# Which country has 2nd largest social welfare system in the world?

The general impression we've all got is that the US is a place where the poor are simply left to starve in the gutter, unlike in soft and cuddly Europe, where we do our best to help our fellow man. That the political mantras shouted at us to keep us coughing up to pay for these welfare states might not be wholly and entirely …

1. #### yay, statistics

The US GDP (\$16.25 trillion) is 32 times larger than that of Norway (\$500 billion), of which each country spends 30% and 20% respectively (according to the article).

Which by my maths works out that the US spends approximately 4.9 trillion dollars a year on social welfare, while Norway spends about 100 billion dollars a year.

The population of the US (320 million) is 61.5 times larger than that of Norway which currently stands just under 5.2 million.

So per person, the US spends just over 15,000 dollars a year on social welfare, while Norway spends just over 19,000 dollars per person.

1. #### Re: yay, statistics

Quite true. The answer being that Norway is a substantially richer country than the US. Per capita GDP is about twice that of the US. The difference narrows a lot when you consider the cost of living.

The explanation is all that oil. Sure, smaller amount than the US pumps up but a vastly greater portion of the economy.

1. #### Re: yay, statistics

The point I was making (or trying to make) is that while the US may spend a larger percentage of its GDP on social welfare, the actual amount isn't proportional to the size of its population (or the percentage of that population that relies on it). In fact the number of unemployed people in the US is more than triple the entire population of Norway. Putting those numbers into the equation implies that the US spends even less per capita than its #2 ranking would suggest.

As an aside, sucking oil out the ground accounts for less than half the oil industry revenue in Norway. More money is made from services these days. (For which I am grateful every pay day. :)

1. #### @Def: A good example of the misuse of statistics

" In fact the number of unemployed people in the US is more than triple the entire population of Norway. "

A good example of the misuse of statistics. As you yourself noted, the population of the US is 61.5 times greater than the population of Norway. Your comparison proves nothing. You can compare total population to total population - as you did earlier - or you can compare percent of unemployed to percent of unemployed, but a comparison of two completely different and unrelated metrics, total unemployed and total population, is simply disingenuous and misleading if not outright dishonest.

2. #### Re: Def Re: yay, statistics

"....Norway...." <Cough>cherrypicked<cough>

1. #### Re: Def yay, statistics

I picked Norway because it was mentioned in the article, and happens to be where I currently live. if I could be bothered, I'm sure I could make the same point with many other countries.

1. #### Re: Def yay, statistics

Pakistan has the largest charity culture.. Its ppl give approx \$30bn annually .. a good chunk goes for Jihad and related. Aside this even official/secular charity service "Eidhi" is aclaimed as world's largest charity service. I have no hard feelings if readers take all of this with doubt/grain of salt but AlReg should dig into this too.

1. #### Re: Def yay, statistics

"Pakistan has the largest charity culture.."

Burma(myanmar) has extremely high charity giving overall, but when you break the stats down you find that 85%+ goes to organised religion and only 8% is individual acts of charity (I'm not sure how these stats are derived)

The result is that lots of poor people want their kids in monastaries, etc because it means they get looked after, whilst the poor are shafted overall (and the rich pretend not to see things). It also gives the theocracy a vast amount of political power - increasingly so now the military govt is all but gone (but not the people within it).

3. #### Re: yay, statistics

Are these statistics even reliable? I live in Poland, and according to the first chart, the bottom 10% of population in Britain are at a worse socioeconomic status than the bottom 10% in Poland.

How the fuck is it possible that people would want to migrate to Britain, then (or Germany, or France, for that matter)? Assuming that it is the people on the bottom of the scale who migrate looking for a job and they can only get the least paid jobs in the UK, it would mean that they are worse off than they were before they moved. However, not only are they able to support themselves in UK, they make enough to send back home and support the family. Effectively, one paycheck is able to support two households.

Anyone care to comment?

1. #### Re: yay, statistics

"However, not only are they able to support themselves in UK, they make enough to send back home and support the family. "

Yes, usually by living in absolute shitholes and/or sharing accomodation in numbers which are well above what are recommended for multiple occupation dwellings.

You can put up with that kind of thing for a while, but it leads to illness, stress issues, etc and means there's a high turnover of people to/from Poland as they burn out and are replaced by more cannon fodder. This phenomenon isn't just limited to Poles.

4. #### Re: yay, statistics

and again, you're talking only Federal, and leaving out individual State and County amounts. As well as private and "faith based" community partner initiatives.

2. #### But the elephant in the room...

... is healthcare. From CNBC (and reflected in other sources):

"Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year (2013) —making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data. And even having health insurance doesn't buffer consumers against financial hardship."

"With an average American family bringing home \$50,000 in income, a high medical bill and a high-deductible insurance plan can quickly become something they are unable to pay".

As an American friend once said to me, "It's a great country - provided you aren't poor, sick or black".

1. #### Re: But the elephant in the room...

That medical bankruptcies stat is a little off. It's more like "x million went bankrupt owing some medical bills" rather than "x million went bankrupt because of medical bills".

But sure, not going to find me defending the insane US medical system.

1. #### Re: But the elephant in the room...

That medical bankruptcies stat is a little off. It's more like "x million went bankrupt owing some medical bills" rather than "x million went bankrupt because of medical bills".

