Part 14 of Passing the Buck, a 15-part series on why we make less but pay more.
The previous thirteen installments have been an attempt to describe the structure of cost-shifting in American economic life and to trace how that structure was built. This one looks at what other developed countries do, partly because the international comparison is the strongest argument against the claim that the current American arrangement is some natural outcome of modern capitalism, and partly because it is the part of this kind of conversation that is most often distorted in both directions. I want to be careful with the comparison. A lot of the standard “Germany has free healthcare” rhetoric flattens real tradeoffs in ways that, once a curious reader notices, undermines the larger argument. The honest comparison is more interesting than the rhetorical version, and the structural conclusion still holds.
Healthcare: the clearest comparison
The United States spent approximately $14,885 per capita on healthcare in 2024, according to OECD data compiled by the Peterson-KFF Health System Tracker. The next-highest spender among comparable countries was Switzerland, at $9,963. Germany was at roughly $7,400 per capita. France, Canada, the United Kingdom, Japan, and Australia were all in the $5,500 to $6,500 range. The median spending across the seventeen wealthiest OECD countries was approximately $7,000 per capita; the United States spent roughly twice that.
The outcomes do not justify the spending. U.S. life expectancy at birth is 76.4 years; the comparable-country average is 82.6. The U.S. has higher rates of infant mortality, maternal mortality, and preventable mortality than any other wealthy country. On most cross-national rankings of health-system performance, the U.S. is somewhere between last and second-to-last among the seventeen wealthiest OECD countries on overall outcomes, despite spending roughly fifty to one hundred percent more per capita than any of them.
Where does the extra American money go? KFF’s analysis attributes most of the gap to two factors. The first is administrative cost: the U.S. spends roughly $1,078 per capita on health-system administration (insurance overhead, billing, claims processing, prior authorization), more than five times the per-capita administrative spending in comparable countries with universal systems. The second is prices: U.S. drug prices, hospital prices, and physician compensation are all substantially higher than in comparable countries for substantially similar services. American specialists earn two to three times what their European counterparts earn. American hospitals charge two to ten times what European hospitals charge for the same procedures. American drug prices, before any negotiated rebates, are typically two to four times the prices the same manufacturers charge in Germany, France, or the United Kingdom.
The combined effect is that the U.S. spends approximately $7,000 to $8,000 per capita more per year on healthcare than any peer country, gets worse outcomes for the money, and finances the difference through a combination of higher employer premium costs (which suppress wages, as I covered in Part 8), higher household premium contributions, higher deductibles and out-of-pocket exposure, and the federal Medicare and Medicaid programs, which pay roughly the same inflated prices as private insurers do. The total annual U.S. healthcare spending is approximately $4.9 trillion. If the U.S. paid Germany’s per-capita rates, the savings would be roughly $2.5 trillion per year, or about $7,500 per household.
Thirty-two of the thirty-three high-income OECD countries have universal healthcare coverage in some form. The United States is the only OECD country without universal coverage. The systems in the other thirty-two vary substantially: Germany has a multi-payer non-profit “sickness fund” structure with mandatory enrollment; the United Kingdom has a single-payer National Health Service; Canada has a federally-funded provincial system; the Netherlands has regulated private insurance with mandatory enrollment and price caps; Japan has employer-based insurance with strong national price-setting. The structures differ. The shared feature is that no household in any of those countries faces the kind of financial exposure on healthcare that an American household routinely does.
Higher education
Public-university tuition is free or nominal in Germany, France, the Nordic countries, Argentina, Mexico, and several others. It is heavily subsidized to the point of near-token cost in much of Continental Europe. The English-speaking countries (U.K., Australia, Canada, Ireland) charge meaningful tuition but typically less than the equivalent U.S. price, and offer more generous income-contingent loan repayment that effectively caps household exposure. Only the United States combines high sticker tuition (roughly $11,600 at in-state public universities, much higher at private universities) with a federal loan system that is non-dischargeable in bankruptcy and an income-contingent repayment system that has been a regulatory football across recent administrations.
