To those following U.S political debate, healthcare reform is without doubt the most contentious issue, with the Administration lobbying for what is effectively the creation of a government run health care system. In this environment, enemies of the market have used the problems in the current healthcare system as an indication of market failure.
The U.S healthcare system has many, many, many flaws. But can it be accurately categorised as free market? I decided to look into this to look at government expenditure on healthcare and compare it to other countries – a comparison I haven’t seen of in the media.
So, I went to the World Health Organisation Database and looked at the per capita breakdown of healthcare expenditure by governments in different developed countries. And the results suprised me. Quite a bit. Because it seems the U.S government spends more per person on healthcare than the government of any major developed country.
Looking at 2006, the most recent year for which statistics are available, we can see that U.S government spends $3074 per capita on healthcare. This is the highest of any major developed country (by way of comparison combined Australian government (ie Federal/State/Local) expenditure is $2097). And this is without the additional expenditure that will occur if the proposed government healthcare plan is passed – with that it goes up to almost $4000 per person!
So effectivly the supposed ‘free market’ of U.S healthcare actually has more government involvement than pretty much anywhere else.
The U.S healthcare system is in need of reform. But I think that this graph effectivly demolishes the myth that the problems arose out of any form of market failure.
(A version of this was originally posted at Americans for Tax Reform)