Healthcare

A friend asked me a great set of questions after a conversation about the NHS. If the UK can’t afford universal healthcare, how are countries like Sweden and Norway managing? And if taxing billionaires isn’t the way, how could the US pay for it? Fewer tanks? More taxes for everyone? Limits on what can be charged for procedures and medication?

I wanted to do a little research rather than just answer off the cuff. I initially typed a bunch of facebook comments, but I figured since I did all that work I’d go ahead and have AI help me clean it up and turn it into a blog post. This is mostly my words, but with AI editing, fact-checking and so on.

First, are they managing?

To answer how they’re managing, let’s first decide whether they’re managing.

Some things in Sweden are great. Life expectancy is 84.1, tied with Italy for the highest in the EU. Sweden also has the EU’s lowest avoidable mortality: deaths that good prevention or timely treatment should stop.

Other things in Sweden are not great. In 2024, 3.9% of Swedes with a medical need said it went unmet, mostly because of waits. Sweden has a legal guarantee: see a specialist within 90 days, then get treated within 90 more. Since 2021, about 30% of patients have waited past 90 days for a first specialist visit, and about 45% have waited past the target for elective surgery. Sweden has not met its own guarantee since it became law in 2010.

The UK, by any measure, is not doing great. Life expectancy is 81. The median wait for a hip replacement was 174 days in 2024, versus 67 in Sweden. Sweden has about 30% more doctors and 20% more nurses per person. And about 1 in 5 Britons who needed non-emergency surgery waited more than a year.

Dental care is worse. NHS dentistry doesn’t pay enough to convince dentists to take NHS patients. In England, only about half the population has an NHS dentist, about 36% pay for a private one, and about 11% have no dentist at all. Of people without a dentist who tried to get an NHS appointment, 84% couldn’t get one.

What’s different?

Partly it’s funding. Sweden and the UK spend about the same share of GDP on healthcare, roughly 11%. But Sweden’s economy is bigger per person, so Sweden actually spends about 18% more per person on healthcare ($7,770 vs. $6,606).

The UK also collects only about 34% of GDP in taxes, versus 41% in Sweden. (And remember, the pie is bigger in Sweden.) Swedes are paying a crap ton more in taxes, and a lot of that helps healthcare outcomes less directly.

The biggest single difference is elder care. Sweden spends about 3.4% of GDP on long-term care for the elderly, both nursing homes and help at home. That’s roughly double the UK. Not surprisingly, it matters. On a typical day, about 13,000 UK hospital beds, roughly 1 in 10, are filled by patients who are medically ready to leave but have nowhere to go. Sweden tackled this back in 1992 by making local governments pay the hospital for every day a patient waits on them for a nursing home spot or home care.

Sweden actually has fewer hospital beds per person than the UK, and it’s generally considered a shortage. But Sweden has deliberately pushed care out of hospitals and into outpatient clinics and elder care. Only about 22% of its health spending goes to inpatient hospital care, versus 28% across the EU. Sweden spends more overall, but it gets a lot more for the money.

Norway: just pay for it

You mentioned Norway. How is it doing? Great, by most measures. How? They pay for it.

Norway spends about 44% more per person on healthcare than the UK ($9,523) and 23% more than Sweden. Fewer than 2% of Norwegians report unmet medical needs. Its avoidable mortality is among the lowest in Europe, and life expectancy is 83.1. It has more doctors, more nurses and more hospital beds per person than either Sweden or the UK, and it spends about as much on elder care as Sweden does.

Their wait times still suck by their own measures, though. Before the pandemic, over 70% of Norwegians waiting for a hip replacement and over 80% waiting for a knee replacement were still waiting after three months. That’s worse than Sweden. Healthcare is a big political issue in both countries; it was a top issue in Sweden’s election this year. Norway’s government has ordered its hospitals to cut average waits every year through 2029. Sweden’s version is an actual law, and they’ve missed it every year since 2010. Legislating outcomes without a means to get there pretty much never works.

