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USA Spends $7,960 Compared to Around $3,800 for Other Rich Countries on Health Care with No Better Health Results

The latest data from the commonwealth fund report confirms the status quo. The USA spends twice as much on their health care system for no better results. It is easier to argue the USA is below average in performance that leading. And for double the cost that is inexcusable.

Globally the rich countries citizens are not tremendously happy with health care systems overall. It seems likely not only does the USA cost twice and much as it should and perform poorly compared to countries doing an excellent job but the USA performs that poorly compared to countries that themselves have quite a bit of improvement to make. Which makes the state of the USA system even worse.

Data from the Commonwealth fund report published in 2011 with data for 2009, International Profiles of Health Care Systems, 2011:

Table showing, percent of GDP spent and total spending per capita in USD on health care by country.

Country	2007	Spending	2009	Spending
Australia	9.5%	$3,128	8.7%	$3,445
Canada	9.8%	$3,326	11.4%	$4,363
Germany	10.7%	$3,287	11.6%	$4,218
Japan			8.5%	$2,878
New Zealand	9.0%	$2,343	10.3%	$2,983
UK	8.3%	$2,724	9.8%	$3,487
USA	16.0%	$6,697	17.4%	$7,960

Survey of population, showing % that chose each statement (no data available for Japan)
	Australia	Canada	Germany	New Zealand	UK	USA
	2007 – 2010	2007 – 2010	2007 – 2010	2007 – 2010	2007 – 2010	2007 – 2010
Overall health system views
Only minor changes needed, system works well	24 – 24	26 – 38	20 – 38	26 – 37	26 – 62	16 – 29
Fundamental changes needed	55 – 55	60 – 51	51 – 48	56 – 51	57 – 34	48 – 41
Rebuild completely	18 – 20	12 – 10	28 – 14	17 – 11	15 – 3	34 – 27
Percent uninsured	0 – 0	0 – 0	<1 – 0	0 – 0	0 – 0	16 – 16

Under currently law in the USA by 2020 the uninsured rate should decline to under 5% by 2020 (still far more than any rich country – nearly all of which are at 0%).

On many performance measures in the report the USA is the worst performing system (in addition to costing twice as much). Such as Avoidable Deaths, 2006–07, the USA had 96 per 100,000, the next highest was the UK at 83, Australia was the lowest at 57. And Diabetes Lower Extremity Amputation Rates per 100,000 population, the USA had 36 the next highest was New Zealand at 12, the lowest was the UK at 9. For experiencing a medical, medication or lab test rrror in past 2 years, the USA was at 18%, next worst was Canada at 17%, best was UK at 8%. The USA was top performer in breast cancer five-year survival rate, 2002–2007. And sometimes the USA was in the middle, able to get same/next day appointment when sick: the USA was at 57%, New Zealand achieved 78% while Canada only reached 45%.

It is possible to argue the USA provides mediocre results, which is consistent with most global health care performance measures. Unless you directly benefit from the current USA system it is hard to see how you can argue it is not the worst system of any rich country. Costing twice as much and achieving middling performance. All that doesn’t even factor in the cost in anguish and bankruptcies and restricting individual freedom (when you have to stay tied to a job you would rather leave, just because of health insurance) caused by the difficulty getting coverage and fighting with the insurance companies for payment and coverage for treatment expenses.

January 26, 2012

Apple’s Impossibly Good Quarter
Apple has been performing amazingly well for years. They keep producing blockbuster hits over and over. Not only are these hits enormously popular they are enormously profitable.

The only real objections to Apple’s stock I can see are: the overall market value is so huge it just has to collapse (over $400 billion – the largest in the world) or it has to be time for a huge reversal of fortunes.

The problem with the view that it will fall is that the stock is very cheap by any rational measure. You are not paying much for all the earnings. Even if Apple does not continue the trend of the last 5 years, if it just stopped growing altogether, it is still cheap (if it does continue that trend it will break $1 trillion by 2014 – but I don’t think it will). The biggest risk is the profit margin shrinks drastically. That is possible. It is even somewhat likely to shrink a fair amount. But there isn’t much reason to think revenues will not grow. And to me, the current price makes sense only if revenues fall and profit margins fall. It takes the worst case scenario to make this stock seem overpriced.

