U.S. Charities Top OECD Amid Health-Care Mess: Albert R. Hunt

Taking several days off last week to bring a child home from college, my reading materials included reports from the Organization for Economic Cooperation and Development, courtesy of a breakfast with Angel Gurria, the energetic Mexican secretary general of the outfit.

The Paris-based OECD is a group of 30 developed and developing countries that promotes democracy and free-market economics. These are mostly high-income economies such as the U.S., Japan, South Korea and the larger European nations, and a few less-affluent countries, including Mexico and Poland.

I have drawn two conclusions from this experience: I get more boring with age, and some of the data comparing U.S. economic and social performance with other OECD countries are very instructive for current policy debates.

The numbers reveal realities and a few myths. The U.S. isn’t an overtaxed country, indeed, taxes are relatively low; the government, in general, makes fewer public expenditures than in most other countries; total health-care spending dwarves anyplace else, and the outcomes are mediocre at best; the U.S. invests more in education, especially higher education, though high-school performance results are comparatively disappointing; and America remains a leader in scientific research and development.

Most of these statistics are for 2006 or 2007. Experts say there’s been little basic change; the financial tsunami of the past year and a half affected all OECD countries.

Case for Health Overhaul

The comparative health-care data reinforce the case for a major revamping of the U.S. system, which, by any measurement, doesn’t work. The recent arguments of the political left and political right that the changes considered are worse than the status quo seem dubious.

According to the OECD figures, the U.S. spends 16 percent of its gross domestic product on health care (it’s a little higher this year), almost double the average of other nations and almost 50 percent more than the next highest-spending country.

The outcomes in the U.S. are inferior. Life expectancy is lower than in most other countries, infant mortality is higher, and Americans are twice as likely to be obese; not surprisingly, diabetes is a bigger problem. The cancer outcomes are mixed, with America doing better on prostate cancer than most other countries but not as well on lung cancer, and in the middle in treatment of breast cancer. At almost eight times the OECD average, the incidence of AIDS in the U.S. is dramatically higher than in any other country.

‘Unmet Needs’

There is a category called “unmet needs,” which usually means that because of excessive cost, long waiting lines, not being able to take off from work or the need to take care of children, citizens don’t receive necessary care. In most OECD countries, a majority of the population reports no unmet health- care needs. In the U.S., more than half the adult population with below-average incomes reports not getting care -- missing a medical test, treatment or follow-up or not filling a prescription -- because it was too expensive.

On a cost-effective basis, the U.S. trails all other countries.

On education, contrary to conventional wisdom, America invests more than other countries, almost 7.4 percent of GDP, although it’s the private outlays that overshadow other places. On higher education, the U.S. spends twice the average. The secondary education performance provides a good argument for the school-reform movement in America. Our teachers’ salaries are pretty high, though below high-performing countries like Japan and South Korea. On performance, high school students lag behind the average in math and science and well behind Japan and South Korea and the leader, Finland.

Research Investment

In science and technology, the investments are well above the average, trailing only the Scandinavian countries and Japan and South Korea. In the U.S., more investment comes from the private sector than from government.

The most instructive OECD data may be in the area of public finance. There is some comforting news for the U.S.: Despite concerns about public debt, it’s a bigger problem in most other countries.

Government in the U.S. spends less of the nation’s GDP, about $3 out of every $8, than in the other countries. Under a category the OECD calls “social protection,” which includes unemployment benefits, old-age pensions, and disability payments, the U.S. is particularly stingy, paying out less than any country other than South Korea.

Government Revenue

Overall government revenue comprises only a little more than one-third of the nation’s output, much lower than all OECD countries except Japan and South Korea. Tax receipts are equivalent to about 28 percent of GDP; the OECD averages about 36 percent and European nations average almost 40 percent.

Moreover, and no surprise, the U.S. relies much more on corporate taxes and individual income taxes than on other levies. Taxes on goods and services in America raised only about 17 percent of total tax receipts in 2007, about half the average of OECD countries. About half of U.S. taxes are income and profit taxes -- this is the sixth-highest rate of member nations.

This provides an argument for tax-reform proponents who claim the U.S., with comparatively high income taxes, is at a competitive disadvantage compared with countries that have consumption taxes. Despite the political unpopularity -- only 20 percent of the public in a recent Bloomberg National Poll said a consumption or value-added tax would be acceptable --this reality, coupled with the chronic deficits may force a rethinking of this issue.

There is a bit of cheer this holiday season, though not from the OECD. In the U.S., charitable contributions total more than 1.5 percent of GDP. That’s twice the percentage in the U.K., tenfold what the French give.

With the severe recession, giving is down everywhere. In the U.S., hospitals, universities and foundations have been hit especially hard. Still, Americans remain the most generous people on the globe when it comes to charity.

(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net.

To contact the editor responsible for this column: Max Berley at mberley@bloomberg.net.

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