Actually, it's closer to the latter, not the former.

CNBC's source is this Nerdwallet article: http://www.nerdwallet.com/blog/health/2014/03/26/medical-bankruptcy/

As NerdWallet explains their methodology:

Bankruptcy: We relied on a widely cited Harvard study published in 2009. NerdWallet Health chose to include only bankruptcy explicitly tied to medical bills[emphasis mine], excluding indirect reasons like lost work opportunities. Thus we conservatively estimated medical bankruptcy rates to be 57.1% (versus the authors’ 62.1%) of US bankruptcies. We also used official bankruptcy statistics, released this month through March 2013, from US Courts.

1. #### Re: But the elephant in the room...

From the Harvard study:

"We designated bankruptcies as “medical” based on debtors’ stated

reasons for filing, income loss due to illness, and the magnitude of their medical debts.

RESULTS: Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical;"

60% odd of bankruptcies are "medical" not necessarily due to "medical bills".

"Illness or medical bills contributed to 62.1% of all bankruptcies

in 2007"

very much or somewhat to their bankruptcy, 41.8% of

interviewees specifically identified a health problem, 54.9%

cited medical or drug costs, and 37.8% blamed income loss

due to illness. Overall, 68.8% cited at least one of these

medical causes."

It really ain't true that they're saying that medical bills caused 60% odd of all bankruptcies. They're including the loss of income from being ill for a start.

2. #### Re: But the elephant in the room...

Half of healthcare dollars in the US are spent by the federal government (Medicare and Medicaid, to a lesser extent the VA). The system is corrupt and grossly inefficient, eating up twice the proportion of GDP as in France, for no better outcomes That in itself accounts for nearly 5% of GDP that should be removed from welfare spending to compare the value of the assistance rendered. The other big factor is how higher education is significantly more expensive in the US, but that's more a concern of the middle class, not the poor.

1. #### Re: But the elephant in the room...

One claim was that if the US introduced free-at-point health care for everyone as in the NHS or Canada it would actually save money - because it covers so much of the healthcare anyway but does it at \$50/aspirin hospital rates.

There was a bill to allow the VA and DoD to act together and use their buying power to force down the price of drugs they buy as you might do in a free market capitalist country. But it was blocked, seems the army don't pay as many lobbyists as the drug companies.

1. #### Re: But the elephant in the room...

Isn't that the elephant in the UK's room?

An NHS that we all have to pay for, but whose availability in your hour of need is a pure lottery. In fact, worse than nothing when they string you along for an operation everyone agrees is necessary, week after week, month after month, until it's too late and the cancer has become incurable. If it hadn't been for vapourware promises from the NHS, we would have gone abroad or gone private four months earlier, and my mother might still be alive.

The reason the UK system costs less than the US is because we're just buying the lottery ticket!

a/c for obvious reasons.

2. #### Re: But the elephant in the room...

Agree with Fazal - The outcome of any spending is surely more important than the actual amount spent

3. #### Re: But the elephant in the room...

I'll just note that the cost of higher education over here began rising faster than inflation (IIRC about 2X) in lockstep with the increase of availability of federal subsidies and loan guarantees. The outcome is that while higher education is much more available (many more colleges per capita), it is at most slightly more affordable than it was in the 1960s, while wages for faculty have stagnated - most uni's now have 80% or higher "part-time" faculty with much lower per-class pay, without hope for full time or benefits, much less tenure. At the same time, pay for college administrators has increased dramatically - at some uni's administrators are now paid five times what they were paid a decade or two ago. TL;DR - federal involvement has been of help mainly to bureaucrats.

4. #### Re: But the elephant in the room...

A little research shows in 2013, US spent \$940B on Medicare/Medicaid out of a total estimate of \$3.6T.

That's closer to 26%.

3. #### Re: But the elephant in the room...

"But sure, not going to find me defending the insane US medical system."

In your analysis you're treating the benefits of various US health insurance schemes as a social benefit. But looking at taxes you're comparing US taxes which don't include the health care costs with those countries where the health care budget comes from taxes. To make a fairer comparison you should be adding insurance payments to the taxes*. How does this affect the comparison as regards progressiveness and overall levels?

*There is a precedent for this in that in the UK there is what is nominally an insurance payment, National Insurance, but which is really part of the taxation system.

2. #### Re: But the elephant in the room...

But these medical bankruptcies are not incurred by the bottom 10%. They are fully covered by Medicaid, and receive their medical care at no cost. They are much more like among the upper-middle classes, who are not eligible for social welfare

1. #### Re: But the elephant in the room...

The poor may not be "fully covered" by Medicaid. But what ends up happening is that they have to find a provider willing to take Medicaid, which pays less than private insurance, and then they may still be asked to put up some cash, just not big dollars which they obviously don't have. But the provider may end up eating a lot of it, and passing the cost along to others who do have private insurance.

Medical bankruptcy, though, is easier for those who have no insurance at all, since hospitals charge a "sucker rate" of 5-10 TIMES the Medicare (old person) rate, several times the private insurance rate, to suckers who are "private pay". The theory is that this is supposed to apply to the Saudi princes who flock in droves to the US for private-pay health care, and every little dipschytt hospital thinks they're setting rates for princes, when in fact it's a scam to take every last dollar an uninsured person will ever have. So a little appendectomy can cost over \$10,000 if you are not insured.