How does Norway pay for all this? Mostly taxes, which are about as high as Sweden’s. But the government also captures most of the value of its oil: a 78% tax on oil profits, direct ownership stakes in the oil fields, and a two-thirds stake in Equinor, the national oil company. That money goes into a sovereign wealth fund worth about $2 trillion, roughly $350,000 per Norwegian, and the fund covers about a quarter of Norway’s annual budget. It’s a great answer if you have it, but it’s hardly a prescriptive solution.

So what about the US?

Remember that the UK spends a pathetic $6,600 per person on healthcare. Sweden spends $7,770, and Norway has fixed most of its problems by spending a fantastical $9,523.

The US? $13,473 per person. Double the UK, and about 40% more than Norway. So we must be doing great, right?

For all that, US life expectancy hit a record 79.0 in 2024, and that’s still the lowest of any large, wealthy country (it bottomed out at 76.1 during COVID). Our preventable mortality was 238 deaths per 100,000 people, versus an OECD average of 158. Waits are one thing we do reasonably well: if you’re insured, you’ll generally see a specialist or get surgery faster than in the UK. But that “if” is doing a lot of work.

Why don’t we just have the government pay for our healthcare? That’d be a great idea. Oh, wait, we do! By the official count, federal, state and local governments spent about $7,000 per American on healthcare in 2023. That alone is more than the UK spends on everything. Add the tax break for employer insurance and the insurance government buys for its own employees, and taxpayers fund about two-thirds of US healthcare, roughly $10,000 per person. That’s more than Norway spends in total, public and private combined.

Clearly something has gone wrong.

Where is all that money going?

About 80% of the extra money goes to hospitals and doctors. And here’s the surprising part: Americans don’t actually use much more care than people in other rich countries. We just pay more for every piece of it: staff, drugs, devices, scans and paperwork.

US doctors make a lot more money. The average primary care physician makes about $300k a year, and the average specialist about $415k. Compare that to roughly $105–160k for a salaried GP in the UK, or $145–195k for a hospital specialist. Sweden pays a bit less than the UK, and Norway is in the same ballpark. Doctor pay alone accounts for roughly a tenth of our extra spending. (And that doctor in the UK probably owns a clothes dryer but doesn’t feel like he can afford the electricity to run it, so he hangs his clothes to dry.)

Administration and drugs make up most of the rest. We spend $925 per person on health administration versus $245 in comparable countries. Drugs get their own section.

What about drugs?

We spend about $1,635 per person a year on prescription drugs, versus $944 in comparable countries. Across all prescription drugs, US prices average about 2.8 times what 33 other rich countries pay.

It’s all in the brand-name drugs. Those cost more than three times as much here, even after rebates. Generics, which are 90% of US prescriptions, are actually cheaper here: about two-thirds of what other countries pay.

The US buys 24% of the drugs sold in rich countries but pays 62% of the money. American consumers account for an estimated 64% to 78% of the drug industry’s worldwide profits, while earning about 27% of the world’s income.

Here’s the thing: that money is what pays for new drugs. Other rich countries negotiate hard, pay a fraction of our prices, and still get the drugs our prices paid to invent. In a real sense, Americans are subsidizing drug research for the rest of the world. One analysis of the 15 biggest drug companies found that the extra revenue they earned from higher US prices was $116 billion in 2015, and their entire global research budget was $76 billion. So about two-thirds of what we overpay would cover all the drug research those companies did, worldwide.

The other third is gravy: marketing, profits, and everything else. So we’re not just funding the world’s drug research; we’re paying beyond that. But cutting our prices to European levels would cost us new drugs. The Congressional Budget Office estimated the 2022 law letting Medicare negotiate some drug prices would mean about 13 fewer new drugs over 30 years. That’s a small effect, but it isn’t zero, and bigger price cuts would cost more.

And keep it in perspective: drugs are only about an eighth of our extra spending. Even if drug prices dropped to European levels tomorrow, we’d still spend far more on healthcare than anyone else.

So who’s getting rich?

Most of the money goes to hospitals. I guess hospitals are getting rich, right? Hah! The typical hospital runs on a 1–5% operating margin, and as of this August, 43% of hospitals were losing money. Most US hospitals are nonprofits anyway. (The big, dominant systems do fine, and nonprofit surpluses show up as reserves and new buildings rather than profit. But it’s not a gold mine.)

