The American Health Care Paradox

Why Spending More is Getting Us Less


By Elizabeth H. Bradley

By Lauren A. Taylor

Foreword by Harvey V. Fineberg

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Foreword by Harvey V. Fineberg, President of the Institute of Medicine

For decades, experts have puzzled over why the US spends more on health care but suffers poorer outcomes than other industrialized nations. Now Elizabeth H. Bradley and Lauren A. Taylor marshal extensive research, including a comparative study of health care data from thirty countries, and get to the root of this paradox: We’ve left out of our tally the most impactful expenditures countries make to improve the health of their populations-investments in social services.

In The American Health Care Paradox, Bradley and Taylor illuminate how narrow definitions of “health care,” archaic divisions in the distribution of health and social services, and our allergy to government programs combine to create needless suffering in individual lives, even as health care spending continues to soar. They show us how and why the US health care “system” developed as it did; examine the constraints on, and possibilities for, reform; and profile inspiring new initiatives from around the world.

Offering a unique and clarifying perspective on the problems the Affordable Care Act won’t solve, this book also points a new way forward.



IN DECEMBER 2011, WE AWOKE early to check the New York Times for the opinion piece that we had worked on for months. The piece commented on a set of empirical findings we had published in the academic literature earlier that year, and the opportunity to discuss its implications on such a grand stage was thrilling.

Our research had presented the surprising finding that the health spending in the United States, as compared with other industrialized countries, was not as inflated as we had long thought it to be, when social services, which also contribute to individuals’ health, were taken into account. If we add together health care spending and social service spending, the nation’s investment in services that foster health is actually moderate compared with peer countries. Thus, the average ratings that the United States had been receiving in measures comparing international health outcomes seemed more deserved.

From our homes in two different US cities, we typed the New York Times web address into our web browsers, hit Return, and found our piece under the banner headline, “To Fix Health Care, Help the Poor.” That headline concerned us. We wondered if it left readers with an incomplete picture.

Neither that opinion piece, nor this book, has been about helping “the poor.” We are not aiming to advance a political agenda, advocate on behalf of social justice, or discuss health as a human right. Rather, our work for the past two years has been about reconceptualizing the way Americans think about health so as to uncover opportunities to increase the effectiveness of American health care. The investigation was motivated in large part by a concern central to Americans of all ideological persuasions: maximizing the return on investment of our national expenditures. Throughout the book, we use the term “American” to refer to the United States, recognizing that in other venues, the broad term “American” may include people from North and South America, outside the United States. We hope readers will understand the need for such shorthand in an undertaking of this size and scope.

The exposure that the New York Times gave to our research ended up having a profound impact. We never intended to write a book, but amid the hundreds of e-mails we received in the wake of that publication came a generous offer encouraging us to do just that. Although initially hesitant, we ultimately decided that the outpouring of enthusiastic responses was evidence that we were on to something, and that the message had resonated among certain health care and social service providers, if among no one else. Readers had written from all over the country and world, affirming for us that our research reflected their experiences on the front lines of care delivery. For the rest of the year and into the next, our inboxes were receptacles for any number of qualitative data points—and the book, in some ways, began to sketch itself.

More precisely, the original empirical research, conducted in collaboration with Brian Elbel, Benjamin Elkins, and Jeph Herrin at the Yale School of Public Health in 2009 and 2010, showed that the central paradox faced by the US health care system—exorbitantly high spending and relatively poor health outcomes—could be explained by examining a broader set of national expenditures. We demonstrated that when both social services and health services were taken into account, the United States was not a high spender. The country had moderate levels of spending and moderate health outcomes. Paradox unraveled. The credo of public health schools everywhere was made manifest: the health of a nation is created by more than the money spent in the health care sector. Investments in larger systems of economic, environmental, and social support produce health and support individuals’ quest for well-being.

Since its publication, our message has been enthusiastically received by a diverse set of communities. The Institute of Medicine and our peers in academe have cited the work frequently, practitioners have affirmed our findings with their own experience, and the general public has taken an interest in what the findings mean for future health care reform. Each opportunity to write about the findings has seemed to beget another opportunity to share them more widely—culminating in the New York Times column and now this book.

We hope here to extend our discussion of these findings beyond what an academic article or short newspaper column permits. Keeping Americans at or above a certain baseline of good health requires collective action to assure the availability of such necessities as food, housing, and transportation. Furthermore, making such social assurances is likely to save the nation health care dollars in the long run. In this way, our research supports the view that health care and social service investments may best be thought of as operating on a continuum, or perhaps even as two sides of the same coin. In direct contrast to the “ . . . Help the Poor” headline, we argue that this reorienting of our health investments is relevant for Americans across the socioeconomic spectrum.

