Graph of the Day: Over-the-Top Health Costs

Today’s graph comes from National Geographic and shows just how far out of whack the U.S. health system is compared to other nations. Despite spending significantly more than any other developed country and lacking a universal health care system (which the blue-line countries have), we still rank in the bottom half in average life expectancy.

Today’s graph comes from National Geographic and shows just how far out of whack the U.S. health system is compared to other nations. Despite spending significantly more than any other developed country and lacking a universal health care system (which the blue-line countries have), we still rank in the bottom half in average life expectancy.

What makes our system so poor at delivering value for the money? Misaligned incentives.
The U.S.’s system is built on a fee-for-service model, where patients pay per procedure. This encourages a higher volume of care rather than quality care at a reasonable value. “No other industry thrives on effort independent of results,” said Jim Traficant, then Vice President of Harris Healthcare Solutions, at a 2009 seminar. “Health care is unique in this aspect and we’re paying for it.”

One example of the damaging consequences that grow from these incentives lies in hospital readmission rates. Nearly 20% of Medicare patients are readmitted to a hospital within 30 days of discharge...