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date: 23 March 2017

Health Policy

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Politics. Please check back later for the full article.

Healthcare is an essential, but often expensive, good. It is largely a linear function of a country’s wealth. Poorer countries have barebones care, primitive facilities, shortages of trained professionals, and usually very limited forms of social, or even private, insurance. Moreover, their public health systems are highly fragile and face shortages of basic sanitation facilities, potable water, and plumbing. Consequently, comparisons across systems are most meaningful when they are constrained by their level of wealth and public sanitation infrastructure. In this comparison, the United States stands as an outlier among other wealthy countries for the higher costs of its health care system and its relatively high level of inefficiency in achieving desirable health outcomes. Approximately 18% of U.S. Gross Domestic Product is spent on health care. That figure is considerably greater than the average for wealthy countries and is, indeed, the highest in the world. But that considerable input results in health outcomes that are among the worst of the wealthy countries.

Why this is so has to do with historical developments, political values, the complexity of American political institutions, and the ability of well-heeled lobbies to successfully find champions to support their grievances. It also may have a good bit to do with some factors that lie outside the health care system but interact with it. The United States is among the leaders of the highly developed world in many risk factors: obesity and the illnesses it often leads to, lethal violence especially by guns, teen age pregnancy, infant mortality, and social inequality. Most notably, however, the United States is the only country in the highly developed world that, even with the passage and partial implementation of the Affordable Care Act, lacks universal accessibility through social insurance to the health care system. The United States also is unusual for its lack of pricing regulation and pricing transparency for medical procedures.

Despite the fact that other health care systems seem to manage better with less, costs threaten to spiral in virtually all of the wealthy countries. This is because populations in all of these countries are getting older and most have a less than replacement birth rate. The demographic logic is that more people will be demanding more health care, and there will be fewer people to foot the bill. So, all systems are facing a cost crunch in the near future. While the United States is among these, thanks largely to immigration, it tends to have a more favorable ratio of donors to recipients than other rich countries.

Ultimately, all health care systems have to juggle three critical factors: (1) access to the health care system; (2) costs of the system; and (3) the quality of the system. While all of these factors seem self-evident, none actually are. They involve trade-offs. All systems ration in some way. Rationing is a buzzword among some sectors of the American political class, but all systems do it and must do it, including the American system. But they do it in different ways. Why has much to do with politics, respect for evidence, or the lack of it, and high levels of social inequality.