It seems important at this early stage to make clear that we are not necessarily experts in all areas of this work; nor do we have prescriptive answers to the health care issues that plague us. Although we have command of the original and new findings presented herein, contextualizing this research has necessitated that we learn as we go. Our learning curve in the history of social services, for instance, has been particularly steep. We regularly received e-mails from students, front-line workers, and fellow academicians pointing us to new lines of research, new pieces of history, or field practices that we had not previously considered. As a result, we make no claims to mastery. The question of how to reform the American health care system is an enduring one requiring any number of bright minds and enthusiastic actors. We guarantee only a deep interest in continuing to wrestle with the data and explore the implications.

Thankfully, we have found help at every turn. In particular, we have to extend thanks to our team of student researchers over the course of two years, who included Lisa Hansmann, Kristin Horneffer, Kevin Li, Maya Major, and Caroline Wentworth. Boyd Jackson, in particular, sustained this effort from start to finish, patiently helping us to interpret, fact check, cite, and note innumerable revisions of each chapter. We are also grateful for the contributions of Kristina Talbert-Slagle, who edited the text and reflected with us throughout. We are similarly indebted to our international interviewees who warmly greeted us and generously explained their systems’ nuances. Other critical readers who have contributed significantly to the strength of the text included Shane Bannon, Ole Berg, Alice Bradley, Deanna Caplan, Sam Chauncey, Emily Cherlin, Leslie Curry, Howard Forman, Jan Frich, Luke Hansen, Jessica Holzer, Leora Horwitz, Jon Howe, Marcia Inhorn, Helen Jack, Marty Klein, Sanjeev Kumar, Georgina Lucas, Lydia Maurer, Aly Moore, Ingrid Nembhard, Martha Radford, Naomi Rogers, Lily Roh, Robert Rosenheck, Heather Sipsma, Fred Strebeigh, and Cornelia Valdejuli. We have been inspired by your understanding of the phenomena and energized by your commitment to our message.

Science generally values research that is contrarian. The researcher who uses evidence to upend a commonly held belief or widely endorsed approach is hailed as an innovator, whereas those who merely support what is already known are dismissed as followers. In some ways, this research has probably garnered attention because it runs counter to many of the popular messages about American health care. For many people, we are providing a new look at an issue that has already received quite a bit of attention in recent years. In this way, we like to think our work has the potential to create a watershed change in how Americans understand and think about health.

At the same time, we have welcomed the realization that the underlying premise of the book is also deeply intuitive. As we have traveled the country (and parts of the world) explaining the implications of our research, we have been met more often by knowing nods than by puzzled looks. People of all professional and political persuasions know what we are saying to be true in their daily lives. The evidence confirms their instinct—health is built by much more than the doctors we see, the radiology scans we get, and the medications we take. We hope that readers will find our message to be as intuitive as it has been to those with whom we have preliminarily shared it.

Within these pages are nuggets of experience and data that may inspire readers to change how they steward their own health. In that sense, we hope the book will have deep personal impact. The implications of our research for larger action are also many. In the face of widespread acknowledgment that current American investment practices have failed to produce the population health we assumed they would, we present an alternative strategy for how to invest in the health of the nation. Whether or not this strategy finds a warm welcome in the current cultural and political climate remains to be seen, but, at the very least, we hope it will prompt new lines of public discourse regarding health care reform in America.



Joe is a twenty-eight-year-old man with type 1 diabetes, living in the United States. He lacks permanent housing and has been staying in a friend’s condemned, boarded-up house. To avoid being seen there, Joe enters through the marshlands behind the house. His shoes are full of holes, but he cannot afford to replace them. Joe’s diet has similarly suffered from his lack of income; he sometimes goes several days without fresh food, which negatively affects his diabetes. Also, after a lifetime of poor insulin control, he is starting to lose circulation in his feet. Last year, Joe had two toes removed on his right foot to save his life (hospital cost: $7,132). Still, neuropathy continues to cause him decreased sensitivity in and increased risk of trauma to his feet. The doctor he last saw emphasized the importance of keeping his feet dry, getting proper nutrition, and taking his costly insulin as prescribed, all of which Joe is eager to do. Since that appointment, Joe has been diligent in taking his insulin, but dry feet and proper nutrition remain difficult to achieve due to his living conditions and unemployment. His doctor has already raised the issue of having to have more toes removed on his left foot (cost: $14,430), and without immediate changes, Joe will need to have a below-the-knee amputation in the years ahead (cost: $17,347) and will likely need a wheelchair (cost: $1,042). The estimated cost of his medical expenses will top $30,000, paid by a state medical assistance program that is funded by taxpayers. Amid a system marked by the most advanced medical treatment in the world, Joe is dying a slow, painful, and expensive death. A decent pair of shoes costs $50.

