Health and Taxes: Why People around the World Are Healthier than Americans

Scott L. Greer

Professor of Health Management and Policy, Global Public Health, and Political Science

April 10, 2019

Americans often equate universal health care, foreign health care, and “single payer” care, with some general vision of “how Europeans do things.”

But single-payer nations like Canada, Sweden, and the United Kingdom are not the only populations with efficient, innovative, equitable health care. The US spends copiously on health care yet is consistently ranked low in health outcomes among developed nations. Other countries have better integrated social, cultural, and economic factors beyond health care to not only provide good care but to support health generally.

Canada and the United Kingdom may loom large in the American imagination. But these two national systems hardly exhaust the range of universal, high-quality, financially sustainable systems out there. In fact, Canadian and British health care are quite different from one another.

In a single-payer system, as the name suggests, one payer covers all health care. Multiple insurers don’t exist, though multiple providers do. In the US, the Veterans Administration (VA) is effectively single payer. The Trump administration’s privatization proposals would shift the VA’s approach from a Scottish model, in which the government owns the hospitals, to a less-efficient Canadian model, in which the government often contracts with other entities to provide care.

Perhaps the most important thing to say about European health care is that we should be very careful about generalizations and assumptions. Single-payer systems are not the only kind of system, the differences between single-payer and other universal systems are not always so big, and single-payer systems can be executed in a variety of ways.

How Do Europeans Actually Do Health Care?

Many continental European countries have a social-insurance model based on contributions. If you imagine a single-payer system as akin to the VA, then social-insurance countries, from France and Germany to Austria and Slovenia—and, for that matter, South Korea—are run along lines similar to Medicare.

In these countries, the patient is a sovereign consumer who can choose providers and whose insurance is provided by tightly regulated, nonprofit social-insurance funds. Patients have more autonomy than in the US model because social health insurers are not incentivized toward narrow networks. And providers also have more freedom because they negotiate prices collectively and set quality standards collectively. An example is how hospitals as a group negotiate their standards and prices with all payers. Such systems are generally less efficient than single-payer systems but deliver higher customer satisfaction because providers need to compete for patients.

Finally, a nascent third cluster of countries—the Netherlands, Switzerland, and to some extent a post-ACA United States—builds health care around a mandate for individuals to have health insurance from private providers. They are distinctive from the social-insurance and NHS countries in their high costs relative to average quality. But all build in large, profitable roles for politically powerful actors such as insurance companies and hospitals.

Refreshingly Simple Lessons The US is an outlier among health systems. Comparative health statistics are easy to fault and dispute for many reasons and tell us little about the different health results of most countries. But they do show, again and again, that the US pays twice the average for health care and has average to below-average health care and health to show for it. Wastefulness and mediocre quality are the outstanding traits of the US health care system overall, despite isolated pockets of efficiency and quality. Health care systems work best when the buck stops somewhere, and no one has found a place it can stop other than the government. Once a government is charged with maximizing health for taxes, an inexorable force is applied to making systems better integrated, more efficient, and often patient-friendly. Efficiency is not the answer to everything. No matter how efficient a health care system, at some point it just needs more money and people to do its job. The UK’s National Health System structures are both extremely good at efficient, high quality care and also underfunded.

Do Voters Really Have Power?

All functional health systems have in common a simple pair of underlying structures: de facto monopsony (a market with only one buyer) and standard prices.¹ Somebody—ultimately the government—is responsible for a satisfactory balance of revenue and health care quality as well as distribution decisions within society, whether that means the relative pay of psychiatrists and surgeons, the relative powers of doctors and nurses, the importance of prevention and cure, or attention to health equity. The government must deliver all that, and voters know it.

Over time, that political reality puts pressure on health systems to integrate and to seek systemic efficiencies. If expensive vascular surgery and cheap podiatry come out of the same budget, what manager wouldn’t try to promote regular podiatric visits over vascular surgery in managing diabetes? American policy often tries to encourage such logic, using payment system reforms—but it is natural to do so in systems where somebody is responsible to the electorate for efficient health care.

