Thursday, January 20, 2011

Which Country Has The Most Efficient Health Care System?

This is a raw measure, but useful for comparison purposes. I've taken the Healthy Life Expectancy of 25 countries and divided it by their % of Gross Domestic Product spent on health care. This yields a result equal to the number of healthy years purchased by each per cent of GDP spent on health care. Let's call it the Health Care Efficiency Ratio:

HCE Ratio = Healthy Life Expectancy / % GDP Spent on Healthcare

Healthy Life Expectancy (HALE) is a statistic devised by the World Health Organization, defined as the "average number of years that a person can expect to live in 'full health' by taking into account years lived in less than full health due to disease and/or injury." HALE is always less than full life expectancy, typically by 7-9 years. (To read more about HALE, click here.)

For example, Norway spends 8.4% of its GDP on health care, and Norwegians have a HALE of 73:

HCE = 73/8.4 = 7.8

In Norway, each per cent of GDP spent on health care purchases 7.8 years of healthy life.

The following ratios are taken from 2006 statistics; because of population aging and medical inflation, each is likely lower now.
  1. Singapore 21.5 (73/3.4)
  2. Republic of Korea 10.9 (71/6.5)
  3. San Marino 10.6 (75/7.1)
  4. Luxembourg 10.1 (73/7.2)
  5. Ireland 9.7 (73/7.5)
  6. Japan 9.6 (76/7.9)
  7. Finland 9.5 (72/7.6)
  8. Israel 9.4 (73/7.8)
  9. Spain 9.1 (74/8.1)
  10. United Kingdom 8.6 (72/8.4)
  11. Norway 8.4 (73/8.7)
  12. Sweden 8.3 (74/8.9)
  13. Italy 8.2 (74/9.0)
  14. Iceland 8.0 (74/9.3)
  15. Netherlands 7.8 (73/9.3)
  16. New Zealand 7.8 (73/9.3)
  17. Australia 7.6 (74/9.7)
  18. Belgium 7.6 (72/9.5)
  19. Denmark 7.6 (72/9.5)
  20. Canada 7.3 (73/10.0)
  21. Germany 7.1 (73/10.3)
  22. Portugal 7.1 (71/10.0)
  23. France 6.6 (73/11.1)
  24. Switzerland 6.6 (75/11.3)
  25. United States 4.6 (70/15.3)
At first glance, the most interesting trend is the clustering of the Beveridge Model countries toward the upper center of the list (7, 10-14, 19). Three NHI model countries (New Zealand, Australia, and Canada) are in the bottom half, but the Republic of Korea ranks second. (The World Health Organization does not have statistics for Taiwan, which also uses the NHI model.) Bismarck Model countries are at the top and bottom, although it should be noted that WHO ranks France as having the best health care system in the world. The French get what they pay for.

Apart from Singapore's astonishingly efficient delivery of care, the most salient point is the high costs associated with having no model at all: It's no accident that the United States is at the bottom of the list.

Next, HealthMatters will examine what the top rated systems do to ensure efficient use of their health care dollars.