The 2021 World Index on Healthcare Innovation, conducted by the Foundation for Research on Equal Opportunity (FREOPP), ranked the United States in 6th place among the world’s healthcare systems. The analysis finds that the United States is a global leader in scientific advancement but that our healthcare system is fiscally unsustainable.
The Index evaluated the national healthcare systems of 31 high-income countries on four key dimensions: quality, choice, fiscal sustainability, and science and technology. Those categories were chosen to examine not only the quality of each healthcare system, but also the ability of that system to improve over time through scientific and medical advances.
The Index finds that the top five national healthcare systems — Switzerland, the Netherlands, Germany, Ireland, and Israel — have all achieved universal coverage in part by relying on private insurance. In fact, Switzerland, the Netherlands, and Israel have universal private healthcare systems in which all citizens are covered by mandatory private insurance. Those countries empower patient choice and allow private insurers to innovate without delays from political or regulatory inaction. In addition, those systems tend to be more fiscally sustainable because subsidies are phased out for wealthier patients.
Ultimately, the United States ranked 6th overall, a result of excellent scientific advancement (1st), good quality (10th), moderate choice (20th), and poor fiscal sustainability (29th). Such rankings allude to the nation’s relative strength in research and development along with its struggle to control rising government spending on healthcare.
The Index emphasizes the importance of innovation in improving healthcare outcomes. Advances in scientific development, healthcare service delivery, and personalized care are recognized as essential components of high-quality healthcare systems. FREOPP calculated the strength of each national healthcare system using 13 elements based on 33 separate measures, from the number of primary care physicians per capita to the national debt-to-GDP ratio. The Index was updated in 2021 to emphasize measures of pandemic preparedness and assess the effectiveness of each national healthcare system’s response to COVID-19.
Science and Technology
The United States ranked first in science and technology by a wide margin. That result stems from U.S. leadership in the number of new drugs and medical devices gaining regulatory approval. The country also ranks near the top in scientific Nobel prizes per capita, scientific impact in academia, and research and development expenditures per capita. Those achievements make some of the most innovative and cutting-edge medical treatment options in the world available to Americans before they are accessible elsewhere.
The United States ranked 10th in quality, a consequence of mixed results on the element’s measures. The nation performed well on measures of patient-centered care, including relatively low wait times for care and good patient involvement in medical decisions. However, the United States ranked lower for pandemic preparedness and response (17th). It also was judged to have relatively poor healthcare infrastructure, with the lowest number of primary care physicians per capita among the nations surveyed. Those rankings highlight that scientific advancement does not necessarily guarantee better healthcare outcomes. In fact, the United States does not perform particularly well compared to other developed nations on a number of different healthcare outcomes, as measured by the Organisation for Economic Co-operation and Development (OECD).
The United States ranked 20th in choice, despite the availability of most new medical advancements. This is because choice encompasses more than just new treatment availability; it also includes the affordability of health insurance and the freedom to choose healthcare services. The United States ranked last in affordability as a result of high healthcare prices, highlighting that treatment availability does not guarantee accessibility for ordinary Americans.
Another way the Index measures the freedom to choose healthcare services is through the amount of out-of-pocket healthcare expenditures; FREOPP judges that healthcare markets are most efficient when patients are directly spending on their own care. This is because higher out-of-pocket spending on a national level indicates that individuals can choose the type of care that fits within their own budget. Despite several nations in the Index with single-payer systems, the United States ranked second to last in out-of-pocket healthcare expenditures.
The United States ranked 29th in fiscal sustainability, ahead of only France and Japan. Healthcare costs in the United States are far higher than those in other countries. In 2020, U.S. healthcare expenditures were $10,948 per capita — nearly three times the average of other OECD countries. Such spending is likely to continue growing rapidly; the Congressional Budget Office projects that spending on major federal healthcare programs will rise from 5.7 percent of GDP in 2022 to 9.4 percent in 2051 — an increase of 64 percent.
What Does the Index Imply for U.S. Healthcare?
