Morningstar Magazine - October/November 2017 - 47

EXHIBIT 2

U.S. Healthcare Highly Inefficient The U.S. far outspends other industrialized countries on healthcare.
Percentage of GDP

17.2

20
%
15

9.7

9.6

10.5

9.2

10.5

11.0

12.4

11.3

10.3

11.0

10
5
0

United
Kingdom

Australia

Netherlands

New
Zealand

Norway

Sweden

Switzerland

Germany

Canada

France

United
States

USD per Capita

12K
USD
9,892

9

7,919
6,647
4,192

4,708

5,551

5,488

5,385

6
4,644

4,600

3,590

3
0

United
Kingdom

Australia

Netherlands

New
Zealand

Norway

Sweden

Switzerland

Germany

Canada

France

United
States

Source: Organisation for Economic Co-operation and Development (stats.oecd.org). Data as of 2016.

product that each country spends on healthcare.
Another way is to look at healthcare spending per
capita. We do both in E X HI BI T 2 , which shows
the 11 countries in the Commonwealth Fund study.
The countries are ranked in the order presented
in that study.
The exhibit shows that the United States spends
far more of its GDP on healthcare than the
other countries. It also shows that the U.S. far
outspends other developed countries on a
per-capita basis. Hence, the U.S. system is not only
not universal; it is also highly inefficient, taking
resources from other economic activities.

A Lot to Learn

In the industrialized world, the United States is the
only country that lacks universal healthcare
coverage. Rather, it has a hodgepodge of private
and public systems that lacks the intergenerational
pools needed for true lifetime coverage.13 All
the other systems have universal coverage,
whether through a government system (Beveridge),
a private system (Bismarck), or a combination
of public insurance and private service providers
(national insurance).
Because universal coverage is lifetime coverage, it
works well with lifetime financial planning.

Also, systems with universal coverage cost less per
capita and as a percentage of GDP than the
U.S. system and are, therefore, likely to be more
economically efficient. For these reasons,
U.S. policymakers have a lot that they can learn
from how the rest of the industrialized world
provide healthcare. K
Paul D. Kaplan, Ph.D., CFA, is director of research with
Morningstar Canada. He is a member of the editorial board
of Morningstar magazine.
Mark Tordai, a Toronto-based freelance journalist, provided
much of the research for this article.

13 Because Medicare is taxpayer funded (as are Medicaid and the VA), there are intergenerational transfers. But payers of the Medicare tax do not receive benefits until they are qualified by age
(65 and older) or disabilities. Hence, there is no intergenerational risk pool as there is in systems that have universal coverage.

global.morningstar.com/Morningstarmagazine

47


http://stats.oecd.org http://global.morningstar.com/Morningstarmagazine

Table of Contents for the Digital Edition of Morningstar Magazine - October/November 2017

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Morningstar Magazine - October/November 2017 - Cover1
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