1. #### medical rates [was: But the elephant in the room...]

As I understand it, once upon a time, hospitals and medical facilities charged uninsured patients the lowest rates and those with insurance got the highest bills (which the patients notionally did not see because insurance covered it). Now insurance companies are not paying diddly, and Medicare/Medicaid pay even less, leaving only those without insurance for bilking (which of course makes no sense: if I can not afford insurance, what makes you think I can pay for the machine that goes 'ping'?).

2. #### Re: But the elephant in the room...

>>But these medical bankruptcies are not incurred by the bottom 10%. They are fully covered by Medicaid, and receive their medical care at no cost.

All I can say is that you are woefully misinformed. The ACA actually made things worse for people at that level.

3. #### Re: But the elephant in the room...

In a nation without debtors prisons, bankruptcy should not matter. It should not be a thing for people to get hysterical over. It may suck for awhile but it's very recoverable. Or rather it should be.

Going broke in a civilized society shouldn't matter any more than getting sick in one.

1. #### Re: But the elephant in the room...

But the US does have debtor's prisons. They just don't call them that. See https://news.vice.com/article/debtors-prisons-are-taking-the-us-back-to-the-19th-century, and also our own darling Daily Mail: http://www.dailymail.co.uk/news/article-2529281/Comeback-debtors-prisons-U-S-courts-revive-Dickensian-practice-jailing-people-failing-pay-legal-fees.html

4. #### Re: But the elephant in the room...

Unfortunately for those who are black and in the US, they are more likely to be sick and more likely to be poor, statistically, than if they were not black.

3. On reason why US welfare expenditure is so high is surely down to the incredible inefficiency (form a financial point of view) of the American medical system. It's not commonly appreciated that the US government spends almost the same % of GDP on their public systems (Medicare and Medicaid) as the UK government does on the NHS. Given the difference in coverage, this is astonishing. It's around the 8% mark in both cases, and in the same general area as many large western countries. It can't even be explained because the US has an older population. It doesn't, but rather the reverse.

A lot of this must come down to the basic cost structure of the US medical industry with al the insurance, legal indemnity, billing and other cost issues (and some very well paid medical staff).

http://data.worldbank.org/indicator/SH.XPD.PUBL.ZS

1. #### Sorta

That NHS number you've got there is a little out of date. That's from before the Blair/Brown splurge of cash on it. More like 10-11% these days.

But yes, the US medical system is insane. It's so bad that even Stalinist central planning like the NHS would be better.

Better than either would be a more market oriented system like Singapore of course, but that's another matter.

BTW, it's not really the billing etc that costs so much in the US. It's that we actually see that cost. It's there in the accounts of the insurance companies. When a health care system is paid for from taxation the costs of the billing are the reduction in economic activity as a result of the taxation (the "deadweight costs") which of course we never do see.

1. #### Re: Sorta

I do not think there is one specific cause why healthcare is so expensive in America. Litigation is certainly one explanation. In America you go in complaining about an ingrowing toe nail, and before you know it you have undergone umpteen blond tests and scan just to make sure that it is not some bizarre cancer.

There is certainly profiteering from hospitals. I remember a few years ago a patient needed an oxygen concentrator for a few months and was being charged close to a thousand dollars a month. The patient then shopped around and found a medical equipment hire company that would hire one out for under a hundred dollars a month.

And less we forget that pharmaceutical companies can advertise prescription medication directly to the public, as anyone who has had the misfortune of watching American TV whilst travelling in America, can attest to. Frankly, I did not know whether to laugh or cry at those ads: Laugh at just how utterly surreal the ads were or cry at the thought of all those American hypochondriacs rushing out to speak to their doctor and demanding the latest prescription drugs to be prescribed to them, regardless of benefit.

But then again, I daresay the NHS has its quirks and can give you that cosy surreal feeling from time to time.

1. #### Re: Sorta

The primary factor is the American Medical Association's cartel deliberately restricting supply to keep prices high. The second is Big Pharma leveraging the corruption of Congress, e.g. Medicare is forbidden by law to negotiate volume discounts on pharmaceuticals. The third factor is a very high level of administrative expenses (which includes marketing costs), primarily driven by the arms race between insurance companies who systematically deny claims or "misplace" them, to the point medical practices need to hire full-time staff to deal with insurance companies. The cost of hospital procedures is incredibly variable. Another cause is gross corruption of some doctors who over prescribe tests in exchange for kickbacks.

1. #### @ Fazal Majid Re: Sorta

I'm going to have to respectfully disagree with you there. It's not exclusively the fault of the "AMA Cartel". It's more of a dog pile in that Dr's have to charge expensive fees to pay for their practices as well as the enormous malpractice they have to cough up yearly, to the insurance companies. The insurance companies have to charge the doctors enormous premiums for their Malpractice insurance, because whether or not the Dr. is guilty of doing anything wrong, juries will always go after the folks with the deepest pockets. Besides, most folks seem to think "what's a couple million to a hospital or medical system"? Then we have the douchebag ambulance chasing attorneys convincing people that the doctors acted with malicious intent and deserved to be sued, oh and they're more than happy to represent the patient for roughly 65% of any award. The insurance companies will try to settle out of court, in order to reduce costs to themselves and the dr's they represent. And the circle of life repeats itself.

