Is American Health Care Uniquely Inefficient?
AbstractThe U.S. health system has been described as the most competitive, heterogeneous, inefficient, fragmented, and advanced system of care in the world. In this paper, we consider two questions: First, is the U.S. healthcare system productively efficient relative to other wealthy countries, in the sense of producing better health for a given bundle of hospital beds, physicians, nurses, and other factor inputs? Second, is the United States allocatively efficient relative to other countries, in the sense of providing highly valued care to consumers? For both questions, the answer is most likely no. Although no country can claim to have eliminated inefficiency, the United States has high administrative costs, fragmented care, and stands out with regard to heterogeneity in treatment because of race, income, and geography. The U.S. healthcare system is also more likely to pay for diagnostic tests, treatments, and other forms of care before effectiveness is established and with little consideration of the value they provide. A number of proposed reforms that are designed to ameliorate shortcomings of the U.S. healthcare system, such as quality improvement initiatives and coverage expansions, are unlikely by themselves to reduce expenditures. Addressing allocative inefficiency is a far more difficult task but central to controlling costs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 22 (2008)
Issue (Month): 4 (Fall)
Other versions of this item:
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
- Jonathan S. Skinner & Elliott S. Fisher & John Wennberg, 2005.
"The Efficiency of Medicare,"
in: Analyses in the Economics of Aging, pages 129-160
National Bureau of Economic Research, Inc.
- Robert E. Hall & Charles I. Jones, 2004.
"The Value of Life and the Rise in Health Spending,"
NBER Working Papers
10737, National Bureau of Economic Research, Inc.
- Robert E Hall & Charles I Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 39-72, 02.
- Robert E. Hall & Charles I. Jones, 2005. "The value of life and the rise in health spending," Proceedings, Federal Reserve Bank of San Francisco.
- Avi Dor & Mark V. Pauly & Margaret A. Eichleay & Philip J. Held, 2007. "End-stage Renal Disease and Economic Incentives: The International Study of Health Care Organization and Financing," NBER Working Papers 13125, National Bureau of Economic Research, Inc.
- Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark E. Votruba, 2008.
"Organizational Fragmentation and Care Quality in the U.S. Healthcare System,"
Journal of Economic Perspectives,
American Economic Association, vol. 22(4), pages 93-113, Fall.
- Randall D. Cebul & James B. Rebitzer & Lowell J. Taylor & Mark Votruba, 2008. "Organizational Fragmentation and Care Quality in the U.S. Health Care System," NBER Working Papers 14212, National Bureau of Economic Research, Inc.
- van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & De Graeve, Diana & Duchesne, Inge & Gerdtham, Ulf-G & Gerfin, Michael & Geurts, Jose & Gross, Lorna, 2000. "Equity in the delivery of health care in Europe and the US," Journal of Health Economics, Elsevier, vol. 19(5), pages 553-583, September.
- Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
- Martin Gaynor & Jian Li & William B. Vogt, 2006.
"Is Drug Coverage a Free Lunch? Cross-Price Elasticities and the Design of Prescription Drug Benefits,"
The Centre for Market and Public Organisation
07/166, Department of Economics, University of Bristol, UK.
- Martin Gaynor & Jian Li & William B. Vogt, 2006. "Is Drug Coverage a Free Lunch? Cross-Price Elasticities and the Design of Prescription Drug Benefits," NBER Working Papers 12758, National Bureau of Economic Research, Inc.
- David Cutler & Angus Deaton & Adriana Lleras-Muney, 2005.
"The Determinants of Mortality,"
cutler_deaton_lleras-mune, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
- David M. Cutler & Angus S. Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," Working Papers id:359, eSocialSciences.
- Cutler, David & Lleras-Muney, Adriana & Deaton, Angus, 2006. "The Determinants of Mortality," Scholarly Articles 2640588, Harvard University Department of Economics.