FREOPP’s report reflects the United States’ role as a world leader in scientific and technological advancement in healthcare. At the same time, spending on healthcare in the United States has far outpaced other major healthcare systems without yielding better outcomes. The Index makes clear that further innovation, beyond pure scientific advancement, is necessary to control rising costs and ensure high-quality healthcare is accessible to every American. Achieving higher healthcare performance will also contribute positively to America’s ongoing fiscal challenges.
Related: Why Are Americans Paying More for Healthcare?
Image credit: Photo by Spencer Platt / Getty Images
The United States remains the world leader in medical innovation, having produced more than half of the world’s new medicines over the last decade. But our edge is slipping away because of crippling domestic regulatory and tax policies.
A new report by Battelle, an international science and technology company, found that other countries are working aggressively to lure research facilities and high-paying jobs away from the United States. They are offering friendlier regulatory policies so companies can get products to patients faster, and they are lowering taxes and offering other incentives to boost private investment in new medicines and medical devices.
Our edge is not gone yet, but U.S. legislators must quickly act to stop the drain. Today, 12 of the top 20 medical device companies are headquartered in the U.S. Last year, U.S. companies had more than 3,000 new pharmaceutical products in development.
This superior medical innovation not only creates life-saving drugs, but boosts our economy. Battelle also found the biomedical industry contributed $917 billion to the U.S. economy in 2009 and supported more than four million jobs.
The cost of developing a new drug now exceeds $1.3 billion and takes an average of 12 years, and only a small percentage of new molecular entities ever reach the market. Instead of mitigating the risks that go along with these huge investments, the U.S. government has been erecting ever higher hurdles.
High American corporate taxes, in particular, deter investment. The top corporate income tax rate in the U.S. is 38 percent compared to an average of 15 percent in other countries.
In addition, many countries have instituted strong and permanent incentives for research and development, but the United States has kept its R&D tax credit “temporary” for decades. America now ranks 17th out of 21 countries in the Organization for Economic Cooperation and Development in the effective rate of its R&D tax credit.
The new health law also has created major new hurdles for investment in the biomedical sciences. Consider ZOLL Medical Corporation, a medical device company that now finds itself in the bull’s eye of ObamaCare. The law imposes a 2.3 percent tax rate on the revenue that medical device manufacturers collect — revenue, not profits! This will increase ZOLL’s tax rate to more than 50 percent, completely wiping out its R&D budget.
As ZOLL President Jonathan Rennert explained in a recent forum, “every one of the jobs in our company is now in the United States. But [when the medical device tax takes effect in 2013] we will have every incentive to move jobs offshore … the tax will lead to less innovation, fewer jobs, and fewer lives saved.”
Many other American companies, large and small, are driving innovation in the medical field — working to promote healthy lifestyles and develop new, life-saving treatments. Washington needs to support reforms that will allow their groundbreaking advances in the health sector to continue.
The engine of enterprise in the U.S. can continue if Washington were to understand the competition U.S.-based firms face from other countries and reverse its destructive policies.
In one small step, companies are working with the FDA to improve clinical trials so they can be smaller and better targeted, getting drugs to patients faster. Pfizer, for example, was able to bring its newest drug for lung cancer, Xalkori, to market in just four years using new research models that target drug trials to patients genetically tested to be most likely to respond. In one study reported at an American Society of Clinical Oncology meeting, 60 percent of patients were alive after two years, compared to only nine percent in historical trials.
The United States remains the undisputed leader in biopharmaceutical research for now, but our continued leadership is far from guaranteed. While other countries fight ferociously to lure biotech jobs and medical breakthroughs, our outdated regulations and burdensome taxes put the biomedical sector at risk. Once these jobs are lost, it will be extraordinarily difficult to get them back.
Real solutions in the health sector have come not from government, but from entrepreneurs working to find new treatments and improve care. These are the people and companies who will bring transformational change for the 21st century — provided Washington gets out of their way.
Grace-Marie Turner is president of the Galen Institute, a public policy research organization focusing on market-based health reform.