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Health care makes up about 28 % of the federal spending in the US. See this. In Denmark, a country which, unlike the US, offers universal health care, which ought to be more expensive for the government, only spends about 16 % of its total expenditures on health care services See this: (Danish page, use google translate).

Or see the picture below. The green one is health services, the big orange one is social services.

enter image description here

This seems counter-intuitive. What is the reason for this? Why is health care so much more expensive for the government to offer in the USA, or why is it so much cheaper in Denmark, when the service seems more extensive in Denmark compared to the US?

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    Is there a citation for the assertion that "the service seems more extensive in Denmark compared to the US"? Most analysis usually indicates far more (especially expensive end-of-life and complicated surgical and high end pharma) services in USA, which are some of the factors contributing to per-capita healthcare costs. – user4012 Dec 19 '17 at 18:45
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    @user4012 - having more comprehensive (non-value-added) services might not be considered "extensive" if they don't contribute to improved healthcare outcomes. The biggest difference between the US and other models is the utterly failed fee-for-service and for-profit healthcare and healthcare financing models. – PoloHoleSet Dec 19 '17 at 18:51
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    The numbers you should be comparing is spent money on public healthcare per capita to see which country actually spends more (see my comment on @blip's answer). Your question can be answered by saying they actually use similar amount per capita and the difference in relative numbers origins from the fact that Denmark has larger budget per capita. – Communisty Dec 20 '17 at 8:07
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    Life expectancy in Denmark is 80.0 years, infant mortality 3.7 per 1000 live births. Figures for the USA are 80.0 years and 5.6 per 1000, respectively. So Denmark gets similar or better outcomes, for lower expenditure. (Worth noting that Denmark for some reason has a low life expectancy by the standards of western Europe, compare with 81.4 in the Netherlands or 82.1 in Sweden.) – Royal Canadian Bandit Dec 20 '17 at 11:56
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    The thing that you're missing is the profit motive. This adds in layers of money in each transaction in the American healthcare system. – Ammar Naseer Dec 27 '17 at 18:15
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Denmark spends a smaller percentage of their total budget on health care because their government budget in relation to their population is much larger.

As you can see, Denmark is paying about 60% more per capita on health care.

But note that this is just the spending on the nation-level. There might be additional health spending on lower levels (states and counties in the US, regioner and kommuner in Denmark). But the question was just asking about nation-level spending, so this is out of scope.

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    You say out of scope, I say related. @Blip's answer's infographic suggests that for the 'Public expenditure on health' is similar on both countries: just under 4000 USD. – Communisty Dec 20 '17 at 13:07
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    Sometime, per capita alone is a bad indicator. – mootmoot Dec 27 '17 at 9:26
  • The question doesn't address per capita expenditures; averaging those from total Federal expenditures seems questionable. Various parties and groups are enriched or neglected disproportionately. Imagine an inefficient nation that consumed 99.9% of it's Federal medical budget on administration. Per capita would then at best be derived from 0.1% of its medical budget. – agc Jan 3 '18 at 1:13
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    Denmark also pays considerably less per comparable unit of health care services provided than the U.S., pretty much across the board. So, for example, the cost of fixing up a broken leg in Denmark is lower after adjusting for exchange rates than it is in the U.S. This is mostly because U.S. providers are more expensive (and more like to be for profit) and secondarily because health insurance advertising/profit/paperwork is mostly absent. – ohwilleke Jan 3 '18 at 6:07
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    See nytimes.com/2018/01/02/upshot/… – ohwilleke Jan 3 '18 at 6:47
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Probably not a comprehensive answer, but one major likely factor is that health care in the US, in general, simply costs way more than the rest of the world:

enter image description here

Source: PBS

Denmark, in comparison to the US, pays half as much per-capita for health care.