WE BEGIN WITH THE TRUE STORY of a young man living in the United States. While that story may sound like the basis of a Hollywood plot, we encountered similar stories throughout our research on the American health care system. It goes without saying that Joe needs more than a good pair of shoes to improve his health; he also needs accessible shelter and nutritious food. But the cost of these interventions still pale compared with $30,000 in medical treatment he is currently on track to accrue in the coming years. Furthermore, shelter, food, and shoes might enable him to return to work and not suffer a lifetime dependent on a wheelchair. Joe, and many others like him, whose diverse stories we share in the coming chapters, illustrate how inadequate attention to social services and supports can lead to exorbitant health care expenses. We confront the consequences of this imbalance experienced by people across the income spectrum. Joe’s is one story, which, replicated across the country, begins to unravel the paradox that has perplexed policymakers for decades: How is it that the United States spends more per capita than any other nation on health care, while Americans fare worse in many measures of health?

According to the 2013 Institute of Medicine report Shorter Lives, Poorer Health, Americans have lower life expectancy and higher rates of infant mortality, low birth weight, injuries and homicides, adolescent pregnancy and sexually transmitted diseases, HIV/AIDS, drug-related deaths, obesity, diabetes, heart disease, chronic lung disease, and disability than people in other industrialized countries. Furthermore, racial and economic disparities fail to explain this national health disadvantage in the United States. Americans who are white, insured, college educated, and upper income have poorer health than do their counterparts in other industrialized countries.1

Although the Institute of Medicine report was circulated as news,2 the “spend more, get less” paradox it documented has been recognized for decades. As early as 1971, Nathan Glazer, a sociologist at Harvard University who worked on President Lyndon Johnson’s Model Cities Program, used the term paradox to describe American health care. In his article published in The Public Interest, Glazer pointed out that while the American population increased 17 percent between 1955 and 1965, medical personnel increased 63 percent with no improvement in general health of the population.3 More recently, Dartmouth economist Jonathan Skinner used the term to demonstrate that between 1986 and 2005, the geographic regions with the largest increases in Medicare spending were not the ones with the largest survival gains.4

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.

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).5


“US$ PPP” means US dollars adjusted for purchasing power parity across countries; 2009 data.

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

And who pays for these services? Government programs cover about 45 percent of total spending in the United States, primarily through Medicare and Medicaid, implemented in the mid-1960s. Medicare commonly insures older people with acute care needs and accounts for 22.9 percent of all health care spending in the United States. (Acute care is short-term treatment for a severe injury or episode of illness, including medical and surgical treatments.) Medicaid commonly insures people with lower incomes and disabilities, and people receiving nursing home care, and accounts for 16.4 percent of health care spending. Private insurance and private resources cover 34.5 and 13.5 percent of health care spending, respectively. The remaining spending is for the Veterans Administration and other third-party payers and programs (including worksite health care, other private revenues, Indian Health Service, workers’ compensation, general assistance, maternal and child health, vocational rehabilitation, the Substance Abuse and Mental Health Services Administration, school health, and other federal and state local programs, and other investments).6

In some ways, America’s massive investment in this area has conferred important benefits. When one measures the quantity of medical interventions undertaken or available, the United States does quite well in comparison with its peers. A higher proportion of women aged twenty to sixty-nine are screened for cervical cancer in the United States than in any other nation, and the United States leads the world in the number of knee replacements performed per year and the number of people living with a kidney transplant.7 Furthermore, when it comes to the speed at which health care is delivered, the United States has no equal. The United States is number one in the percentage of people who receive diabetes treatment within six months, the percentage of seniors needing hip replacement who receive one within six months, and the percentage of people referred to a medical specialist who see him or her within one month. Americans are treated with more catheterizations, more angioplasties, and more bypass surgeries than in any European country,8 and the United States enjoys 26 magnetic resonance imaging (MRI) scanners per million people, while England and Canada report 5.6 and 8, respectively.9 Nevertheless, despite this leadership in the application of medical care, the United States continues to fall behind other industrialized countries in many important health outcomes (see Figure 1.2).10


Source: OECD, Health at a Glance 2009 (Paris, France: OECD Publishing, 2007).