The data on the last quarter (and for 2011 overall) are impossible (except they actually happened).
- record quarterly revenue of $46.33 billion ($26.74 billion in 2010)
- record quarterly net profit of $13.06 billion ($6 billion in 2010)
- Gross margin was 44.7 percent compared to 38.5 percent in the year-ago quarter
- $17.5 billion in cash flow from operations during the quarter (and $38 billion in the last year)
- $100 billion in cash now ($97.6 billion to be exact but since the data was gathered they probably passed $100 billion anyway). That is more than the market cap of all but 52 companies in the world.
You can’t grow quarterly sales from $26.7 billion to $46.3 billion. $26 million to $46 million, fine that is possible, billions however – not possible. Except Apple did. You can’t grow a $6 billion quarterly profit to $13 billion in 1 year. Except Apple did. You can’t generate a cash flow of $17.5 billion in a quarter. Except Apple did. You can’t have a stockpile of $100 billion in cash. Except Apple does. These figures would not have been seen as unlikely just 3 years ago. They were impossible. But Apple achieved them.

These figures are not short term blips. They are the latest in a long stream of amazingly results.

Related: How Apple Can Grow from $200 Billion to $300 Billion In Market Cap – Apple Tops Google (August 2008)

Apple has numerous, incredibly strong businesses. Each could be the linchpin of an extremely valuable company.
- iPhone initial sales and reoccurring income (over 50% of Apple’s revenue)
- app sales (for iPhones, iPads and Macs)
- iPads
- iTunes
- Macs
- Their retail store business – selling all their products
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January 25, 2012
Health Care in the USA Cost 17.9% of GDP, $2.6 Trillion, $8,402 per person in 2010

Total health expenditures in the USA in 2010 reached $2.6 trillion, $8,402 per person or 17.9% percent of GDP. All these are all time highs. Every year, for decades, health care costs have taken a larger and larger portion of the economic value created in the USA. The costs have risen much more rapidly than the costs in the rest of world. This creates a burden that slows the USA economy – it acts as a friction dragging everything else down. We not only need to slow down how fast we are getting worse (which we have done the last 2 years) but actually start making up for all the ground lost in the last few decades. We haven’t even started on that. The amount of work to do in getting our health system back to mediocre and reasonably priced is enormous (currently we have mediocre performance and extremely highly priced – twice as costly as other rich countries).

In 2009 the USA Spent Record $2.5 Trillion, $8,086 per person 17.6% of GDP on Medical Care.

USA health care spending grew 3.9% in 2010 following an increase of 3.8% in 2009. While those are the two slowest rates of growth in the 51 year history of the National Health Expenditure Accounts, they still outpaced both inflation and GDP growth. So yet again the health system expenses are taking a bigger portion of overall spending.

As a result of failing to address this issue for decades the problem is huge and will likely take decades to bring back just to a level where the burden on those in the USA, due to their broken health care system, is equal to the burden of other rich countries. Over 2 decades ago the failure in the health care system reached epidemic proportions but little has been done to deal with the systemic failures. Dr. Deming pointed to excessive health care cost, back then, as one of 7 deadly diseases facing American business. The fact that every year costs have increased more than GDP growth and outcome measures are no better than other rich countries shows the performance has been very poor. The disease is doing even more harm today.

Related: USA Heath Care System Needs Reform – USA Spends Record $2.3 trillion ($7,681 Per Person) on Health Care in 2008 – Systemic Health Care Failure: Small Business Coverage – Measuring the Health of Nations – How to improve the health care system performance – Management Improvement in Healthcare – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007

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January 23, 2012

Looking at GDP Growth Per Capita for Selected Countries from 1970 to 2010

I decided to take a look at some historical economic data to see if some of my beliefs were accurate (largely about how well Singapore has done) and learn a bit more while I was at it.

GDP in USD for countries

country	1970**	2010***	% increase
Korea	1,320	20,200	1,430
China	325	4,280	1,217
Singapore	4260	42,650	901
Indonesia	460	2,960	543
Brazil	1900	10,500	453
Thailand	850	4,600	441
Portugal	3,970	21,000	429
Japan	9,000	42,300	370
Malaysia	1,900	7,755	308
Germany	11,550	40,500	251
UK	10,400	36,300	249
France	13,600	40,600	199
Mexico	4,160	9,200	121
Panama	3,480	7,700	121
India	555	1,180	113
USA	23,350	47,100	102
South Africa	3,930	7,100	81
Venezuela	8,280	9,770	18

I just picked countries that interested me and seemed worth looking at. I looked for some around the starting position of Singapore and close to Singapore geographically. And looked at Panama as the closest match to Singapore (for Singapore’s main 1970 asset, convenient for shipping lanes, and very close for GDP per capita).

Malaysia and Singapore were 1 country after independence (from 1963-1965).

I can’t imagine more than a couple countries could reasonably be argued to have had better economic performance from 1970 to 2010 than Singapore (Korea? China? Who else?). Singapore had very little going for it in 1970. They had a good location for shipping and that is about it macro-economically. No natural resources. No huge storage of wealth. No preeminence in science, technology or business.

