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Why Are Americans Spending More on Healthcare Than Any Other Nation, While Getting Lower-Quality Care?

An excerpt from the new book, 'The American Health Care Paradox.'

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Researchers, policymakers, and practitioners have offered a number of rationales for this paradox mostly related to the design and financing of the health care system. Pundits of various political views have laid blame on greedy insurance companies, inefficient and wasteful hospitals and government programs, and skyrocketing costs of pharmaceutical drugs. These assertions can be supported with data but do not fully explain why spending more on health care is getting Americans less health.

We propose a different explanation, based on compelling data gathered over years of research. Inadequate attention to and investment in services that address the broader determinants of health is the unnamed culprit behind why the United States spends so much on health care but continues to lag behind in health outcomes.

The idea that Americans spend more and get less when it comes to health care is frustrating to a populace long steeped in the virtues and benefits of capitalism. The American spirit resists the thought that the nation may not be getting value for money. The situation is upsetting not only because it connotes waste in the system, but because it provides evidence of the United States’ falling behind its peer, industrialized countries—spending more but not being any healthier for it. The United States ranks top out of thirty-four nations in national spending on health care as a percentage of GDP. Data from countries in the Organisation for Economic Co-operation and Development (OECD) from 2009 puts US health care spending at $7,960 per person, while most others spend less than $4,000 per capita (see Figure 1.1) and rank above the United States in multiple measures of health.

[Source: OECD, Health at a Glance 2011 (Paris, France: OECD Publishing, 2011).]

Most of the health care spending finances hospitals, physicians, and clinics. According to 2010 data from the Centers for Medicare & Medicaid Services, it is allocated as follows: approximately 31 percent is for hospital care; 20 percent, for physician and clinic services; 10 percent, for prescription drugs; 7 percent, for dental and other professionals; 7 percent, for government administration; 6 percent is for investment (structures, equipment, and noncommercial research); 6 percent is for nursing home and other long-term care; and 14 percent is for other medical costs including home health care (3 percent), government public health activities (3 percent), other medical products (3 percent), and other health, residential, and personal care (5 percent).

This piece was published with permission from Perseus Books.


Dr. Elizabeth Bradley is professor of public health at Yale, faculty director of its Global Health Leadership Institute, and master at Branford College. She was previously director of the health management program and co-director of the Robert Wood Johnson Clinical Scholars Program at Yale and served as hospital administrator at Massachusetts General Hospital. She lives in New Haven, Connecticut.

Lauren Taylor studies public health and medical ethics at Harvard Divinity School, where she is a Presidential Scholar. She was formerly a program manager at the Yale Global Health Leadership Institute. She now lives in Boston.