Aggregate U.S. student loan debt was approximately $1.77 trillion at the end of 2024, held by roughly forty-three million borrowers. The peer countries’ aggregate household student debt is dramatically lower per capita, even after controlling for tuition price and enrollment differences. The mechanism is straightforward: when the public sector funds universities through general taxation rather than tuition, the cost is spread across a larger and progressive tax base; when tuition is the primary funding mechanism, the cost is concentrated on individual households and their children, which is what the U.S. has chosen.
This is not, contrary to some rhetoric, a free-college-or-debt-slavery binary. The intermediate options are substantial: income-contingent repayment systems with hard caps as percentages of post-graduation income, tuition caps tied to public funding levels, expanded community-college free-tuition programs (which several U.S. states have implemented), targeted forgiveness for public-service employment. The U.S. has chosen the high-tuition, high-debt, low-protection version of higher-education finance, and the structural cost-shifting onto households is the consequence.
Labor
The comparative labor-protection picture is the area where the gap between the United States and the other wealthy countries is largest and most consistent. Most of Western Europe mandates twenty to thirty days of paid vacation, mandatory paid sick leave, mandatory paid parental leave (Sweden’s is the longest at 480 paid days per child), restrictions on at-will firing (after a probation period, dismissal typically requires documented just cause and severance), and either statutory collective-bargaining structures (Germany’s works councils, the Nordic sectoral-bargaining model) or very high rates of voluntary union coverage. France caps the standard work week at 35 hours, with overtime regulated.
The United States mandates none of these. There is no federal minimum paid vacation, no federal paid sick leave, no federal paid parental leave (the U.S. is the only OECD country without statutory paid maternity leave), and at-will employment is the default in forty-nine of the fifty states (Montana is the partial exception). Union density in the private sector is roughly six percent, down from a postwar peak of about thirty-five percent. Collective-bargaining coverage in the U.S., counting both union members and non-members covered by union contracts, is approximately twelve percent of the workforce. In Germany the comparable figure is approximately fifty-nine percent; in Sweden and Denmark it runs above eighty percent.
The Danish “flexicurity” model is worth flagging because it is sometimes held up as a model for the U.S. to adopt, and the trade-offs in it are usefully complicated. Danish employers can dismiss workers relatively easily by European standards; in exchange, the unemployment-insurance system provides up to ninety percent of previous salary for up to two years, with mandatory retraining and job-placement support. The Danish version is held together by a tax-funded welfare state, very high collective-bargaining coverage, and an active labor-market policy regime that costs roughly four percent of GDP. The U.S. spends about a tenth of that on equivalent active labor-market policy. Adopting the flexible-dismissal side of flexicurity without the security side, which has occasionally been proposed in U.S. policy discussions, would be the worst of both worlds.
Transportation, housing, and the tradeoffs that don’t transfer cleanly
This is the section where I want to be most careful, because the standard “Tokyo has incredible transit, why don’t we” comparison flattens a structural reality that matters: the United States is, by population density at the urbanized-area level, much less dense than Japan or most of Europe. The Tokyo metropolitan area has roughly five times the population of greater Los Angeles in roughly the same land area. The transit infrastructure that works in Tokyo works because there is the population density to support the network economics; the same infrastructure built across a metro area at U.S. density levels would not have the ridership to sustain the service frequency that makes Tokyo’s transit usable.
That said, the comparison is not nothing. American cities of comparable density to European peers — New York, Boston, Chicago, San Francisco — have transit systems whose underinvestment is real and is the result of policy choices rather than geographic constraint. The New York City subway system, on a passenger-mile basis, receives a fraction of the public investment that London or Paris or Berlin receives. The Northeast Corridor rail line, which connects four of the densest American population centers, would in any peer country be a high-speed-rail showpiece; in the U.S. it is operated by an underfunded federal corporation on infrastructure built in the early twentieth century. The political-economic point is not that the U.S. should build Tokyo’s network in low-density suburbs (it can’t); it is that the U.S. has systematically underinvested in transit in the urban geographies where it would actually work, while subsidizing the road-and-parking infrastructure of low-density automobile dependence to a degree that no other wealthy country approaches.
