The Opportunity Cost of Excess Medical Expenditures

d t e r t b a c 1 As of 2010, health care–related expenditures in the U.S. totaled some $2.6 trillion (17.9% of the gross domestic product [GDP]). Year after year, ealthcare spending rises at double the rate of overall DP growth, and total healthcare spending growth conistently outpaces overall inflation. This exuberant rowth would be welcome if health care were thriving ecause of its effıciency. Instead, it is among the leastffıcient parts of the economy, and much of the healthare spending does not improve health outcomes subtantially. Indeed, the IOM recently conservatively estimated that some $750–$765 billion spent on health care in the U.S. is in excess of what should be spent to achieve the observed health outcomes. Others have estimated the excess to be between $700 billion to upward of 1.2 trillion. Despite spending almost 50% more per capita on health care than theOrganisation for Economic Co-operation and Development (OECD) country with the next-highest expenditure and 2.5 times the average of all OECDcountries, U.S. outcomes are much worse than other developed countries. The U.S. ranks 26th among 34 developed countries in life expectancy, and 30th in infantmortality. Many analyses of the relatively poor health of the American population and the large disparities in health among various subgroups of the population point to two underlying determinants: social environment and physical environment. Babies born to mothers who did not