  • 1
    Since the question is worded US federal spendings vs Denmark governmental spendings the answer is in your graph. The public expenditure on health by the two nations is actually quite similar (dark blue bars). The light blue bars are irrelevant to the actual question. And the reason why this makes 28% of US federal spending and only 16% of Denmark's is that Denmark has larger public sector than the US. Whether the two countries use the money as efficiently to gain the same amount of 'health' or not is another question (hint: they don't). – Communisty Dec 20 '17 at 8:00
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    You could further expand on why it's more expensive: doctors have bigger salaries, drug companies scam the US government by charging them more, medical equipment is likewise sold to US entities for far more money. – JonathanReez Supports Monica Dec 20 '17 at 11:15
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    @JonathanReez: Administrative costs are much, much higher in the USA model -- in particular, overheads for health insurance companies. – Royal Canadian Bandit Dec 20 '17 at 11:59
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    @JonathanReez it's more expensive because it's a for-profit system. But as communisty points out, that's really irrelevant to the question. – user1530 Dec 20 '17 at 12:02
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    You used expenditure data here, which results in a somewhat circular conversation. "Why does the US spend more than Denmark? Because the US spent more than Denmark." Cost data would support your thesis much better, but (from the researcher's perspective) it's much more difficult to get. – indigochild Dec 20 '17 at 13:31
2

I would be very, very careful comparing "federal budgets".

In the USA, you have one federal budget, and each state has its own budget. Denmark is a small country, comparable in size to the average US state, so the Danish state budget is comparable to 1/50th of the US budget, combined with one US state budget. Things that would be split up between federal responsibility and state responsibility in the USA would be just Danish responsibility in Denmark.

And every country can have private healthcare where the cost would never appear in any budget.

For a meaningful comparison, you have to find out how much total money a citizen spends on health care every year.

  • Do you mean 'total spending per capita' as the meaningful comparison? The problem with 'how much each person spends on health care' is also going to be a wildly variable number that isn't necessarily any more or less meaningful. – user1530 Jan 3 '18 at 21:11
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    I'd say "total spending per capita" is much more useful, if you count spending through tax, health insurance, employer benefits, and employees' money, direct payments from your savings and any other way it is paid. – gnasher729 Jan 3 '18 at 22:42
  • That is a good point. States have to pay a share of Medicaid dollars spent, as well, which, last time I was actually working for a state Medicaid program, amounted to $1.2 B state claims dollars vs $2.1 B federal claims dollars for the not especially large state government I worked (Small state, that is. Does not include operations/administration which was probably in the $40M to $50M range). This was a long time ago. Probably chicken feed compared to today's costs. – PoloHoleSet Jan 4 '18 at 20:37
2

This is one of those "simple" question , but difficult to answer question.

Honestly, there is no conclusive answer as there is too little research done on such issues.

For example, Freakonomics go through the topics of US health care from time to time, as experts hint that poor follow up on treatment effectiveness is the main cause of US healthcare overspending on unnecessary expensive treatments, while neglecting the importance of follow up (e.g cheaper care taking vs expensive treatments).

For country that practice universal health care, there is a policy in place to PREVENT over-diagnostic, or fooling around with fancy unproven treatments. Some people may argue that "advanced treatment" is important to find a new cure, however, most of such claims has little support ground, as many new treatments need double blind test and even long term tracking.
More of such data finding research emerge, because doctor themselves are not good data collector due to the workload and resources. The infamous thalidomide drug that cause birth defects in past decades show that it took many good doctor to through the whole process.

(update) Here is another reading material about the issue : Why American doctors keep doing expensive procedures that don’t work. After going through all those facts, you will be surprised that there is hardly enough scientific follow up to stop possible expensive and even harmful treatment that cost the tax payer.

(additional podcast) Freaknomics Nurse to the rescue mentioned about important roles of much lower paid healthcare worker : nurse. Rich Europe country tend to spend more on following health caring than excessive treatment. While US seems doing the otherwise. Some people argue that US doctor wages may contribute to the cost, but it can never offset the high treatment cost. For example, the insane jack up price of epipen and the contract is just tip of the iceberg.

  • "as experts hint that poor follow up on treatment effectiveness is the main course of US healthcare overspending" (of course you meant "cause". Except that the U.S. pays more than anyone else in the world for almost every single provider service even before considering unnecessary treatments because U.S. doctors and nurses are paid more, and U.S. drug and device makers charge more, and U.S. hospitals charge more. – ohwilleke Jan 3 '18 at 6:14
  • @ohwilleke Most rich Europe countries healthcare worker basic pay are way higher than USA. – mootmoot Jan 3 '18 at 9:04
  • Doctors and nurses in the U.S. are paid significantly more than they are in the rich countries of Europe (and Denmark in particular). See, e.g. economix.blogs.nytimes.com/2009/07/15/… The pay for orderlies and janitors and cooks, at hospitals, may be better in Europe. U.S. doctors and nurses defend this by arguing that they have to pay for their educations which are free in Europe, and have to deal with costs like malpractice insurance, bad debt, their own health insurance, and insurance administration which European doctors don't face. – ohwilleke Jan 3 '18 at 18:03
0

The repartition of the US budget is missing in your question. Why is the US a bigger share than Denmark on healthcare ? Because they are spending a lesser share than Denmark on something else.