It seems to me that Singapore actually did have 1 other thing. A government that was to preside over a fantastic economic growth success. You won’t find many textbooks talking about the way to economic success is a very well run government. And there is good reason for that, I believe. Relying on a very well run government will nearly always fail. In some ways Singapore was like Japan but with significantly more government influence on the way economic development played out.

I was surprised how poorly the USA has faired. It isn’t so surprising that we lagged. People forget how rich the USA was in 1970. The USA is still very rich but bunched together with lots of other rich countries instead of way out ahead as they were in 1970. And in 1970 the lead was already contracting, for what it had been earlier. But even knowing the relative performance of the USA had lagged, I was surprised by how much it under-performed.

I was also surprised with India. I knew they have done poorly but I didn’t realize it had been this poor. The failures to greatly improve infrastructure, education and the stifling effect of their bureaucracy have been causing them great harm. They have been doing some good things in the last 10 years especially but still have a long way to go. Their premier education is actually pretty decent. The problem is the other 90% of the education is often poor and many people (especially women) hardly have any education at all. It is very hard to get ahead when you fail to take advantage of the talents of so many of your people.

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January 18, 2012

Curious Cat Investing, Economics and Personal Finance Carnival #23
Welcome to the Curious Cat Investing, Economics and Personal Finance Carnival: find useful recent personal finance, investing and economics blog posts and articles. The carnival is published twice each month. This carnival is different than others in two significant ways. First, I select posts from the blogs I read (instead of just posting those that submit to the carnival). I think this provides readers a better selection of valuable material (many of the best blogs don’t take time to submit to carnivals). And second, I include articles when I think they are interesting. I figure the primary purpose is to provide links to good recent content, so just because something isn’t a blog post doesn’t exclude it from inclusion.
- Recovering Adam Smith’s ethical economics – “He justified commercial society for its tremendous contribution to the prosperity, justice, and freedom of its members, and most particularly for the poor and powerless in society.” [This post covers a topic I think is very important and have written about several times – John]
- A Man. A Van. A Surprising Business Plan. by Zoe Chace – “Adam had tricked out the van to be a mobile solution to Chinese bureaucracy. There are a couple of Mac laptops and a printer, plus an old couch, Christmas lights and bamboo mats. It’s as cozy as a dorm room. And confused visa applicants line up outside.” [wonderful – John]
- Chart of Manufacturing Output from 2000 to 2010 by Country by John Hunter – “Europe has 4 countries in this list (if you exclude Russia) and they do not appear likely to do particularly well in the next decade, in my opinion. I would certainly expect Brazil, India, Korea and Indonesia to out produce Italy, France, UK and Spain in 2020. In 2010 the total was $976 billion by the European 4 to $961 billion by the non-European 4. In 2000 it was $718 billion for the European 4 to $343 billion (remember all the data is in 2010 USD).”
- Ultimate Sustainable Dividend Portfolio – “I would expect the Ultimate Sustainable to do better in difficult times and worse in great times. Why? The USDP is a more stable portfolio that will fluctuate less over time…”
January 16, 2012

12 Stocks for 10 Years: January 2012 Update

The 12 stock for 10 years portfolio consists of stocks I would be comfortable putting into an IRA for 10 years. The main criteria is for companies with a history of large positive cash flow, that seemed likely to continue that trend. I am considering adding Abbot to the portfolio, and maybe dropping Cisco.

Since April of 2005 the portfolio Marketocracy* calculated annualized rate or return (which excludes Tesco) is 5.7% (the S&P 500 annualized return for the period is 3.9%). Marketocracy subtracts the equivalent of 2% of assets annually to simulate management fees – as though the portfolio were a mutual fund – so without that (it is not like this portfolio takes much management), the return beats the S&P 500 annual return by about 380 basis points annually (it would be a bit less with Tesco, but still close above 3%, I would think – calculating rates of return with purchases and sales and dividends is a complete pain, which is one reason Marketocracy is so nice).

The current stocks, in order of return:

Stock	Current Return	% of sleep well portfolio now	% of the portfolio if I were buying today
Amazon – AMZN	350%	9%	7%
Google – GOOG	187%	17%	14%
PetroChina – PTR	115%	8%	6%
Templeton Dragon Fund – TDF	85%	8%	7%
Templeton Emerging Market Fund – EMF	44%	5%	7%
Danaher – DHR	43%	10%	10%
Apple – AAPL	42%	9%	9%
Intel – INTC	18%	6%	6%
Cash (likely to be ABT soon)	–	4%	6%
Cisco – CSCO	-2%	5%	4%
Toyota – TM	-8%	8%	12%
Pfizer – PFE	-9%	6%	7%
Tesco – TSCDY	-13%**	0%*	5%

The current marketocracy results can be seen on the Sleep Well marketocracy portfolio page.