ON ACCOUNT OF THESE MANY strengths, Americans sometimes dismiss the less inspiring population-level health outcomes, in part because they do not always see themselves in the data. These are, after all, national figures, meaning they may not reflect the experience of population subgroups, which may fare considerably better or worse than the average. The challenge of interpreting national data for a diverse population is similar in the realm of education. Although one can attain the best education possible in America, educational performance of the population as a whole is less stellar. Nationally representative statistics pertaining to math and science test scores, literacy rates, and college graduation rates flag in comparison to industrialized peer countries, according to the US National Center for Education Statistics,11 the United Nations,12 and the US Census.13

Additionally, some Americans have criticized international comparisons of infant mortality, as record-keeping practices for preterm babies may differ across countries, artificially inflating or deflating infant mortality rates.14 Some of this may be true, although considerable efforts have been undertaken to harmonize measurement across the international community of the OECD. Moreover, the data reveal that infant mortality rates in the United States are double those of Western Europe, and even without consideration of infant mortality, the pattern of poor health outcomes in the United States compared with peer countries persists in many other measures of health.

Why else do Americans dislike hearing about these numbers? These figures show that the United States is not necessarily on top. Look at any political speech or piece of public discourse, and the fact that the United States expects to lead the world in virtually every indicator of development and progress becomes abundantly clear. French writer Alexis de Tocqueville captured this sentiment, from a foreigner’s perspective, writing in 1831 after a tour of the nascent country that “The position of the Americans is therefore quite exceptional, and it may be believed that no democratic people will ever be placed in a similar one . . . Let us cease, then, to view all democratic nations under the example of the American people.”15

The idea took hold. One hundred and thirty years later, President Dwight Eisenhower added a sense of superiority to the already entrenched sense of exceptionalism. Following the 1961 conclusion of the Korean War, he declared, “We now stand ten years past the midpoint of a century that has witnessed four major wars among great nations. Three of these involved our own country. Despite these holocausts, America is today the strongest, the most influential, and most productive nation in the world.”16

As recently as President Barack Obama’s 2012 State of the Union Speech, Americans heard a proposal for a new defense strategy that would “ensure [the United States] maintained the finest military in the world.”17 A month earlier, the president had offered similarly boisterous rhetoric in discussing Americans’ propensity for innovation: “The world is shifting to an innovation economy and nobody does innovation better than America. Nobody does it better. No one has better colleges. Nobody has better universities. Nobody has a greater diversity of talent and ingenuity. No one’s workers or entrepreneurs are more driven or more daring.”18

Belief in American exceptionalism is just as fervent on the other side of the political aisle, as Mitt Romney indicated at a November 2011 Republican Party Debate at Wofford College in South Carolina. There, he stated, “We have a president right now who thinks America is just another nation. America is an exceptional nation.”19

Given this political and cultural backdrop, it seems reasonable to think that Americans might be proud to spend more than any other nation on health care—if the health outcomes measured up. They do not. Americans are hence left wondering why, and how to improve the situation.

Historians, health services researchers, health policy scholars, and political leaders have devised a number of rationalizations for America’s mediocre-to-poor performance, usually linked with proposed reforms intended to provide people with greater access or have people pay less for care. Many have attributed the failures of health care in delivering better outcomes at lower costs to several facets of the current approach. First, some have suggested that underinsurance has resulted in poor prevention and inadequate adherence to medical recommendations.20 Second, blame has been placed on fragmentation between public and private payers and inadequate primary care with fee-for-service arrangements that can result in unnecessary duplication and inefficiencies. (Fewer than 15 percent of all physicians practicing in the United States are primary care physicians and the remainder are specialists of some kind,21 despite evidence that areas with more primary care resources per capita have better health on many measures, including lower premature mortality.22) Third, many have suggested that fears of medical malpractice compel physicians to screen for every conceivable disease and use the most aggressive treatment available, lest they be sued for not doing everything.23 Fourth, experts have cited cultural demands for the most sophisticated medical technology as the main driver of cost.24 For the last twenty years, policymakers and practitioners have sought to address these problematic features in the health care system, but without success in delivering the same level of health per dollar found in other industrialized countries.

Those who believe the fundamental problem reflected in Americans’ poor health outcomes is underinsurance highlight the fact that about 15 percent of the American population lacked health insurance as of 2011. This camp has argued that the answer is to insure everyone so as to promote better access to preventive and acute care and ideally improve outcomes. Although providing insurance does improve access to needed care, the cost of such access can be substantial,25 and data suggests that American health outcomes among insured populations still lag substantially behind those of other countries.26 Thus, such reforms in isolation are unlikely to resolve the spend more, get less paradox.