On your graph, I see "Social Beskyttelse". I do not speak danish, but it is roughly 45% and has "social" in its name, so I guess it is the answer: the US spend less than Denmark on "Social Beskyttelse" and so everything else appears to have a bigger share. Same with "culture, religion and ???" which is probably 0% in the US. If you remove those two, you multiply the shares of every others by 2 and then you get a 32% share on healthcare.

So, it makes more sense to compare how much Denmark spends on healthcare per capita. It has been noted it is much higher in Denmark than in the US. Still, you are comparing two countries that are very different. The US is a huge federal state while Denmark is a small state (unitarian, that is non-federal, if I understand correctly). So perhaps some healthcare spending occurs at a state level in the US, while there is no such spending in Denmark.

  • But if you are arbitrary excluding things like social beskyttelse (social protection) and fritid, kultur og religion (free time/leisure. culture and religion), why not also exclude military spending (forsvar=defense), 2% compared to one third of USA's spending? – hlovdal Apr 14 '18 at 18:27
  • @hlovdal: you can also remove military spending. That is my point : this comparison makes no sense. If you want to compare, a good basis would be healthcare budget/ inhabitant. – Distic Apr 15 '18 at 19:06
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Short answer. The US's medical and ancillary businesses like to overcharge and promote dubious conditions and nostrums, some of the proceeds of which allow them do what they do by:

  • hiring excellent lobbyists to reward politicians who pass laws and bend rules that permit medical mischief to proceed with relative impunity; for example, consider the following evasion employed on behalf of Purdue Pharma, as summarized by the Harvard Law Record:

    ...when you read in the newspaper that a major healthcare company pled guilty, it’s not the parent company that pleads guilty. The prosecutor will allow a unit of the corporation that has no assets – or even a defunct entity – to plead guilty. And therefore that unit will be excluded from Medicare – which doesn’t bother the parent corporation, because the unit had no business with Medicare to begin with.

    In May 2007, federal prosecutors brought a criminal prosecution of Purdue Pharma, the Stamford, Connecticut-based maker of OxyContin.

    It was reported in the press that the company pled guilty to pushing OxyContin by making claims that it is less addictive and less subject to abuse than other pain medications and that it continued to do so despite warnings to the contrary from doctors, the media, and members of its own sales force.

    In fact, Purdue Pharma – the company that makes and markets the drug –didn’t plead guilty. A different company – Purdue Frederick pled guilty. Purdue Pharma actually got a non-prosecution agreement. Purdue Frederick had nothing to lose, so it pled guilty.

  • hiring clever PR firms to make unforgivable practices seem almost normal.

  • advertising new diseases everywhere to help sell new products to a confused public. (Not quite everywhere: In Denmark prescription-only drug advertising to the general public is prohibited, (Danish Medicines Act, Part VII, #66-(1)-(i).)

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    The only citation in this answer is a link to a PDF on medical advertising in general. – Andrew Grimm Dec 20 '17 at 9:23
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    Much of the time, you don't need to advertise diseases. They tend to be very viral. – Andrew Grimm Dec 20 '17 at 9:24
  • @AndrewGrimm, Re "don't need to advertise": Normally, no. This answer isn't about normal. In the US today ads attempt to convince consumers they'll be worse off without the latest proprietary prescription patent medicine. Ads also exaggerate the prevalence of existing diseases, and make rare conditions seem common -- or common conditions seem rare. Harm ensues, people suffer and die, and perhaps some fines might be paid. – agc Dec 20 '17 at 10:41
  • What you have here is an explanation which tries to explain the general high cost of health care in the US, not why the US Government spends more. What affect do ads and PR firms have on Federal spending? – CGCampbell Dec 20 '17 at 16:29
  • @CGCampbell, Re "Federal spending": overcharging and dubious therapies increase public eligibility for Medicare and Medicaid; while the medical trade extracts maximum, not minimum, prices. Impunity and PR allows it to continue. – agc Dec 20 '17 at 16:48

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