A recent paper from the World Economic Forum – the group that runs the Davos conference – stated that Americans pay more for healthcare than other countries but get inferior outcomes. That rhetoric was amplified by Warren Buffett, when he called health care costs a “hungry tapeworm” eating into the American economy. But, before you assume that Americans are not getting good value for their health care dollars, let’s look at the data.

The data (from the Davos paper) at the heart of those claims will be familiar to anyone who has followed health care issues:

The dark blue bars show that the U.S. spends more on healthcare as a percentage of GDP (17.1%) than other developed countries, and the light gray bars show Americans have a lower life expectancy at birth (age 79).

Those facts are not in dispute. The problems are that life expectancy at birth is a highly imperfect measure of health care outcomes and that health care spending as a percentage of GDP doesn’t accurately measure how much a government’s outlays affect the health of its citizens.

The problems with life expectancy at birth

No single metric can accurately measure something as multifaceted as the efficacy of health care spending. But life expectancy at birth is a natural choice for those looking for a simple answer to a complex question. Unfortunately, its simplicity masks its many shortcomings.

Let’s start with the fact that life expectancy at birth is very different for blacks and whites. Data from the Center for Disease Control (CDC) shows that white men can expect to live to age 78.8, black men to age 74.5 and non-Hispanic black men to age 74.2. The pattern is the same for women. Among the reasons blacks have shorter life expectancy is that they are more likely to die from heart disease, cancer, homicide and diabetes. This data raises the issue that the problem with lower U.S. life expectancy is rooted in discrimination and inequality rather than the efficacy of our healthcare.

Incidentally, the same racial pattern exists in infant-mortality rates. The overall rate for the U.S. is 6.1 deaths per 1,000 live births, which is the highest among developed nations. But for blacks the rate is 11.7 and for whites it is 4.8. (The U.S. rates are also elevated in part because it has a higher rate of births before 24 weeks of gestation, which are riskier births.)