Others, who believe the nation’s health problems are rooted in the fragmented financing system and the lack of primary care physicians to coordinate care, have called for medical homes. Conceptually, medical homes are designed to reduce fragmentation and duplication and help individuals navigate the health care sector. These are physician-led, team-based health care delivery models that seek to provide comprehensive, continuous, and well-coordinated medical care to patients to maximize health outcomes. Medical homes typically implement care coordination services and limit fee-for-service reimbursement in favor of various managed care payment schemes, which reduce financial incentives for physicians to provide unnecessary services.

Unfortunately, evidence indicates that the potential value of medical homes has been mixed, although rigorous evaluation of these initiatives is limited.27 Case studies have documented modest financial savings, but findings are inconsistent.28 Efforts at the Geisinger Health System in Pennsylvania29 and in urban hospitals in Texas30 have shown some savings. In contrast, however, a larger experiment—the Medicare Coordinated Care Demonstration Project—initiated at fifteen sites not only failed to reduce costs but also resulted in increased costs in ten of these sites (for a total cost increase of 11 percent).31


  • "Bradley and Taylor have identified social services as the unnamed culprit behind high health care costs and poor outcomes. Highlighting the non-medical determinants of patients' health may not only make physicians' jobs easier but also prove to be a prudent strategy for payers. This book offers an important reality check about what actually creates health in the United States." William Gillespie, MD, Chief Medical Officer of Emblem Health, and president of AdvantageCare Physicians
  • "The American Health Care Paradox has enough intellectual heft to bring an opera house to its feet. Drawing on data from dozens of international and domestic site visits, wide-ranging scholarly studies and in-depth interviews with patients, practitioners, health care administrators and social service staff from all over the world, the authors tackle the unenviable task of explaining why we think of health care the way we do—to the near total exclusion of social services. And they manage to do it with astonishing clarity, conciseness and narrative ease." Pauline Chen, the New York Times

    "An important attempt to shift the discussion on health in the United States" Kirkus

    "Their argument has intuitive appeal [and] is made more attractive by their clear prose and by their many helpful descriptions and historical explanations of US health care policy." Arnold Relman, New York Review of Books

    Admirably presented as an apolitical examination of an urgent situation, Bradley and Taylor's carefully researched and lucidly reported findings offer what appears to be an easily rendered fix, but their equally striking depiction of uniquely American hostility to government involvement in private matters, exposes a daunting uphill battle." Publishers Weekly
  • "It seems like there are daily stories of skyrocketing medical costs here in the US coupled with our bad health outcomes compared with other developed countries. This book argues compellingly that we may have been looking for solutions in the wrong places. We won't find the answers by changing medical payments or improving quality of care as important, as those are. But rather that health begins, is nurtured, protected and preserved in our families and neighborhoods where people live, learn, work and play. The authors find that supporting families and children in ways that make their houses, neighborhoods and schools secure and enjoyable pays off in health in concrete and measurable ways. It is time we started to get serious about building a culture of health and making it easier for people to live that kind of life than merely paying the costs to repair the damages from injury and disease." James S. Marks, MD, MPH, president and director of Health Group at the Robert Wood Johnson Foundation
  • "If we're so rich, why aren't we healthier? I'd wondered about that for years, always assuming it was a medical question with a medical answer. I now know the answer lies not in what happens in our hospitals but what happens (or fails to happen) in our social services. This compelling, groundbreaking, and utterly persuasive book has opened my eyes." Anne Fadiman, author of The Spirit Catches You And You Fall Down

    "This book provides new insight on why it is the United States' is spending so much on medicine without seeing commensurate health outcomes. Bradley and Taylor provide a clear account of life in the chasm between health and social services, where so much of our health care investment is lost, and put forth concrete ideas on how we can do better." Dr. Paul Farmer, MD, PhD, Harvard Medical School, Brigham and Women's Hospital, Partners In Health, and author of To Repair the World and Haiti After the Earthquake

On Sale
Nov 5, 2013
Page Count
272 pages

Elizabeth H. Bradley

About the Author

Elizabeth H. Bradley is the president of Vassar College, professor of science, technology, and society, and professor of political science. She has been a recipient of a Bill & Melinda Gates Foundation grant, and was previously the founder and faculty director of the Global Health Leadership Institute at Yale University and served as hospital administrator at Massachusetts General Hospital. She is a member of the National Academy of Medicine and lives in Poughkeepsie, New York.

Lauren A. 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, where she led a research team in building a model for scaling up public health innovations for the Bill & Melinda Gates Foundation. She completed a masters in public health at Yale University in 2009. She lives in Boston, Massachusetts.

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