Anne Case and Angus Deaton
98 «¬® ̄°±² ³««³°® ́
among less educated American men and women, many o whom have
children with more than one person to whom they are not married, is
much rarer across the Atlantic.MORE MONEY, MORE PROBLEMS
Another factor unique to the United States contributes signi¥cantly
to the hollowing out o the U.S. labor market: the tremendous cost o
the U.S. health-care system. The United States spends 18 percent o
its ±½Ä on health care; the second-highest percentage among coun-
tries in the Organization for Economic Cooperation and Develop-
ment is in Switzerland, where that ¥gure is 12 percent. The United
Kingdom spends only ten percent; Canada, 11 percent. But Ameri-
cans don’t get many health bene¥ts in return for their huge expendi-
ture. Life expectancy in the United States is lower than in any other
rich country, levels o morbidity—the experience o ill health—are
worse, and millions o people don’t have health insurance.
The crucial problem is not that the system does so little for health
but that it does so much harm to the economy. I the United States
were to reduce its percentage o health-care spending to the level o the
Swiss percentage, it would save six percent o ±½Ä—over $1 trillion a
year, or approximately $8,600 a year for every household in the coun-
try. Savings o that kind would come to 180 percent o what the United
States spends on its military. This wasteful spending on health care is a
cancer that has metastasized throughout the economy. (The investor
Warren Buett has referred to its eects on U.S. business as like those
o a “tapeworm.”) The cost inates the federal de¥cit, compromises
state budgets, and drains resources for education and other services.
U.S. workers would have much better lives today i they didn’t have to
pay this enormous additional tribute. Yes, the health-care industry cre-
ates employment, pays the salaries o providers, and boosts the pro¥ts
and dividends o shareholders; all that waste is an income for someone.
But the resources swallowed up by the health-care industry would be
better used in other ways, in improving education, investing in research
and development, and repairing roads, bridges, airports, and railways.
Less skilled workers lose the most in this arrangement. Uniquely
among rich countries, employers in the United States are responsible
for the health insurance o their employees; ¥rms with 50 employees
or more must oer health insurance. In 2018, the average annual cost
o a family policy was $20,000. For the employer, this is simply a labor