August 28, 2019

Conventional wisdom says the US spends too much on health care—and not enough on social services. But is that true?

Daily Briefing

    It has been widely speculated that the reason the United States outspends other countries on health care is because it does not invest enough in social services, but a study published last week in Health Affairs casts doubt on that theory. 

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    Study details

    For the study, researchers from the London School of Economics and Political Science and Harvard University sought to compare the United States' social spending to other high-income countries and determine if there is any link between increases in social spending and lower health care spending.

    To do so, the researchers examined health care and social spending data from 1980 to 2015 for 35 countries in the Organization for Economic Cooperation and Development (OECD). 

    Findings

    Overall, the researchers found health care spending accounted for 16.8% of the U.S. gross domestic product (GDP) in 2015, which was higher than the average 8.8% of GDP among all OECD countries. Meanwhile, the United States spent 16% of its GDP on social services, slightly below the average 17% among other OECD countries.

    However, when the researchers examined trends over time, they found higher social spending was associated with higher health spending.

    Irene Papanicolas, a co-author on the study and an associate professor at the London School of Economics and Political Science, said the findings were "surprising." She added, "People have preconceived notions that the [United States] spends less on social programs on aggregate. We debunked our hypothesis."

    However, Papanicolas said the findings do not mean the United States should not prioritize social spending. "This is not us saying social programs should not be invested in," Papanicolas said. "That's not the takeaway to get from this study. We know by investing in social programs, health outcomes improve," she said (Lagasse, Healthcare Finance News, 8/15; Feinstein, Business Insider, 8/21).

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