January 12, 2012

USA Adds 200,000 Jobs in December, Unemployment Rate Falls to 8.5%

Nonfarm payroll employment rose by 200,000 in December, and the unemployment rate declined to 8.5% (the lowest rate in 3 years), continuing a downward trend. The change in total nonfarm payroll employment for October was revised from +100,000 to +112,000, and the change for November was revised from +120,000 to +100,000 (which results in total increase of 192,000 with this report: 200,000 – 8,000 lost in revisions).

The number of long-term unemployed (those jobless for 27 weeks or more) continues to be a big problem and was little changed at 5.6 million, accounted for 42.5% of the unemployed (quite a high percentage). While adding 192,000 is better than losing jobs or adding fewer, it is still not enough to make up for the credit crisis job losses. The economy needs to add 125,000 a month to keep up with population growth. Sustained gains over 230,000 month after month are needed to be what I would see as good, and really above 270,000 would be much better – but given the Eurozone problems, staying about 200,000 may really be good news.

The civilian labor force participation rate (64.0%) and the employment-population ratio (58.5%) were both unchanged over the month.

Over the past 12 months, nonfarm payroll employment has risen by 1.6 million. Employment in the private sector rose by 212,000 in December and by 1.9 million over the year. Government employment changed little over the month but fell by 280,000 over the year.

Employment in transportation and warehousing rose sharply in December (+50,000). Almost all of the gain occurred in the couriers and messengers industry (+42,000); seasonal hiring was particularly strong in December.

Retail trade continued to add jobs in December, with a gain of 28,000. Employment in the industry has increased by 240,000 over the past 12 months.

In December, manufacturing employment expanded by 23,000, following 4 months of little change. Employment increased in December in transportation equipment (+9,000), fabricated metals (+6,000), and machinery (+5,000).

Related: USA Unemployment Rate Rises to 9.8% (Nov 2010) – USA Unemployment Rate Remains at 9.7% (March 2010) – Over 500,000 Jobs Disappeared in November 2008

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January 6, 2012
Curious Cat Investing, Economics and Personal Finance Carnival #22
Welcome to the Curious Cat Investing, Economics and Personal Finance Carnival: find useful recent personal finance, investing and economics blog posts and articles. The carnival is published twice each month.

The new year starts with markets still highly uncertain due to the after affects of the too-big to fail credit crisis and the Euro-zone crisis. Job markets leave many people’s personal finances is trouble and those that are in good shape have a much greater challenge determining what are optimal personal financial strategies.

And markets embody the uncertainty. Investing strategies are also made more difficult by the current uncertainties. Continuing with long held strategies seems wise, but less comforting in these troubled times.
- 32 Best Dividend Stocks for 2012 by Shailesh Kumar – “The following table lists the best dividend stocks for 2012 based on dividend yields, dividend growth rate and dividend sustainability. All the stocks in this list have a P/E ratio of 15 or below.”
- How I Switched to Long Term Thinking – “I started spending some time each day thinking about the decisions I made that day, particularly ones I would often see myself repeating. Outside of the moment, I’d look at the short term benefits of my options as well as the long term benefits and I’d decide independently what the best long-term choice was.”
- A Country In Denial About Its Fiscal Future by Robert Samuelson – “Political leaders assume that financial markets won’t ever choke on U.S. debt and force higher interest rates, stiff spending cuts and tax increases. At best, this is wishful thinking. At worst, it’s playing Russian roulette with the country’s future.”
- Top 10 Countries for Manufacturing Production in 2010: China, USA, Japan, Germany… by John Hunter. China took over first place from the USA in manufacturing output in 2010. From 1980 to 2010 China increased output 1345%. The total top 10 group of countries increased output 302%. From 1995 to 2010 China increased output 543%. The group increased 64%.
January 1, 2012
Chart of Manufacturing Output from 2000 to 2010 by Country

Chart of manufacturing production by the top 10 manufacturing countries (2000 to 2010). The chart was created by the Curious Cat Economics Blog. You may use the chart with attribution. All data is shown in 2010 USD (United States Dollar).

In my last post I looked at the output of the top 10 manufacturing countries with a focus on 1980 to 2010. Here I take a closer look at the last 10 years.