- David M. Cutler & Angus S. Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," NBER Working Papers 11963, National Bureau of Economic Research, Inc.
- David Cutler & Angus Deaton & Adriana Lleras-Muney, 2005. "The Determinants of Mortality," Working Papers cutler_deaton_lleras-mune, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
- Kevin M. Murphy & Robert H. Topel, 2006.
"The Value of Health and Longevity,"
Journal of Political Economy,
University of Chicago Press, vol. 114(5), pages 871-904, October.
- Weisbrod, Burton A, 1991. "The Health Care Quadrilemma: An Essay on Technological Change, Insurance, Quality of Care, and Cost Containment," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 523-52, June.
- Kessler, Daniel & McClellan, Mark, 1996. "Do Doctors Practice Defensive Medicine?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 353-90, May.
- Dana P. Goldman & James P. Smith, 2004. "Can Patient Self-Management Help Explain the SES Health Gradient?," HEW 0403004, EconWPA.
- David M. Cutler & Ernst R. Berndt, 2001. "Medical Care Output and Productivity," NBER Books, National Bureau of Economic Research, Inc, number cutl01-1, October.
- Irving Shapiro & Matthew D. Shapiro & David Wilcox, 2001. "Measuring the value of Cataract Surgery," NBER Chapters, in: Medical Care Output and Productivity, pages 411-438 National Bureau of Economic Research, Inc.
- Jacobs,Rowena & Smith,Peter C. & Street,Andrew, 2006. "Measuring Efficiency in Health Care," Cambridge Books, Cambridge University Press, number 9780521851442, November.
- David A. Wise, 2005. "Analyses in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise05-1, October.
- Martin Neil Baily & Alan M. Garber, 1997. "Health Care Productivity," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1997 Micr), pages 143-216.
- Avi Dor & William Encinosa, 2004. "How Does Cost-Sharing Affect Drug Purchases? Insurance Regimes in the Private Market for Prescription Drugs," NBER Working Papers 10738, National Bureau of Economic Research, Inc.
- Emmett B. Keeler & Shan Cretin, 1983. "Discounting of Life-Saving and Other Nonmonetary Effects," Management Science, INFORMS, vol. 29(3), pages 300-306, March.
- Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2007. "Patient Cost-Sharing, Hospitalization Offsets, and the Design of Optimal Health Insurance for the Elderly," NBER Working Papers 12972, National Bureau of Economic Research, Inc.
- Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
- Pablo Hernández de Cos & Enrique Moral-Benito, 2011. "Health care expenditure in the oecd countries: efficiency and regulation," Banco de Espaï¿½a Occasional Papers 1107, Banco de Espa�a.
- Stephen Hall & P. A. V. B. Swamy & George S. Tavlas, 2011.
"Generalized Cointegration: A New Concept with an Application to Health Expenditure and Health Outcomes,"
Discussion Papers in Economics
11/22, Department of Economics, University of Leicester.
- Stephen Hall & P. Swamy & George Tavlas, 2012. "Generalized cointegration: a new concept with an application to health expenditure and health outcomes," Empirical Economics, Springer, vol. 42(2), pages 603-618, April.
- Melberg, Hans Olav, 2011. "Some problems with international comparisons of health spending – and a suggestion about how to quantify the size of the problems," HERO On line Working Paper Series 2011:4, Oslo University, Health Economics Research Programme.
- Jabłonowski, Janusz & Müller, Christoph & Raffelhüschen, Bernd, 2010. "A fiscal outlook for Poland using generational accounts," FZG Discussion Papers 47, Research Center for Generational Contracts (FZG), University of Freiburg.
- Jonathan Gruber & Helen Levy, 2009. "The Evolution of Medical Spending Risk," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 25-48, Fall.
- Samuel H. Preston & Jessica Y. Ho, 2009. "Low Life Expectancy in the United States: Is the Health Care System at Fault?," NBER Working Papers 15213, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.