Does Lower Spending on Health Care = A Sicker Population?

December 11, 2011 in Health Policy by RangelMD

A recent LA Times article bemoaned the latest report from the Federal government that California ranks near the bottom among states for per person health care spending.

New data show that total spending by insurers, government agencies and individuals amounted to $6,238 per resident in 2009, well below the national average of $6,815. That puts California on a bottom tier with Arkansas, Georgia, Texas, Utah, Nevada, Arizona, Colorado and Idaho.

God forbid that California be in the same category of anything with those red states! It must be like west coasters finding out that Newt Gingrich is a diehard 49ers fan. Then came the blanket statements that blames lower health care spending for a sicker population, less productive work force, and the general downfall of civilzation.

“The state is essentially under-investing in healthcare and ending up with an unhealthier population as a result,” he said. “If people aren’t healthy, they are not able to work or to be as productive as they otherwise would be.”

But it’s not at all certain how spending on health care directly or indirectly affects worker productivity and economic growth. The problem is one of being able to separate the variables from each other. For example, health care spending is well known to directly correlate with older and wealthier populations.  States with a higher percentage of older citizens such as those in the North East and Florida spend more on health care than states with a younger median population like California and wealthy countries spend more on health care than poorer countries.

The overall health of a population (as measured in higher life expectancy, lower infant mortality, lower rates of disability, etc.)  certainly does correlate with better productivity.  But economically advanced and productive populations tend to be healthier which promotes increases in productivity which increases wealth and so on. Ergo, this self defining metric is not very useful and it not at all the same as the level of health care spending.

Another problem with trying to study population health and health care spending is determining cause and effect. Obesity is a good example. There is very good evidence that obesity and obesity related health problems directly leads to $40 Billion per year in excess costs to the Federal government. But there is no good evidence of the reverse.

Indeed, health care spending in this country is almost all reactionary and not preventative. States with older populations spend more. States with higher rates of unhealthy lifestyles such as obesity, smoking, and substance abuse spend more to deal with these miladies. The primary philosophy of US policy makers regarding health care spending appears to be little more than, “the squeaky wheel gets the grease.” And right now California has the benefit of being one of the healthiest states with low rates of obesity and smoking as well as being one of the states with the youngest populations.

In the same way that lower spending on fire fighting equipment and supplies is due to the fact that there were fewer  rather than more fires, the total level of health care spending should not be confused with worsening public health. Better metric analysis should focus on the numbers of and access to primary care providers, basic and affordable medications, neonatal and women’s medical care, and efforts to reduce pain and suffering in the elderly and terminal patients. Right now the US spends far too much on expensive and often frivolous medical care.  A smarter question should be, “are we spending enough on the right things” and not just “are we spending enough?”


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