What Can Economics Tell Us About What Is Right and Wrong With Our Healthcare System?

Abstract

This chapter describes the difference between health and health care, the efficacy and efficiency of the US health care system, the institutional framework of the US healthcare system, and the positive and negative features of the system, as well as recommendations for change. The authors note that US healthcare is both among the world's best and the developed world's worst, depending on what is being used as a basis for comparison. The complexity of the system with its seven different methods of payment is taken to task, and the fact that health care is an industry that significantly deviates from classical economic industrial theory is evaluated in depth. It is noted that economics can tell us much about how the misaligned and inappropriate incentives, as well as the erroneous comparisons to other industries, have allowed politicians to mislead the public as to the true benefits and drawbacks of the US health care system, which is better described as “sick care” as opposed to “health care.”