Expert Voices: Why America Spends More on Health Care
Eric Jensen, Consultant
Lenny Mendonca, Director of Firm Knowledge, McKinsey & Company
Pathbreaking work by the McKinsey Global Institute (MGI) shows that, relative to other peer countries from the Organisation for Economic Cooperation and Development, the U.S. spends nearly $650 billion more on health care than would be expected after adjusting for cross-country differences in wealth. Fully two-thirds of this added spending occurs in the outpatient sector. The highly profitable nature of many outpatient services coupled with the incentives of a fee-for-service payment system are contributing to greater intensity of outpatient care and helping to fuel this spending. In this essay, Eric Jensen and Lenny Mendonca describe MGI's work to examine all sectors of the American health care system and identify factors responsible for the higher-than-expected spending.
Other recent Expert Voices essays include:
- Jonathan Gruber, PhD, Professor of Economics, Massachusetts Institute of Technology, "The Role of Individual Mandates in Health Reform" (January 2009)
- Paul N. Van de Water, PhD, Senior Fellow, Center on Budget and Policy Priorities, "Scoring Health Legislation" (April 2009)
- Mark Fendrick, MD, University of Michigan Medical Center and Michael Chernew, PhD, Harvard Medical School, "Value Based Insurance Design" (June 2009)