In 2010, China took the lead as the world’s leading manufacturing country from the USA. In 1995 the USA was actually very close to losing the lead to Japan (though you wouldn’t think it looking at the recent data). I believe China will be different, I believe China is going to build on their lead. As I discussed in the last post the data doesn’t support any decline in Chinese manufacturing (or significant moves away from China toward other South-East Asian countries). Indonesia has grown quickly (and have the most manufacturing production, of those discussed), but their total manufacturing output is less than China grew by per year for the last 5 years.

The four largest countries are pretty solidly in their positions now: the order will likely be China, USA, Japan, Germany for 10 years (or longer): though I could always be surprised. In the last decade China relentlessly moved past the other 3, to move from 4th to 1st. Other than that though, those 3 only strengthened their position against their nearest competitors. Brazil, Korea or India would need to increase production quite rapidly to catch Germany sooner. After the first 4 though the situation is very fluid.

Taking a closure look at the large group of countries after top 4. Chart of manufacturing production from 2000-2010.

Chart of manufacturing production by the leading manufacturing countries (2000 to 2010). The top 4 countries are left off to look more closely at history of the next group. The chart was created by the Curious Cat Economics Blog based on UN data. You may use the chart with attribution.

Removing the top 4 to take a close look at the data on the other largest manufacturing countries we see that there are many countries bunched together. It is still hard to see, but if you look closely, you can make out that some countries are growing well, for example: Brazil, India and Indonesia. Other countries (most in Europe, as well as Mexico) did not fare well in the last decade.

The UK had a particularly bad decade, moving from first place in this group (5th in the world) to 5th in this group and likely to be passed by India in 2011. Europe has 4 countries in this list (if you exclude Russia) and they do not appear likely to do particularly well in the next decade, in my opinion. I would certainly expect Brazil, India, Korea and Indonesia to out produce Italy, France, UK and Spain in 2020. In 2010 the total was $976 billion by the European 4 to $961 billion by the non-European 4. In 2000 it was $718 billion for the European 4 to $343 billion (remember all the data is in 2010 USD).

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December 28, 2011
Top 10 Countries for Manufacturing Production in 2010: China, USA, Japan, Germany…

Chart of output by top 10 manufacturing countries from 1980 to 2010. The chart was created by the Curious Cat Economics Blog based on UN data. You may use the chart with attribution.

China has finally actually taken the lead as the largest manufacturer in the world. Reading many news sources and blogs you may have thought the USA lost the lead a couple of decades ago, but you would be wrong. In 1995 it looked like Japan was poised to take the lead in manufacturing production, but they have slumped since then (still they are solidly the 3rd biggest manufacturer). China has been growing manufacturing output enormously for 20 years, and they have now taken the lead from the USA.

As I have been saying for years the biggest economic story about manufacturing is the dramatic and long term increase of productive capacity in China. The next is the continuing global decline in manufacturing employment: increased productivity has seen production rise year after year and employment fall. What is the next most interesting stories is debatable: I would say the continuing failure to appreciate the continuing strong manufacturing production increases by the USA. Another candidate is the the decline in Japan. Another is the increase in several other counties: Korea, Brazil, India, Indonesia…

Looking more closely at some of the long term data shows how much China stands out. From 1980 to 2010 China increased output 1345%. The total top 10 group increased output 302% (all data is in current USD so inflation accounts for most of the gain, 100 1980-USD equal 280 2010-USD). From 1995 to 2010 China increased output 543%. The group increased 64%. For 1980-2010, the results for the other 3 largest manufacturing countries are: USA up 218%, Japan up 261% and Germany up 148% (other countries doing very well are Korea up 1893% and India up 737%). Looking at the last half of that period, from 1995-2010 the: USA up 44%, Japan down 11% and Germany up 19%.

One thing to remember about adjusting manufacturing data for inflation is that often the products created in later years are superior and cost less. So that a computer manufactured in 1990 which added $5,000 to the manufacturing total is far inferior to one in 2010 that added just $1,000. This point is mainly to say that while the increase in manufacturing in real (not inflated dollars) is not as high as it might seem the real value of manufacturing good did likely increase a great deal. But the economic data is based on price so manufacturing increases are reduced by cost decreases. Computers are the most obvious example, but it is also true with many other manufactured goods.

You can that the other largest manufacturing countries fail to keep up with the increases of the entire group of the top 10. China’s gains are just too large for others to match. If you remove China’s results (just to compare how the non-China countries are doing) from 1980-2010 the increase was 216% (so compared to the other 9 top manufacturers over this period the USA was even and Japan better than the average and Germany was worse). And from 1995-2010 the top 9 group (top 10, less China) increased just 28%: so the USA beat while Japan and Germany did worse than the other 9 as a group.

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December 27, 2011