Public Spending on Healthcare
Bryan Caplan calls me out for a misleading comment on healthcare in my note about Arthur Brooks's new book (see previous post). I wrote:
Public spending is lower in the US, but not vastly lower once you remember to add state and local spending to federal outlays; the US healthcare anomaly accounts for a lot of the remaining difference.
Bryan points out:
According to 2007 OECD data, U.S. government [healthcare] spending as a percentage of GDP is actually slightly above the average of (Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Norway, Spain, Sweden, Switzerland, and the UK). As a percentage of GDP, the U.S. government outspends Canada, too! And since U.S. GDP per capita is higher, the U.S. government actually spends a lot more dollars per person than the average country in Europe. Lack of U.S. government spending on health care is not the reason why our government's share of the economy is smaller than Europe's.
He's quite right. In fact it's a point I've mentioned myself (here, for instance), and it's important to be clear about it because people find it very surprising. The point in my head was not that low US public spending on healthcare explains low overall US public spending, but that the government's small share of total health spending keeps overall public spending lower than it otherwise would be. The "US healthcare anomaly" is not low government spending on health, which would be the natural interpretation of what I said; the anomaly is the government's relatively small share of a very large total. I muddled the point at best, and stand corrected.