In short, everybody wants something for nothing and if there's the slightest chance to drag things into a court, they're all over it.

2. #### Re: Sorta

Another alternative health care system is that of the French, paid for by government but run privately. Even the WHO says its one of the best systems in the world.

http://en.wikipedia.org/wiki/Health_care_in_France

3. #### Re: Sorta

I did link to a source. I think the 10-11% figure includes private health expenditure, not just public. When it comes to private health expenditure in the UK, it's not just those BUPA policies. There's a significant part of health costs that are only partly covered by the NHS. Expenditure with Opticians is primarily private as is much of the dental work.

1. #### Re: Sorta

Fair enough, I stand corrected.

4. #### Re: Sorta

"It's not really the billing" - no, it's that the goal of health-care in the US is to turn a profit first, and cure the sick second. This means more unnecessary procedures, more expensive procedures, more prescriptions over therapy, and of course more insurance to cover the litigation when this massive industry collides with the other US profit-centre, the legal system.

(Aside - anyone remember who said there were no poor in the US, just temporarily disadvantaged millionaires - that's why they keep voting republican?)

5. #### Re: Sorta

"Stalinist central planning like the NHS"

NHS central planning?

At one level there are English, Welsh, Scottish & N Ireland health services. Below that, at least in England and Wales there are then various local trusts plus trusts running hospitals. And then there are also local organisations such as http://locala-homecare.org.uk/ whose exact status is a mystery to me. There are also local organisations in Scotland but I can't remember whether they were also trusts or called something else.

N Ireland I'm not so sure about as it's nearly 30 years since I lived there & I haven't had to deal with them from a business point of view. In fact it's now a few years since I had to deal with the trusts in the rest of the UK level so it might have been all change there but unlikely to have been simplified.

1. #### Re: Sorta - Stalinist?

Sticking "Stalinist" in front is just cheap hiding of a lack of understanding and knowledge. By the way, some things are best centralised if they affect a whole country and one can hardly complain of centralisation at the same time as others talk of post code lottery. Anyway it is not true.

The notable thing is that, the more countries use the private sector for basic services, the more expensive those services become. In Britain this is particularly clear, whether the rising cost of health or the insane cost and inefficiency of privatised rail. This is not surprising: if one privatises, say, the supply of towels to a hospital, the staff and facilities to wash the towels still expect salaries, sometimes higher than in the state sector. Their private managers expect salaries and bonuses and the firm as a whole requires profits. Meanwhile, the hospital requires administrators to manage the supplier and staff to handle the towels on their way in and out, check the standard, manage the budget. So, all you have saved, possibly, is having your own washing machines and laundry rooms (though towels still need storage and dirty towels must be kept somewhere), while still requiring a hefty admin. layer and having to pay enough for the service, including the profits made by that service. Meanwhile, you've lost proper control and the annual tendering process is open to corruption and itself costs time and money.

The USA is said to have the most expensive health service in the world, with still 45% not covered and the famous medicaid being rather limited - hence Obamacare. Switzerland has a pretty good system. But, as it is mainly dependant on private insurers, it is the second most expensive system. But at least everyone is covered.

The sad thing is that ignorant, British politicians think the American way is good - so now we have profit-making companies and trusts running schools and some hospital services badly, treatment driven by saving and not need yet costing more; food banks! I grew up in Britain - food banks was not even in the language. But the great success of modern government is to make charitable food banks and shop left-overs a necessary part of life even for some working people,

We have neo-liberals who think that letting employers pay less than the minimum needed to live and then subsidising them with income related benefits is clever. Why not just mandate a minimum wage that is genuinely enough to live, stop all the subsidies in the form of tax credits, then do away with the need for ever more complex computer software and hardware, civil servants to run it all, private consultants to exploit it all and so on. If a business is so bad it can not afford proper wages, then goodbye to it and good riddance, or tell it to cut the senior bonuses and use the money sensibly.

Any country that does not feed, educate and look after the health of all its people, good or bad, is a failed state in this day and age. It is no surprise that home grown terrorism or susceptibility to radicalisation is a worry in such a country.

1. #### Re: Sorta - Stalinist?

--Any country that does not feed, educate and look after the health of all its people, good or bad, is a failed state in this day and age. It is no surprise that home grown terrorism or susceptibility to radicalisation is a worry in such a country.

Amene!

The health system here has many flaws, the per capita spending is roughly 3x that of the UK for not much better treatment (comparing experience of two births, one in each country and various other trips to ER for parent related stuff). The litigious nature of society here will play a part, sadly it's always the doctors fault if you don't make a complete recover and there's always some winnet freshly clipped from satans arse to take your case for you and ensure someone is to blame (for a 40% cut). The drugs angle is interesting, there's no single purchasing organisation here like NICE in the UK and I get the feeling that the USA pays a premium on drugs compared to these other countries as whilst they are sold at a profit on the cost of manufacture I think the R&D costs are largely shouldered by countries with large private insurance systems and no central purchasing.

