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Feeding the Beast

March 26, 2010

The Australian ambassador to the US has provided us with a very concrete example of how ridiculously expensive health care is in the US. Under a typically lamebrained headline, The Australian details the costs incurred by the poor man after he badly damaged his knees falling on the ice in Washington DC, and then compared them to hypothetical costs for the same procedure down under. The result is this table:

Regardless of recent breakthroughs in coverage, this is simply not sustainable. After some very helpful analysis of the possible trajectories the US system might follow, Ezra Klein notes that prices are the elephant in the room (hat tip Andrew Sullivan). Why are costs so high, and what will it take to control them?

I can’t possibly answer that. But let’s look at another comparison: medical research. In 2007 Australia’s National Health and Medical Research Council (NHMRC) spent about half a billion dollars on research (see spreadsheet here). That same year, the US National Institutes of Health (NIH) spent $29 billion. That is an astonishing difference! (According to Wolfram Alpha, in 2007 Aussie GDP was about 1 trillion US dollars, while the US GDP was about 14 trillion).

So, to review:

ratio of US GDP to Aussie GDP in 2007: about 14 to 1

ratio of US medical research to Aussie research in 2007: about 60 to 1

Even taking into account population, it’s still a huge disparity. With a very quick and dirty calculation I get that in 2007 the US spent about US$94 per person on health research, while Australia spent about A$24 per person (I won’t bother with the currency conversion, but today that would be something like US$22 person in Australia).

What’s the relationship between spending on medical research and overall cost of health care? Well, that’s the problem. We don’t really know. In fact, it’s really hard to draw connections between our investments in medical research and broad health outcomes of any kind (despite some deeply flawed, politically motivated attempts).

But it is reasonable to assume that these two are connected somehow, even if not directly. It is quite possible that every time we increase the NIH budget we are simply feeding the beast. More money for research is not necessarily good for the national health. It matters very much how that research money is invested, and the kinds of knowledge that result from those investments.

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2 Comments leave one →
  1. March 29, 2010 12:35 am

    Hey Ryan, I’m an incoming student for ASU’s Bio&Soc PhD program. I’m interested in studying science policy and climate change adaptation so I’ll definitely be following your blog!

    -Marci

    • March 29, 2010 10:21 am

      Thanks Marci!
      You’ve picked a great spot, and a great program!

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