Is American health care uniquely inefficient?

A lthough countries around the world are grappling with the problem of rising health expenditures, the United States has reason for particular concern. Americans are dissatisfied with their healthcare system (Schoen et al., 2007) but also spend more than the citizens of other nations: 15 percent of GDP on health care in 2006, compared to 11 percent in France and Germany, 10 percent in Canada, and 8 percent in the United Kingdom and Japan (OECD, 2008). There is no question that the United States spends the most, but some observers view this money as well spent and forecast that future healthcare expenditures could optimally account for nearly one-third of GDP (Hall and Jones, 2007). Improvements in cardiovascular health and in the survival of premature infants in the United States have been estimated to be worth their high expenditures (for example, Cutler, 2004; Murphy and Topel, 2006). But the efficiency cost of the U.S. health system has also been estimated at 20–30 percent of healthcare spending, or 3–5 percent of GDP (Fisher et al., 2003a, b; Skinner, Fisher, and Wennberg, 2005),