Health insurance costs are frankly insane, mine, for me alone, runs around \$600 a month. I'm perfectly fit and healthy, haven't been ill in probably 15 years now. Don't smoke, don't drink, no obesity, no genetic issues etc, work in the open air on an organic farm, yet my premiums pay for people who are less responsible with their health and have near unlimited access to an incredibly expensive 'take a pill' system. Right now there's loads of commercials for this diabetes drug with staggering list of side effects (I love how they say red coloured urine, not pissing blood) when we have a cure for type 2 diabetes that doesn't use drugs and some promising work on curing type 1. There's no incentive to prevent illness or steer people towards anything other than the latest fad pill and 20 different pills to deal with the side effects.

Copays are also dubious, I understand the concept of using them as a method of controlling use but they get high and frequently cover far more as a percentage of the actual cost than they would have you believe.

I'd be curious to see the difference between the amounts of work done, i.e. does higher gunshot injuries and car crashes significantly increase the total cost of healthcare between the usa and uk?

2. #### Re: Sorta - Stalinist?

Private rail isn't a great comparison, as they didn't actually allow for any competition (if I want to go to London, I have to use a Southern train), plus they are required to run the trains throughout the day, even mostly empty.

A proper capitalist "privatised" solution would allow for different train lines to run trains on the same routes, thus allowing for price competition. It would also allow them to only run the trains when there are enough people to make it economical to do so, and to allow much greater changes in pricing.

I can see why they do it the way that they do, but it's really not privatised in any meaningful sense of the word.

1. #### Re: Sorta - Stalinist?

"Private rail isn't a great comparison, as they didn't actually allow for any competition (if I want to go to London, I have to use a Southern train), plus they are required to run the trains throughout the day, even mostly empty."

Not completely true (although I grant you, mostly true).

Grand Central is an open access rail company providing a few additional direct routes to London from Sunderland and Bradford. This is in competition to East Coast. If you want to travel York to London, you have the choice of East Coast or Grand Central (although there are only a few GC trains a day). So, they allow for competition, just there mostly isn't any.

4. #### Shirly the value for money, per cent spent, matters?

I don't think the statistics tell us a great deal. In many parts of the U.S. for example, mass transportation is almost none existent. In these places it must suck to be poor. There are healthcare systems that are more effective, while providing better value for money, than the NHS. Meanwhile, in the U.S. the privatised healthcare system takes everyone for a ride.

1. #### Re: Shirly the value for money, per cent spent, matters?

In many parts of the US, public transportation is wildly impractical. It there are 2000 people in your town, and the next town of 2000 people is 30 miles away, what would you expect?

1. #### Re: Shirly the value for money, per cent spent, matters?

A small bus.

1. #### Re: Shirly the value for money, per cent spent, matters?

And put in some footpaths for the love of God. Perhaps it's just here but if it isn't in front of a shop there isn't a space to walk. Most residential streets either have no path or a path on one side. Forget walking any distance. Forget footpaths between towns, along roads or otherwise.

More public transit would also help the drunk driving epidemic here.

1. #### Re: Shirly the value for money, per cent spent, matters?

The foot paths (side-walks!): depends on the local regulations in a given place. Some towns/cities dictate a footpath must be included in any application for planning permission. I've been stuck in a hotel (Independence, Ohio - grimmest place on Earth, IMHO) you literally couldn't walk out of!

5. Quite interesting!

In re US health care: there's a big difference, I think, between NHS and, say Aetna health insurance. The former does not pay stockholders; for the latter, profit is its raison d'etre. In 2013, Aetna paid its CEO \$30,725,000 and some odd cents; John Holden (director of systems, NHS) got 125,000 pounds, or \$234,000 in US dollars.

Where the monkey grabs the cheese is here: in the US system, profits are served when Aetna pays fewer patient claims. A farmer makes more money when he sells more aubergines, but Aetna makes more money when they deliver less medical care. (But sell more policies, of course.)

The US private insurance system also profits when only partial payments are made for care. Termed "co-insurance" or "co-pay", these mean that "comprehensive" insurance is actually akin to a 50%-off coupon. (My co-insurance percentage goes up almost every year.) The patient can be run into bankruptcy very fast even when they have paid up on "comprehensive" health insurance.

While health insurance is, in theory, a risk-spreading strategy, private insurance in the USA is in practice a rather cut-throat mega-business. The patients' throats are usually those which get cut.

But overall, the article to hand is quite the eye-opener. I guess those guys on the street-corners, the ones holding the cardboard signs that say "Homeless Vet, Anything Helps" must not be as badly off as they look.

1. For profit isn't necessarily inefficient and government isn't necessarily cheaper.

Here car insurance is a govt monopoly - everybody pays the same irrespective of what car you drive or how old you are. The only weighting is years of no-claims.

The result is that with max no-claims I pay >\$1500 vs <\$300 in the UK. Partly this subsidizes 17year olds being given Ferraris on their birthday but mostly it subsidizes the large "transfer payments" the government makes from the coffers of the insurance corporation to the treasury.

6. Including the cost of the US healthcare system in welfare spending is not unlike including the price of billionaire mansions in the money spent to fight homelessness.

1. Or claiming the govt funded Space shuttle as public transport.

2. It's perfectly proper to include the publicly funded part of healthcare as welfare. Private expenditure on health is another issue (although you could make a case that tax breaks on health insurance could be included).

3. > Including the cost of the US healthcare system in welfare spending is not unlike including the price of billionaire mansions in the money spent to fight homelessness.

