Saturday, August 10, 2019

The Economics of Healthcare in America #1: Where Individuals (not Averages) Live Longer Than Any Country on Earth (Part 2 of 2)

Click here to read the original Cautious Optimism Facebook post with comments

3 MIN READ - A followup healthcare dispatch from the Cautious Economics Correspondent for Economic Affairs and Other Egghead Stuff.

In Part 1 of this installment on life expectancy we explained why America is the best place in the world to be if you want to live a long time, and why headlines and arguments of “America has one of the lowest average life expectancies in the industrialized world” are statistically misleading, flawed, and used to misrepresent the effectiveness of America’s leading (but still overly expensive) medical system.

In short, the melting pot of America has large ethnic populations with shorter lifespans that pull the national average down below many other OECD countries. That is, countries like Sweden and Japan don’t have large African, Western Indian, or Eastern European populations that tend to live shorter lives. Yet life expectancy for Swedish-Americans is higher than the average of Sweden itself, Asian-Americans live longer than the Japanese, and of course Hispanic Americans have far higher life expectancy than any Latin American country including OECD members Chile and Mexico.

The COCEA suggests reading the earlier analysis in detail (link is at the bottom of this article).

However there’s more. Despite life expectancy by ethnicity already being higher in the USA than anywhere in the world, the U.S. average is artificially lowered by other unique factors that either 1) have nothing to do with the health system, or 2) are the product of government policy.

Accounting for those factors, America’s already world-leading life expectancy widens the gap even further from the rest of the world.

Here are a few of them.

I. The U.S. has a far higher incidence of premature deaths due to violence and traffic accidents than other developed countries. Violent deaths usually claim the lives of young men who, by virtue of dying young, disproportionately adjust nationwide life expectancy downwards. Also, since Americans own cars and drive longer distances on a per capita basis than citizens of other developed countries, they die at a higher rate in auto accidents.

For example, the U.S. rate of auto deaths per 100,000 people is over double that of France and Germany (10.4 vs 5.1 and 4.1) and over triple that of Denmark, Switzerland, and the U.K. (10.6 vs 3.4, 3.3, and 2.8).

Since the average driver fatality age tends to be much lower than the average age of those who die naturally, traffic deaths also disproportionately lower average American life expectancy.

Health policy academics Robert L. Ohsfeldt and John E. Schneider (both Univ. of Iowa) recalculated average life expectancy factoring out violent deaths and accidents in all countries and official U.S. adjusted life expectancy—which had previously ranked #19 using the traditional statistical methods—leapfrogged to the top of the list.

II. Also, we all know Americans eat worse and lead more sedentary lifestyles than your average Swede or Japanese. These “bad habits” have nothing to do with the effectiveness of the healthcare system which overwhelmingly treats such patients only after the consequences of their lifestyle choices catch up to them. That Americans can place so well against the rest of the world even when engaged in such unhealthy behavior is actually a tribute to the strength of America’s medical system.

III. America’s statistical methods for calculating infant mortality are far more stringent than other developed nations. The result is far more actual infant deaths are counted in America, imposing a severe downward impact on average life expectancy while countries that statistically ignore those deaths are unaffected.

Another column detailing the wide variances in infant mortality calculations between the United States and other countries will be forthcoming in a future article.

IV. Finally, overall American life expectancy averages include citizens whose medical bills are overwhelmingly paid for by government insurance programs like Medicare, Medicaid, and state-level reimbursements.

According to the Census Bureau, some 118 million of America’s 330 million citizens received Medicare or Medicaid-paid services in 2015. And a little known fact is half of all healthcare spending in the USA is made by government.

It’s common knowledge that Medicare and Medicaid patients receive a lower standard of treatment from providers due to lower government reimbursements and payouts. Doctors, hospitals, and other providers universally spend more time, provide more effective procedures and services, and generally take better care of patients paying with private insurance than with Medicare and Medicaid.

Yet America’s average life expectancy includes the inferior results derived from Medicare and Medicaid patients. So if those programs are factored out and only truly private sector medicine and payments are counted, American life expectancy rises even further.

Which after all is what the underlying debate is about: health outcomes under private medicine compared to those under government-run healthcare. We don’t want to compare the 100% government British system with a 50% private/50% public American system. We want to compare the 100% government British system with the private-only portion of the U.S. system. On that account America wins by an even greater margin.

So even with all the life-shortening behaviors prevalent in America (bad diet, lack of exercise, violent deaths, auto accidents) and the statistical downward pressures applied by Medicare and Medicaid funded care, there is still no place in the world where you will live longer than the USA.

That is once again unless you’re an average—and not an individual.

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