We certainly do need healthcare reform. The “debate” in the House has been a fascinating and conflicting mix of ideology, political power, idealism, facts, pragmatism and occasionally, some common sense. So what will we get for $1.2 trillion? Can anyone tell us? Do we have the largest government boondoggle yet, or is there some real progress being made toward a more affordable healthcare system? How can we determine what the current House bill means, or evaluate the future actions of the Senate and Congress in general?

According to the World Health Organization, the United States spends about $2.1 trillion on health-care each year. That is out of a total Gross Domestic Product (GDP) of approximately $14 trillion, or about 15%. In fact, that is the largest percentage for any industrialized country in the world. Switzerland is next at 11% of GDP, with France and Canada somewhat less. Japan spends about 7.9% of its GDP, or about one-half of U.S. per capita expenditures. Looking at it on a per capita basis, the U.S. spends a little over $6,700 per year and Japan spends around $2,700. By 2016, U.S. health-care annual expenditures are predicted to reach $4.1 trillion.

Some people will claim the United States has the best healthcare system in the world. Not perfect, but the best. The challenge we have is how to define “best.” Since healthcare covers everything from accidents to disease, malnutrition, and violence, determining how good any one country’s healthcare system is can be complex and, at times, debatable. Two measures that have been used for some time are still considered to be good indicators: life expectancy and infant mortality. They are related of course, since high infant mortality will lower average life expectancy. But they do measure different parts of the society and the effectiveness of the supporting healthcare system. The youngest and oldest age groups are historically more vulnerable than the general population. Good healthcare for these groups is an indicator of the priorities held by a country, other factors such as economics being similar.

Using these measures, the U.S. doesn’t appear to be doing well. For life expectancy, the U.S. ranks not in the top 10, but 31st. U.S. life expectancy is four years less than Japan’s and we are right alongside Portugal and Albania, and half a year ahead of Cuba. Infant mortality is even worse. For this measure the U.S. ranks 45th, behind Cuba. The U.S. infant mortality rate is as much as 2.5 times worse than the rates of the best countries. Comparing countries side-by-side may have some risks, but in general, comparing industrialized countries this way appears to be mostly valid.

Using these two critical measures, the U.S. does not appear to have the best healthcare system. In fact, we are not in the top 10, not even close. When our per capita expenditures are factored in, we spend twice what the average expenditure is for the top 10 life expectancy countries. The U.S. healthcare system obviously has gross economic inefficiencies when compared to its peers. It also appears to be significantly under performing. Briefly stated, we have a lousy cost/benefit ratio.

The problem is political. A conservative estimate of waste, fraud and abuse in our Medicare/Medicaid system is approximately $60 billion. Both Bush and Obama administration officials have acknowledged the amount of fraud cannot be measured, so the dollar amount could be much, much larger. The New England Journal of Medicine reports, “In a recent statement to the Senate Finance Committee, Lewis Morris, chief counsel of the Office of Inspector General, Department of Health and Human Services (DHHS), said, 'Although we cannot measure the full extent of health care fraud in Medicare and Medicaid, everywhere we look we continue to find fraud in these programs.'" And if things were out of control before, organized crime is beginning to find healthcare fraud more lucrative, lower risk and easier to get into than more traditional criminal activities. To his credit, President Obama has repeatedly identified the importance of attacking waste, fraud and abuse. Unfortunately, Congress has not always been supportive of past efforts. Additionally, there are other strategies for attacking unnecessary cost structures. These include tort reform which could yield cost savings comparable to those from rigorous pursuit of waste, fraud and abuse. These two areas alone could yield a 5 or 6% reduction in overall spending with no loss of benefits. Not insignificant, and just a start. Experience in both business and government tells us costs tend to build up over time in lots of smaller places. If we can find some more “5 per centers,” they could well add up to what we need. Unfortunately, there are rarely any single big items that can be eliminated. The collaborative hard work of this administration, Congress and the healthcare industry is required to bring us into line with other countries that appear to be doing a better job than we are, maybe especially Japan. Ironically, we had to learn how to build good cars from the Japanese. Maybe the same will hold for healthcare.

It is doubtful the American public has the appetite for huge additional expenditures in healthcare without improving the economic efficiency of our system. As citizens concerned about growing costs and declining quality of U.S. healthcare, we need to be expressing our ideas and continuing our activism for meaningful reform. We need to continue to hold our politicians accountable for workable solutions. After all, we suspect they caused a fair bit of this mess.