So what you are saying is that some of us in America are paying for "billionaire mansions" when it comes to healthcare? In other words, we are at liberty to pay more to get more. That doesn't sound altogether bad really. It sucks to be poor but then again it always sucks to be poor. It's nice that there's at least the option to do better and get better.

That's the key difference between what we have in the US and European Communism.

Although, it does make sense to compare total expenditures for both public and private payments for healthcare and taxes in general. I am in a much better position than a European counterpart to handle my own medical expenses. I have more money for housing and food and health insurance and vacations and my medical rainy day fund (HSA).

I just have to choose to prepare for that sort of thing rather than wasting every last cent I earn on consumption of consumer products. The same goes to a lesser degree for "working class stiffs". We simply choose as a nation to be irresponsible. "Saving" is a dirty word. We all must feed the economic beast. You even see propaganda about this in math textbooks (I kid you not).

7. #### so, let me get this right...

Basically what makes the american tax system more progressive _and_ it's benefits budget seem per capita greater is health insurance.

a system introduced by tricky dicky, which should be proof enough of it's broken-ness, that 'charges' patients thousands of dollars for an asprin, on the basis that the patient a) doesn't pay much on the day, b) is not in a position to argue. and the hospital makes an enormous profit from, and the HMO also makes a bundle from - by sky rocketing premiums.

in stating that the US spends 30% of GDP on health you failed to mention that for that 30%of GDP around 10% of the population have no cover at all, and a further 90% of the population (i.e. all the rest) upon contracting a serious or long term condition have no cover at all.

The US _wastes_ 30% of it's GDP on the fig leaf of notional health insurance. which is of no practical use to man nor beast and it therefore not part of the 'common good' calculation.

there fixed it for you!

1. #### Re: so, let me get this right...

Not quite. All "social welfare" is in that 30%. Health care is about half of that (18% of GDP in total, from memory).

So, no, it's not all about the health care system.

And tricky dicky? Nixon? Not all that much to do with it as far as I recall. The idea of health care insurance being provided by the employer started in WWII, under FDR. Wage constraints (hey, there was a war on!) meant that employers competed by offering better health care insurance. It's also true that health care insurance is tax free: it's an expense to the company, so part of costs, not taxed. But it's tax free to the recipient. If you were paid the money and bought insurance with it you'd pay income tax on that money. But if the company buys you insurance then the employee doesn't pay tax.

Changing that alone would make the system rather better.

1. #### Re: so, let me get this right...

not health insurance per-se, but the HMO's

heard a tape of tricky dicky in the oval talking about setting up HMO's, he was against it, til it was pointed out that the 'market forces' would result in less healthcare not less profits for his mates in the insurance business, then he was all in favour.

only came out fairly recently i think

smoking gun here:

Health insurance is not the issue, the 'free market' is. You could say is what we have in the uk... bit of a stretch but we all pay a little all the time for the time when we individually need a lot. I know the nitty gritty of it don't work that way, but from the perspective of an end user that's pretty much what it looks like. It's just 1/2 a century of political cowardice and piss poor planning that makes it not work like that.

As a card carrying lilly livered pinko subversive son of a bitch I loath and detest the free market, because i see the evil it brings every day.

As fully paid up, good ol boy 'fuck the poor' capitalist son of a bitch you see the opportunities the free market gives for your mates to make a shitload of cash. (or at least you play one on the internet)

and never the twain shall meet

8. #### More money !=more in return

Like everything else in the U.S. (and yes I do mean everything) you spend the most money to get the least in return.

A good example is the U.S public school system (grades 1-12) which spends more per student than any other country in the world, (~12k avg. annually as of 2013) yet student performance constantly ranks in the high 20s to low 30s globally* where 1-10 are ranked as best.

While your statistics are correct, the map is not the terrain and that is never more important nor more dangerous if ignored, than in the U.S.

It is the same with welfare. While you SEE a lot money being spent and allocated to the poor, a large share of that money never actually reaches the end recipients.

(* there were a variety of scales, studies and reports to choose from. I chose the averages)

1. #### Re: More money !=more in return

But the teachers who make \$90K a year in school districts were the graduates can't read and write, the doctors who make \$300K a year treating the poor on Medicaid, the professors at big universities who teach one course for \$200K....they all thank you for the money!

1. #### Re: More money !=more in return

Is this a deliberate grammatical error in a phrase complaining about poor teaching? Sadly I suspect not...

2. #### Re: ecofeco Re: More money !=more in return

"Like everything else in the U.S. (and yes I do mean everything) you spend the most money to get the least in return....." So why is it that, whenever I'm in the US, I keep having the fun of sending copies of my petrol receipts back to my colleagues in the UK? \$3.28 per US gallon, about 87c per litre, whereas last month it was £1.28 for a litre in the UK under the 'progressive' UK tax regime - LMAO! It's also a lot, lot cheaper to eat out in most US cities compared to London, Paris or Berlin, usually cheaper for a hotel and car rental, and have you seen the prices of houses? Most people I know in the UK say their biggest drain on their family's purse is their mortgage.

1. #### Re: ecofeco More money !=more in return

"It's also a lot, lot cheaper to eat out in most US cities compared to London, Paris or Berlin"

But, Dear Boy, the food, the awful food.

