Health system cost-effectiveness
By Austin Frakt
How much value do we obtain per dollar spent on the health system? How has that changed over time? How does it compare across countries? These are tough but important questions.
To explore them, this chart is worth close study. It’s an updated version of one that appears in this 2017 Lancet article by Reinhard Busse, Miriam Blümel, Franz Knieps, and Till Bärnighausen. It represents how much health systems reduce mortality per dollar spent.
Let’s unpack it. Seven countries are represented: US (red, labeled “USA”), Denmark (yellow), France (dark green), Germany (light green, labeled), United Kingdom (red), Switzerland (blue, labeled), Canada (grey). For each country, about a dozen points are plotted, roughly 2006 – 2016 (some start in 2005 and some end in 2015).
Each plotted point represents a year — earlier years are toward the upper left, later ones toward the lower right. And each point, for each country, conveys how many lives were lost that could have been saved by the health system and how much is spent by the health system.
Specifically, the horizontal axis is per capita health spending, in US dollars and adjusted for purchasing power (meaning a dollar equivalent of another currency buys the same amount of goods and services as a US dollar does in the US). All else held constant, one would prefer to spend less on health care, so movement to the left along the axis is preferred.
The vertical axis is amenable mortality per 100,000 people, for those under 75 years old. That is, it’s the number of 0-74 year olds that die per 100,000 due to factors that they health system can address with accessible, timely, and effective health care. All else held constant, one would prefer fewer deaths, so movement downward along the axis is preferred.
With that in mind, points more to the left and further downward are to be preferred than points upward and to the right. That’s because they imply fewer deaths for less money. I don’t care what your values are, you should always prefer less death at lower cost. I’ll let you conclude from that what to make of US health care spending relative to that of any other country represented.
There’s another way to look at this chart, though. Just focus on one specific country— let’s take Germany. As the years passed, Germany (and every other country) spent more on health care. How much reduction in death did it achieve as it did so? The spending is more efficient the greater decrease per dollar. In other words, the steeper the downward slope of a country’s line, the more efficiently it is investing in health care.
Relative to other countries depicted, Germany has a moderately steep downward slope. From about 2010-2015, Denmark’s slope is the steepest shown—vast improvements in mortality per dollar spent. Switzerland’s really flattens out in recent years, indicating very little gain for a lot more spending.
Now look at the US. Recently, it’s line has sloped a tad bit upward. More spending and more death. That’s the worst deal of all.