My mission statement

The times we are working in now need a great deal of accelerated change and there must be no negotiating that down. So my mission statement for this part of my consultancy career is to be clear that there needs to be and will be a lot of change from the work that I do with individuals and organisations and if organisations don’t want that, then it is probably best to go somewhere else.

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NHS or US health systems? Who spends the most taxpayers’ money?

Filed Under (Expenditure, Health Policy, Public Health, US opinion) by Paul on 25-08-2009

The recent discussion about the US and English health care system has thrown up a number of important facts. Some of them are obvious but some are counterintuitive and need some exploration and discussion.

Whilst we all know that the US spends much more pre head of the population or as a proportion of GDP on their health services than we do, the assumption is that most of this is private expenditure. Surely there is nothing wrong with individuals in a rich country spending their own money on health in the same way as they might spend their money on a third or fourth luxury car. This is private income being spent privately on their health – a set of personal consumer choices.

Overall per head of the population in the US they spend $6719 per head of the population on health care whereas in the UK it is $2815. So all of that is surely simple private consumption choice?

Add this to the traditional US low tax economy with its concomitant dislike of raising and spending taxes and you have what look like the main twin rationalities for what passes as their health care system. Individual freedom to spend your own money as you want and an aversion to spending tax payers money on what should be paid for privately.

A strong piece of ideology which sounds good but it’s not true in one important respect – the US tax payer now spends more per head of the population on health care than we do in the UK.

In the US taxpayers pay out $3706 per head of the population in health care and in the UK it is $2457.

No this isn’t saying that the US taxpayer pays out $3706 per head of those people who are not covered by private insurance.  That $3706 is for every single person on the US even those who do not use tax funded medicine.

So whilst we hear a great deal from the right about the inefficiency of the NHS paid for out of taxation. The US system, a system which does not appear at first sight to be organised around tax funded health care, actually pays out a higher proportion per head of taxpayers’ money than one where everyone is covered.

How on earth could this happen? How on earth could a system which has all that private money going from employers and individuals into health care still cost more than one that is totally funded by the tax payer?

And here is where the ideology of the US right crumbles into dust. Their overall non system has such deep inefficiencies built into it that they cannot produce levers to spend less money into their tax paid for system.  To save money health care systems need earlier and earlier diagnosis. They then need some competition between providers at the point where value is added to drive up value and keep costs down.

For the recipient of Medicaid and Medicare (where most of the tax funding goes) there is little if any overall systemic approach to health care and the early diagnosis of long term conditions. By the time the tax payer is paying out for health care for the old and the poor, they are usually quite sick. This increases their cost enormously.

But given the strength of political opinion in the US against paying tax, how is this allowed to continue? As we can see in the onslaught against President Obama’s reforms, there are those who are in favour of the present chaos because within that chaos there is a lot of money to be made.

17% of the GDP of the biggest economy on earth is an enormous amount of money to be made. About one half of that money comes from the tax payer and consequently is there to be exploited.

So it is in the interests of those  that are making money out of this non system to be in favour of high tax spend, as long as that high tax spend is part of a deeply inefficient system.

This places the left in the US in favour of efficiency over public and private spend and the right in favour of overall inefficiency even if its means that the tax payer has to go on spending more money on that inefficiency.

So in the debate over the next few months as the right in the US attacks the NHS, remember that the US spends more tax per head of the population on a non tax funded service than our taxpayers do on our NHS that covers everyone for their health service free at the point of need with equal access for all.

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