1. #### Re: Zog Re: ecofeco More money !=more in return

".... the food, the awful food." Sorry, but that kind of nationalistic chauvinism is long since past its sell-by-date, especially when you consider that not all of us are food snobs. In the US I have often eat very high-quality meals prepared with organic food at a fraction of the cost of doing so in the UK or Europe. Sorry, but the so-called superiority of Continental cuisine is just another myth.

2. #### Re: ecofeco More money !=more in return

".....\$3.28 per US gallon....." LOL, just filled up today outside Atlanta - \$2.64/gallon!!!!

9. #### Some gaps

A few items:

* "The major difference between the two ideas is that wages – generally at least if not in the past few years – rise faster than inflation."

Can you please cite stats? The stats I have seen is median income flatlined for 30 years:

* Your Better-life index. Has that been updated for the cuts to SNAP (maybe TANF too?) for 2014?

* You make the mistake of using wage income for comparing progressive tax rates. The biggest loophole in the US is the carried interest income. One could also comment about long term capital gains as also being regressive given the majority of folks don't have investments (they can get too readily - think 401(k) here).

* You mention the health care system is already insane here, so not much more to comment there. With Obamacare/Romneycare legislating health care profits to view citizens as 'consumers' the outcome will never be good. And when folks need private insurance most (big bills) then need to worry about rescission for minor errors/delaying tactics.

1. #### Re: Some gaps

A number of problems with the "median income has flatlined" for 30 years story.

It's usually presented as median household wages have flatlined. But the size of the household has declined, meaning wages per capita have increased.

Second, it's measuring wages, not compensation. It leaves out pensions contributions and, importantly, health care insurance. That second has very definitely increased over that time.

Thirdly, and this is argued about, there's something a bit hinky about the way that inflation is measured in that calculation.

Adjusting real per capita incomes, the median, is guesstimated at having rised 25% or so. Not a great performance by any means but better than flatlining.

1. #### Re: Some gaps

A few problems with your 'number of problems' (none of which you saw fit to cite sources for, possibly because you don't have any).

On 'household size has declined'... I think you may have your decades in a bit of a muddle. It's 2015 now, not 2000. Household size since 1991 pretty much stable at just over 2.4 people. The decline in size is a phenomenon of the 1970s (as the baby boomers began to set up homes for themselves). See page 2 of file:///H:/st39ch0_tcm77-219077.pdf

Secondly, the statistic uses PPP to determine income... so the value of health care and pension contributions remains stable, since they're paying for the exact same thing they were 30 years ago. That the price of services taken in addition to wages has risen has no impact, since rising prices are kind of the point of the whole measurement.

Your third point can't really be argued with, since it contains no argument. It's just a totally unsupported statement that you don't like the math, without outlining any reasons why. One could equally say that there's something a bit hinky about the stats you presented in this article. Of course, there's no need to, since it's easy enough to come up with half a dozen good reasons why the article is nonsense - not least that it hinges on the idea that spending more money on something automatically means it's better. I'm fairly certain that if the findings showed the US at the bottom of the spending list rather than the top, you'd still conclude the US system is working better because it's kept costs down.

I look forward to next week's paper on why the Spartan Hoplite regiment was objectively a better fighting force than the modern US air force, because the Spartans spent a higher percentage of their GDP on it that the US does.

2. #### Re: Some gaps

Please direct me to the statistics supporting these claims.

Note that size of the household actually *increased* post GFC due to folks a) being unable to support mortgages, and b) young folk cannot afford even the reduced prices given wage and wage security conditions. There is a low level moan from the MBA/NRA (National Realtors Association - not the other!) about the fact that household creation is stalled (at least for this period). Irony given their refusal to countenance the word 'fraud' in the lead up to the GFC (except by buyers! A joke in itself).

Also, what pensions are you referring to? Those run by corporations/municipalities that have been seen to be rather vulnerable to being wacked in BK? On the 401(k)s that folks cannot get to until 55+, unless they need it for emergency/housing, in which case it gets wacked in the long term? Also, can you show how pensions and HC insurance are treated elsewhere? And how does a pension factor in when you are still in the working period?

Inflation has always been argued about, especially the hedonic pricing (and the productivity gains there were not passed to workers...). Still, references please.

So, given the above, you have an unsubstantiated claim of 25% increase per capita. Again, references please.

10. #### I think that healthcare screws the stats badly

As I read it, you're including healthcare/health-insurance spending in that 30%, but as others have noted our system is outstandingly inefficient -- much higher spending and notably worse outcomes (measured in terms of life expectancy, infant mortality, years of healthy life, etc). I.e., rather than look at outcomes, and in particular outcomes for the poor, you just swept it all up into "communal welfare spending" and called it good.

If instead you look at our outcome metrics, and pick some other countries with comparable outcomes and split our medical spending into "proportional to results in a well-run system" and "pissed into the wind", about 2/3 of our medical spending is "pissed into the wind". That lops about 12% out of our 30%, giving you an overall of 18% which is well below the median.

And yes, I know that faith-based microeconomic handwaving (*) says that's unpossible, but that's what the outcomes are. An alternate explanation that is not necessarily more charitable is that you have laundered gold-plated healthcare for people like me (top 2-3%) into "social welfare spending" therefore medical care doesn't suck for poor. You really need to do better than this -- this looks a lot more like shilling for a particular POV than honest analysis.

