Irene Papanicolas PhD Associate Professor of Health Economics Department of Health Policy London School of Economics and Political Science 

US Spends As Much On Social Services As Other High Income Countries Interview with:

Irene Papanicolas PhD Associate Professor of Health Economics Department of Health Policy London School of Economics and Political Science 

Dr. Papanicolas

Irene Papanicolas PhD
Associate Professor of Health Economics
Department of Health Policy
London School of Economics and Political Science What is the background for this study?

Response: As many people know, the US spends considerably more on health care than other countries. One common explanation that is often put forward to explain this phenomenon is the belief that the US does not spend enough on social programs. As prior work has shown, lower spending on these type of programs, or social spending, is linked with worse population health outcomes. It is then believed that these poorer outcomes lead to a sicker population that uses more health care services, thus driving up health spending.

In this study we set out to examine some of the underlying assumptions behind this argument.

  • First, does the US really spend that much less on social programs?
  • Second, do we find that there is a consistent negative relationship between social spending and health spending across countries, that would be suggestive of this narrative? and
  • Third, do we find that countries that spend more on social programs over time, spend less on health care? What are the main findings?

Response: We find that the U.S does not spend much less than other high income (OECD) countries on social programs. The US spends 16% of GDP whereas the OECD average is 17%. If we include education in social spending, the U.S. spends more than the OECD average at 20% of GDP compared to about 19% across the rest of the OECD. Either way you look at it the US is not an outlier when it comes to social spending.

We also find that there appears to be a strong, positive, relationship between social spending and health care spending. That is that countries what spend more on social programs also spend more on health care. Finally, when we examine changes over time we see that countries that increased their spending on social services also see increases in healthcare spending. What should readers take away from your report?

Response: What readers should take away from this study is that countries that spend more on health services are the same ones that spend more on social programs. What readers should not conclude is that social spending is not “worth it”. Indeed we should  invest in social spending as this improves health and social outcomes. But perhaps we should not invest in social spending with the aim to reduce healthcare spending. What recommendations do you have for future research as a result of this work? 

Response: Our study is purely descriptive and indicates that there are a lot of further research that needs to be done to understand why this positive relationship exists. While we know that social spending and health care spending are positively correlated at the country level, we do not know why that is. It could be that countries that value spending on health also value spending on things like housing and education. It could be that this just reflects changes in national income and that richer countries spend more on services in general. It could be that lower health spending results in less social spending because people have worse health outcomes and claim less services in older age. All of these different mechanisms generate different policy responses, so further understanding what is at play here would be very important. Is there anything else you would like to add?

Response: When people first read our results the intuitive response is to think we are stating that the US should not spend money on social programs. That is definitely not what we are trying to show with this study. We do believe investment in social programs is important, but because in improves health outcomes, not because it will save money in the healthcare system. 


The Relationship Between Health Spending And Social Spending In High-Income Countries: How Does The US Compare?

Irene Papanicolas, Liana R. Woskie, Duncan Orlander, E. John Orav, and Ashish K. Jha
Health Affairs 0 0:0

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Last Updated on August 15, 2019 by Marie Benz MD FAAD