 1960 to 82% today.
The costs of health care contribute to the long-term stag-
nation in wages; to fewer good jobs, especially for less edu-
cated workers; and to rising income inequality.
The U.S. health care system spent $10,739 per person
in 2017, about five times what the country spends on de-
fense and about three times what it spends on education.
High costs inflate the earnings of many providers and make
the industry unnecessarily large. The cost of employer-
provided health insurance, largely invisible to employ-
ees, not only holds down wages but also destroys jobs, es-
pecially for less skilled workers, and replaces good jobs
with worse jobs at lower wages. Health care costs directly
hurt those without insurance, while those who are insured
must pay co- payments, deductibles and employee contri-
butions. Health costs also affect federal and state govern-
ments, which pay for Medicare and Medicaid. Governments
must collect more taxes; provide less of something else,
such as infrastructure or public education; or run deficits
that shift the burden to future taxpayers. We could cut back
costs by at least a third without compromising our health.
American health care is the most expensive in the
world, and yet American health is among the worst among
rich countries. The chart accompanying this story shows
life expectancy and health expenditure per capita from
1970 to 2017. It highlights just how far off course the U.S.
has drifted.
The U.S. has lower life expectancy than the other wealthy
countries but vastly higher expenditures per person. In
1970, the countries were not very far
apart, with American life expectancy not
much worse and expenditures not much
higher, but other countries have seen
faster improvements in health and slower
increases in costs. In 2017, the Swiss lived
5.1 years longer than Americans but spent
30% less per person; other countries
achieved a similar length of life for still
fewer health dollars. If a fairy godmother
were to reduce the share of health care in
American GDP to Switzerland’s, 5.6% of
our GDP (or more than a trillion dollars)
would be available for other things. That
is more than $3,000 a year for each per-
son in the U.S., or about $8,300 per house-
hold. If each household had been given an
additional $8,300 in 2017, median income
growth over the past 30 years would have
been double what it actually was. These
very large numbers are just the waste of
health care.
America is a rich country, and it makes
sense for Americans to pay for more and
better health care. Yet Americans do not
use more of most medical services com-
pared with other countries’ citizens.
Americans do seem to have a more lux-
urious system— business rather than
coach, as it were—but as with business
and coach passengers, everyone reaches
their destination at the same time.How is it possible that Americans pay
so much and get so little? The money is
certainly going somewhere. What is waste
to a patient is income to a provider. The
industry is not very good at promoting
health, but it excels at promoting wealth
among health care providers, including
some successful private physicians whoThe sickness
of our system
HEALTH CARE COSTS UNDERMINE WORKING-CLASS LIVES
BY ANNE CASE AND ANGUS DEATON