(*) do we have independent utility functions? we do not, therefore the proof of general welfare maximization does not hold, and that's just one preconditions out of several that fail. All those mathematical symbols in econ papers are so much fancy wankery if you don't deal with the behavior of real-world humans.

1. #### Re: I think that healthcare screws the stats badly

I would rather not fixate on the poor because people are ultimately responsible for themselves. They still have some ability to control their own destiny even if they are on the lower end of things. The things they choose to do and the things they choose to value impact their lives greatly. To say that they are in control of nothing ultimately strips them of their humanity and any hope that they might someday do better for themselves.

No amount of throwing money at the problem will compensate for a pathalogical culture that actively discourages assimilating the habits of successful members of society.

11. As I have pointed out in several comments, the bulk of the 'social welfare' spending is not actually received by the poor. It goes to social workers, teachers, and doctors who provide 'services' to the poor. The poor are not really in any position to complain about the low quality of these services, because they're not paying cash for them.

The actual money spend on food stamps, EITC, and section 8 housing is a small fraction of the social welfare spending. But even something like food stamps is immediately received by the grocery stores, and adds to their business and profits.

12. #### The uncut truth.

The rich want more wealth and the poor have no voice. The supreme court said money is voice.

Keeping an economic slave state works for business not governments.

1. #### Re: Pay through your noise

Actually, you can get away with far more when you deal with US companies ... we noticed that a consultancy job that takes say 35 hours in Europe (and is billed as such), is billed 70 hours in the US - simply because we get no questions in the US ... might as well milk you guyz a little more... ;-)

14. #### Poverty

You can never eliminate poverty. It is a relative state to everyone else. That is why poverty loses credibility as an argument as the system supports them more.

having lived in Europe 20 years, half of them in Britain, and having had to return to the U.S. Because bankers,

- I think you forgot to compare how much of benefits accrue to the middle classes and not hose actually needy

- besides medical, where many more but not significant numbers can be insured at all, and still where you are going to lose big if really ill, how about dental arrangements? Bad teet come from not being able to spend in them (remember postwar Britain?) and then you are really going to get stuck if you wish to fix them.

- what about states, and the war a good many of them are fighting not to give medical benefits to the poor at all? And did you realize, to get that Medicaid if you can, you'll be required to have almost no cash or possessions, losing the benefit as soon as you cross the \$3500 or so line.

There are many other traps in America and in your thinking, which is after all elitist according to your cherry picked numbers and opinions.

America grew cruel after the 1970s, and has not grown up in humanity yet to get over it.

16. #### Ah but, who do they spend it on?

"As that chart shows, the net effect of all of this is that the US really does spend more on social welfare than anyone other than France." Correct, but not complete.

I did a report using US Census office figures that showed that while what you say is true, a significant portion of this is given to the already wealthy and rich. How much? Enough that if some of this state support was given to the poorest instead, 9.4% of ALL US householders would be pulled above the poverty line.

1. #### Re: Ah but, who do they spend it on?

it says nothing of the kind.

most of that figure is health insurance, which as has been pointed out time and time again, for more reasons than you can shake a stick at inappropriate in these figures. due to the vastly worse cost per outcome encountered in the US un-health business when compared to proper health care systems.

There is usually a god awful hole in Worstall's thinking, this week it's a doozie :-)

(we'll set aside all that bollocks about higher rate income tax being 40%, we all know it's closer to 19% - warren buffet told us, and he should know!)

1. #### Re: Naughtyhorse Re: Ah but, who do they spend it on?

".....due to the vastly worse cost per outcome encountered in the US un-health business when compared to proper health care systems....." Ignoring the US (and I have ex-pat friends in the US which sing long and loud about how much better the health care they actually receive is in the States compared to the old NHS in the UK), my own direct experiences are from my wife seeking treatment for a back issue. It was misdiagnosed twice by the NHS, correctly diagnosed by BUPA, then mistreated by the NHS (after a six month wait for treatment), at which point she went back to BUPA and got what she needed at her convenience. TBH, we have received great service in other cases from the NHS, but to blindly insist it provides better care than private is simply denial.

17. #### Tim writes...

As an example, someone who spends their child benefit on a packet of ciggies (and who wouldn't need a couple after looking after a squalling brat all day?)

Quite a few actually.

1. #### Re: Tim writes...

Um... militant smokers or child haters or both?

18. #### Lies, damned lies and statistics

Being one of the, probably, few here who have actually tried being poor in both Denmark and the US i can say with absolute certainty that it's waayyy worse being poor in the US than in Denmark.

And more importantly, the delineation for being poor is way higher.

Having a two income household with the median salary where i am in New Orleans, would make you not much better off than having a family that was unemployed in Denmark.

And therein lies a huge part of the discrepancy.

Being "poor" is not quantifiable by the same metrics in such different systems.

Denmark, for one, does not have entire industries dedicated to screwing over poor people simply because they're poor and thus have no other choice.

The US most certainly does.

And don't even get me started on the equality differences in regards to the law.

I'm now solidly in the top 5%.

And honestly it wasn't until i passed that 10% mark that i could stop worrying about living paycheck to paycheck.

Yes. There most definitely is a difference and if i was poor i would take the Euro way any day.

19. It's not anything to brag about when those social welfare programs are contributing heavily to our 18 trillion dollar debt.

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