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Viewpoint |

Critiquing US Health Care

Victor R. Fuchs, PhD1
[+] Author Affiliations
1Stanford Institute for Economic Policy Research, Stanford University, Stanford, California
JAMA. 2014;312(20):2095-2096. doi:10.1001/jama.2014.14114.
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This Viewpoint discusses the economics of the US health care system.

Critics of US health care usually begin by noting that this country spends a much greater share of its gross domestic product (GDP) on health care than any other country but lags in life expectancy at birth. This critique implicitly (and sometimes explicitly) assumes that there should be a positive correlation between health care expenditures and life expectancy. Such an assumption is fully justified for low-income countries with minimal health care; additional care and financial resources usually have substantial favorable effects on life expectancy.

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Average Life Expectancy vs Health Care Expenditures

The data points are health care expenditures as a percentage of gross domestic product (GDP) in 2009 for Organization for Economic Co-operation and Development (OECD) countries and higher- and lower-income US states. The GDP for each US state was calculated by dividing the US state’s health care expenditures as a percentage of the US state’s personal income by 1.16, which is the US ratio of GDP to personal income. Using personal income as the base preserves more accurately the variation across US states in economic well-being. Adjusting the level by the ratio of GDP to personal income makes the US state data more comparable with the OECD data. The OECD countries with at least $2400 per capita in health care expenditures are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom. The diagonal line indicates the linear relationship between life expectancy and health care expenditures as a percentage of GDP as calculated by a linear regression fitted to the 25 observations for the low-income US states.

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