Private insurers do pay hospitals about 2.5 times what Medicare pays for the same care. That’s mostly because mergers left many regions with one or two hospital systems that no insurer can leave out of its network. In 2024, one or two health systems controlled the entire hospital market in 47% of US metro areas, and 97% of metro areas counted as highly concentrated by federal antitrust standards. But that money mostly gets spent inside the hospital rather than kept as profit.

Well, the health insurance companies must be getting rich, right? We’ve decided it’s open season on CEOs, so they must be the problem. Bad news for that theory: US health insurers had a profit margin of 0.4% last year. They’re having a better 2026, around 4%, but that’s still thin. (The big conglomerates like UnitedHealth make a bit more by owning the clinics and pharmacy middlemen they pay, but even UnitedHealth’s overall margin is about 5%.)

My theory

Everything about doing business in some sectors of America is insanely expensive. No one’s getting rich doing it, but we’re not spending the money on doing the thing. With healthcare, a huge amount of money is tied up in insurance billing, coding, claim disputes, and hiring a zillion well-paid people who never actually treat anyone. When hospitals get paid more, they mostly just spend more.

The waste is intrinsic and incredibly hard to spot. Does your doctor’s office have two people sitting at the front desk? Do they really need to be there? Are they extending your lifespan? Does Norway have two people at the front desk? They certainly don’t have another two people in the back office doing insurance billing. The US spends almost four times as much per person on health administration as comparable countries, and that only counts insurers and government programs. It doesn’t include the billing staff inside hospitals and doctors’ offices.

It’s not just healthcare. I think we’ve failed at higher education in the same way. We spend a shit-ton of money on colleges, most of them aren’t getting rich, and a lot of the growth has gone to administrative staff who don’t actually educate anyone, but who somehow seem indispensable now. Between 1993 and 2007, colleges’ per-student spending on administration rose 61% after inflation, versus 39% for actual instruction.

What’s the solution?

I would like the government to be responsible for outcomes, and the only way to do that is to make sure economic incentives are aligned across the whole structure.

We have to pay doctors enough that they want to do the job, and that means they need to be able to pay for their education. Right now the median new doctor graduates owing about $200,000 for medical school alone, then spends years in residency earning around $68,000. Their education needs to be affordable, which means we need to figure out how to train them efficiently. Pay medical schools more for high-quality doctors produced quickly, and less for weaker doctors who took longer to train. You can start to see how metrics could form around that. But a US doctor trains for 11 to 15 years after high school, and four of those are a bachelor’s degree that the UK, Sweden and Norway skip entirely: their students go straight from high school into medical school. That seems like an obvious place to start.

We need to pay doctors for making us healthy, but instead we pay them per office visit and per MRI they order. (Plenty of other countries pay per visit too, so this isn’t the whole story, but it doesn’t help.)

We need to pay hospitals for getting us well and not getting us sicker. Instead we pay them per admission and per procedure, however it turns out. One study of a 12-hospital system found that when a privately insured patient suffered a surgical complication, the hospital netted about $39,000 more on that patient (revenue minus variable costs). Medicare mostly refuses to pay that bonus; private insurers often don’t.

We need to incentivize doctors to pick the best available treatment for us. Instead, we do about 500,000 coronary stent procedures a year, roughly 1 in 5 for patients with stable heart disease. For those patients, two big trials (COURAGE in 2007 and ISCHEMIA in 2019) found stents don’t prevent heart attacks or death any better than medication and lifestyle changes. (In an actual heart attack, they save lives.)

These are really hard structural problems with individual fixes. Just saying “let’s expand Medicare to everyone” won’t fix them. It would cut prices, since Medicare pays hospitals far less than private insurers do. But Medicare already pays about 12% less than what hospitals report it costs to treat its patients, so without fixing what drives those costs, we’d just be expanding the already misaligned incentives to everyone.

Socialized medicine is absolutely the answer, but it’s not in any way a simple answer.