Health or Health Care?

Of course, health care is not the only thing affecting health. Cultural behaviors and trends are remarkably influential. Scotland’s high-quality and efficient health care system—good outcomes and possibly the lowest managerial costs of any system—is often overwhelmed by Scotland’s worrisome public health situation, from poverty and bad diets to physical inactivity.² Spain’s health care system is also very good, but outcomes are looking worse as Spanish health care fights a wave of obesity-related noncommunicable diseases.

A variety of policies influence health. The US is still a world leader in some, such as regulating air pollution. With others, like occupational safety and health, the US has fallen behind the EU. In failing to constructing built environments that encourage walking and cycling instead of obliging people to drive, US infrastructure and development patterns still promote auto-centric lives and accompanying ill health.

Then there is the question of equality. In rankings of health and income inequalities, the US looks more like a Latin American country than a European one. Racial and income inequalities pervade our health care system, with strong relationships between income and racial discrimination and health at every stage of life.³ Even the UK, famous for its class system, has more upward mobility and less income and racial disparity in health than the US. The worst EU performers in reducing inequality—Latvia and Spain—still offer a poor or working-class child a better shot at upper middle-class life and health than the US.

What Do Taxes Do for Health?

Americans often attribute European success with “welfare” to Europe’s “tax-and-spend” model. And it is true that both the taxes paid and public services received by a Danish or French citizen are far greater than those paid and received by a resident even of a liberal state like Massachusetts, California, or New York. But much of the difference is in the broader economy, especially the regulation of labor and wages.

To take a dramatic example, British and Swedish governments are about equally committed to reducing income inequality through taxing and social investment. The UK, however, is far more unequal than Sweden because even a state that taxes the rich and supports the poor is not able to compensate for the extremely unequal distribution of income in the UK. The difference is that Sweden has strong unions and a coordinated labor market, which depresses the salaries of the highest skilled employees, increases the salaries of the least skilled employees, and thus increases Sweden’s international competitiveness, equality, and innovation because people can take risks. The costs and benefits of that are clear, as are the politics behind such decisions.⁴

Broader areas of the political economy, and many other factors, shape population health. It isn’t just that Swedish, French, or Swiss health care systems are more equitable and efficient than ours. It is also that their societies are more egalitarian and provide a better infrastructure for work, family, and upward mobility.

Health is not the same as health care. Efficient, innovative, equitable health care is only part of our health outcomes. In evaluating human health in the US, keep looking beyond health care systems to the political, social, cultural, and economic realities behind our care.

Notes

1. Joseph White, “The 2010 US Health Care Reform: Approaching and Avoiding How Other Countries Finance Health Care,” Health Economics, Policy, and Law 8/3 (July 2013): 289–315.
2. Scott L. Greer, “Devolution and Health in the UK: Policy and Its Lessons since 1998,” British Medical Bulletin 118/1 (June 2016): 16–24.
3. OECD (2018), A Broken Social Elevator? How to Promote Social Mobility, Paris: OECD,
   doi.org/10.1787/9789264301085-en.
4. Scott L. Greer, “Labour Politics as Public Health: How the Politics of Industrial Relations and Workplace Regulation Affect Health,” European Journal of Public Health 28/supp.3 (November 2018): 34–37.

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About the Author

Scott L. Greer, a political scientist, is professor of Health Management and Policy, Global Public Health, and Political Science at the University of Michigan and is also Senior Expert Advisor on Health Governance for the European Observatory on Health Systems and Policies. He researches the politics of health policies with a focus on politics and policies in the European Union and impacts of federalism on health care. Before coming to Michigan, he taught at University College London. He has published in the British Medical Journal, American Journal of Public Health, Social Science and Medicine, Journal of European Public Policy, Journal of European Social Policy, and Journal of Health Politics, Policy, and Law.