American Healthcare

The Economics of American Health Care explores economic growth and the health sector. Is the health sector a curse or a blessing? The American health sector now accounts for an estimated 18 percent of the economy and will likely increase even more in coming years. American healthcare spending and healthcare spending per capita far exceed that of other developed countries. Yet our health, as measured by life expectancy and infant mortality, is relatively poor by comparison with the developed world. Other measures of quality including hospital acquired infection and other medical errors are too common. Healthcare costs still financially cripple households despite advances associated with the Affordable Care Act. There is widespread dissatisfaction with the American healthcare system and growing support for more change.

It is also the case that the health sector has been a leader in the evolution of the US economy. The history of economic development is largely attributable to integration of new technology. We tend to applaud new technology and the improvement it brings to our lives. Important new technologies often grow rapidly and faster than the economy as a whole. This leads to larger shares of the economy.

Advancements in technology have evolved rapidly and while there is an appreciation that these technologies are an engine of economic growth and a source of strength for the American economy, there are growing concerns surrounding privacy. And, there is much less confidence that these rapid gains in medical and other health technologies are equally beneficial. There have clearly been enormous advances in pharmaceuticals, medical devices, genomics and molecular biology as well as other subsectors. Yet there is considerable apprehension about the costs and associated benefits and how this will impact the economy.

This book details important health sector institutions and perhaps uniquely, explore linkages between health care and broader economic growth. The book also explores asymmetric information between providers and consumers as well as between insurers and beneficiaries which is one of the most distinguishing characteristics of healthcare compared to other parts of the economy. Special attention is provided for monopoly power in labor markets in healthcare which contributes to inefficiencies in the system. The author also discusses cost-effectiveness and allocative efficiency as well as productivity and cost. Policy recommendations for improved long run efficiency are also provided.