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Health Care Spending: Large Differences, Unequal Results

Global inequality in health care spending is large. As the chart of health care spending per person shows (below), the countries in the highest quintile (20%) spend more than 16 times the amount spent by the lowest quintile. The highest 5% of the countries spend 4492% of the lowest quintile. This is after adjusting the per capita spending rates to international dollars (to account for Purchasing Power Parity), and includes both government and personal expenditures.

 

Money Alone Does Not Extend Lives

Despite the wide gaps, higher spending on health care does not necessarily prolong lives. In 2000, the United States spent more on health care than any other country in the world: an average of $4,500 per person. Switzerland was second highest, at $3,300 or 71% of the US. Nevertheless, average US life expectancy ranks 27th in the world, at 77 years. Many countries achieve higher life expectancy rates with significantly lower spending. The chart below shows the top 30 countries in the world ranked by life expectancy. The red line indicates per-capita health expenditure (right axis), and shows that many countries outperform the US with approximately half the spending.

The chart (above) also highlights the sharp contrast between the US and Cuba. With a life expectancy of 76.9 years, Cuba ranks 28th in the world, just behind the US. However, its spending per person on health care is one of the lowest in the world, at $186, or about 1/25 the spending of the United States. There are other cases where high life expectancies are achieved with low spending on health care. The scattergraph (below) shows the relation between per-capita health care expenditure and average life expectancy for 2000. Countries with higher spending generally have longer life expectancy rates, but there are also many countries that perform nearly as well with much lower spending.

Policy Priorities Have a Large Influence Beyond Per-Capita Spending

One reason for the discrepancy between spending and longevity is that these numbers are average life expectancies and per-capita spending rates, which mask inequalities. For example, the US Health and Human Services department found that people with lower incomes and less education tended to die younger. Life expectancy also varied by ethnicity. In 1998 life expectancy among white Americans was 76.8 years, while African Americans lived an average of 70.2 years. (See Intracountry Inequality).  Another reason some countries achieve high life expectancy with low health spending is that clean drinking water and preventive health care can be provided with little spending. If there is near universal clean water and preventive care, life expectancy rates can be high. In the US, however, nearly 40 million Americans lack basic health insurance, and are therefore less likely to receive preventive care.  In contrast, Cuba has universal health care and one of the highest doctor-to-patient ratios in the world (See Physicians).  Although Cuba has limited resources and many economic problems, it has made health care a priority. It is not alone. Sri Lanka, China and the Indian State of Kerala are considered "low-income, high well-being" countries, which have adopted policies that not only reduce inequality but also increase overall health and well-being. The results of these policy priorities are significant, and can be measured in survival indicators, such as average life expectancy.

 

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