There is no doubt that health care — specifically the cost of health care — is a hot topic these days. With rising health care costs in the U.S., you’d be hard pressed to find anyone who isn’t feeling the pinch!
The Economist Intelligence Unit created a free white paper called the ‘Healthcare Outcomes Index 2014’ based on World Health Organization (WHO) data to measure health care outcomes compared to the cost of those outcomes.
The authors of the paper relied on WHO data measuring these factors:
- Adult mortality in 2012
- Disability adjusted life years (DALYs)
- Health-adjusted life expectancy (HALE)
- Life expectancy at age 60 in 2010 (the latest available data)
They then converted these indicators into an index to show the outcomes for each country and compared that with WHO spending data to get their results.
America’s poor health care ranking
Probably the most disheartening finding is that while the U.S. spends the most on health care, we ranked 33 on health care outcomes. So why is that?
A few reasons for America’s low ranking
Many of the countries with the best outcomes have made those gains at a considerable cost. But with health care, the law of diminishing returns applies — meaning since life is finite, the best ROI comes by providing care to people when they are younger versus when they are older. Life matters no matter what age we are — but our heath expenses increase as we age. The paper states, “As life expectancy rises and disease profiles shift towards chronic disease, gains at older ages or for the seriously ill become hard-won, often entailing months of expensive care or high-priced medicines and medical technologies.”
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Less advanced health care systems fair better when it comes to value than their more advanced counterparts — if cost is the only factor considered — even though the advanced health care group delivers better outcomes overall.
Some factors for America’s ranking:
- Large aging population
- High labor costs in medicine
- ‘Legendary inefficiency’
- Low spending on other social services that may help to improve health outcomes
A country to look to: Japan
Conversely, Japan is a bit of an outlier. Though Japan has the oldest population of the 166 countries covered by this report, it also has the highest health care outcomes. The country’s life expectancy is the highest at 60, and in spite of this, they have somehow found a way to keep their health care costs low.
So why is Japan different?
Though Japan also has a large aging population and is a developed nation like we are, they have some notable differences:
- The relatively healthy diets and lifestyles of its people (many Japanese citizens continue to be active and work into their 70s, plus they have very low obesity as a nation).
- The efficiency of their health care system (central pressures on pricing for health services and pharmaceuticals are strong, and Japan has established a mandatory long-term care insurance to which people 40 and over must contribute).
- Japan has the lowest rate of non-communicable disease (NCD) such as cancer, which can also be the most expensive to treat.
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In tandem with health care becoming more expensive as we age, there is also the factor of cost of innovation. As the paper states, “As outcomes improve, progress becomes more expensive.” There are costs associated wth advancement in industrialized nations compared to many developing nations. These nations tend to have younger overall populations who can realize large benefits from relatively lower cost forms of medical care, such as vaccines.
Although healthcare has become more expensive for many nations, the data isn’t all bad: Life expectancy has risen 12 years over the past four decades, while infant mortality is one-third what it was previously. South Africa is the notable exception that has declined in life expectancy due to AIDS, but the overall picture is generally getting brighter for healthcare on a worldwide scale.
Perhaps the U.S. could take some pointers from Japan and other nations in order to decrease our health care costs, streamline our efficiency in health care and improve our quality of life. After all, we only get one life to live!