The 62.5% solution

The Brits are mad that U.S. conservatives and libertarians are holding up their National Health Service as an example of what will happen to America under Obamacare. (As the past year has demonstrated, both the British and Germans are as nationalistic as the French or Americans when their countries are criticized by outsiders.)

As part of the self-organized British response, you will find that the talking point

The UK spends less per head on healthcare but has a higher life expectancy than the U.S.. The World Health Organisation ranks Britain's healthcare as 18th in the world, while the U.S. is in 37th place.

has shown up at least 400 times on the web.

Checking the 2000 WHO study, sure enough the US ranks #37 after Finland, Australia and Denmark and barely ahead of Cuba and New Zealand. But what do the rankings mean? There are five criteria:

1. Health Level: 25 percent
2. Health Distribution: 25 percent
3. Responsiveness: 12.5 percent
4. Responsiveness Distribution: 12.5 percent
5. Financial Fairness: 25 percent

The libertarian flagship thinktank, Cato, has compiled a number of commentaries on the limitations of the WHO rankings, as well as a detailed report. I won’t rehash all the arguments here, but let me pick up two quick points.

As Cato analyst Glen Whitman notes, three of the measures — financial fairness, health distribution and responsiveness distribution — are about equity rather than about quality outcomes (either at the mean or even at the minimum). These measures are weighted 62.5% of the total. A bad but fair system would rank ahead of a good but unfair system for 5/8ths of the WHO points — so without a calculation eliminating those weightings, we don’t know what effect they have on the final result.

Whitman also observes:

The WHO rankings have also been adjusted to reflect efficiency: how well a country is doing relative to how much it spends. In the media, however, this distinction is often lost.

Costa Rica ranks higher than the United States (number 36 versus number 37), but that does not mean Costa Ricans get better healthcare than Americans. Americans most likely get better healthcare -- just not as much better as could be expected given how much we spend. If the question is health outcomes alone, without reference to spending, we should look at the unadjusted ranking, where the U.S. is number 15 and Costa Rica is number 45.

So saying “UK spends less per head” is double-counting. Without adjusting for efficiency, the UK is #9 and the US #15.

There are also other problems with the comparisons. As Dr. Ronald Wenger wrote last month:

Review of recent literature suggests that life expectancy is a poor statistic for determining the quality of a health care system because many people actually die with minimal interaction with the health care system (in auto accidents, homicide, and sudden death).
…
According to a 2007 article in the New England Journal of Medicine, only 10 percent of premature deaths in the U.S. are related to the health care system. The great majority (85 percent) of premature deaths are related to human behavior, genetic predisposition, and social circumstance.

Wenger also makes two other interesting points. First, Japanese-Americans in the US have life expectancy similar to Japanese living in Japan (which has the highest life expectancy in the world.)

Secondly, America spends a disproportionate share of its healthcare dollars on detecting and treating cancer, but even if all cancer deaths eliminated, US life expectancy would only increase by 2.4-3.0 years. So America values saving cancer patients far beyond any economically rational cost-benefit analysis for the current generation. (Of course, if treatments become more efficient and effective, the benefits may be realized by the whole world a generation later).

Thus, it’s impossible to directly compare the results of two vastly dissimilar trillion-dollar healthcare systems. All sorts of value judgements enter in to making adjustments for comparability, making the final result more subjective than anyone is willing to admit. (And the assumptions don’t seem to make it into the talking points.)

As with other aspects of life, there are three kinds of lies: “lies, damned lies, and statistics.”