Housing is the area where the comparative analysis cuts in the most complicated direction. Continental European countries have, on the whole, more renter protections, more public and social housing, and more land-use planning that produces moderate-density mixed-use neighborhoods than the U.S. does. They also, mostly, have lower rates of household homeownership than the U.S. — a Berlin household is much more likely to be a long-term renter than a Phoenix household. Whether the European model produces better housing outcomes than the U.S. model is contested even on the political left; the YIMBY movement in U.S. urbanist circles has reasonably argued that the binding constraint in expensive American metros is supply restriction through restrictive zoning, and that some European rent-control regimes have made the underlying supply problem worse rather than better. The honest version of the housing comparison is that the U.S. has a supply-side problem that is mostly a state-and-local zoning failure, layered on top of a federal mortgage-finance system that has subsidized low-density homeownership for the better-off half of the country for ninety years. Both pieces are policy outcomes, not natural facts. Neither maps cleanly onto a European-country comparison.
What the numbers actually add up to
The honest aggregate comparison is something like this. The U.S. median household has a higher gross income than the equivalent household in any large European country. The U.S. median household disposable income, in purchasing-power-parity terms, runs around $70,000 per year, ahead of Germany’s roughly $54,000 and France’s roughly $50,000, behind only Norway and Luxembourg among comparable countries. The U.S. household, however, spends a much larger share of that disposable income on the mandatory categories this series has been documenting — healthcare, higher education, transportation, insurance — and bears substantially more uninsured risk on top of that spending.
What that means in practice is that the U.S. median household has a higher peak material standard of living when nothing goes wrong, and a much lower floor when something does. The Federal Reserve’s finding that thirty-seven percent of American households cannot cover a $400 emergency expense from cash is the headline statistic for what the lower floor looks like. The German or Danish median household is somewhat less affluent at the peak (smaller houses, smaller cars, less consumer expenditure) and substantially better protected at the floor: nobody loses their house because they got cancer, nobody graduates with $50,000 in debt, nobody is one car repair away from a payday loan. The trade between the two patterns is real. Most economists who study the comparison have concluded that the U.S. pattern, integrated over a population, produces lower aggregate welfare than the European pattern, even allowing for the U.S. advantage in headline GDP per capita. Whether you personally would prefer to live in the U.S. or in Germany depends on a lot of things — the U.S. has higher returns to high-skill professional labor, more dynamic labor markets, more in-migration, lower marginal tax rates on high incomes, and more consumer-economy abundance for the top half. Germany has none of those advantages and substantially more household economic security across the entire income distribution.
The U.S. pattern would be a defensible choice if the better protection of the other pattern were not also achievable. The international comparison is mainly an argument that the protection is achievable, because thirty-two other OECD countries are achieving it, with various structural choices and at various levels of tax-funded spending, but none of them through anything like the U.S. arrangement of high-cost private insurance, high-tuition private education, and high-overhead administrative complexity that this series has been documenting. The U.S. could have most of what the European countries have, at lower aggregate cost than the U.S. is currently spending, if it chose to. It has not chosen to.
What I see from here
I have been to France and to Portugal in recent years, and my wife works internationally in her own field, which means our family has had reasonable exposure to how peer-country professionals actually live. The honest version of what I have seen is that the European middle-class lifestyle is materially less abundant than the equivalent American one — smaller homes, smaller appliances, smaller cars, less restaurant culture, less discretionary travel, fewer flat-panel televisions — and is, at the same time, substantially less precarious in the ways that matter most. A French nurse making roughly half what my American friends in healthcare make does not worry about losing health coverage if she changes jobs. A German professional household does not worry about the kid’s college fund the way American parents do. A Danish family does not delay seeing a doctor because of the deductible. A Portuguese pensioner does not split her pills to make them last because of the price.
None of those countries is utopia. Each has its own pathologies, its own political dysfunctions, its own anti-immigrant resentments, its own deficits and debts and arguments. The point of the comparison is not that one of them is the model the U.S. should adopt wholesale. It is that the structural protection-of-household-economic-security side of the trade, which Americans are taught to believe is incompatible with prosperity, is in fact compatible with prosperity in every other wealthy country. The U.S. has chosen, decade after decade, a different point on the curve. The choice is not natural. It is a political-economic settlement that could be different.
The final installment looks at what changing the settlement would actually require.
Even that's Odd 
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