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Testimony--Health and Wealth: Measuring Health System Performance

Doctor in Xray Room

Americans value good health—perhaps more than any other good or service produced in the economy—yet policy officials, business leaders, and experts express alarm when health care spending grows as a percent of the gross domestic product. If spending more on cars and consumer goods is a sign of a strong economy, why is spending more on health care a sign of a deeply dysfunctional health care market? The answer lies in the broken link between what we pay for health care services and the contribution those services make to longer and healthier lives, relief of pain and anxiety, and quality of life. Simply put, spending on health care does not reflect the value of health care delivered. Rather there is evidence from other countries—and from some states within the U.S.—that it is possible to have better health outcomes and spend less on health care. When a sector of the economy that makes up one-sixth of total GDP is not adequately captured in our national accounts and when there is no consensus on what constitutes good performance in the health sector, it is not surprising that the debate over health policy is often stymied.

As Robert F. Kennedy urged 40 years ago, the nation should have a better system of accounts that measures the benefits of investing in health care. An annual report to Congress—setting goals for performance of the U.S. health system, priorities for improvement, and monitoring benefits and costs as well as progress toward achieving value for spending on health care—would lay a sound foundation for public policy discussions. It would help us shape policies to ensure access to the care essential to health and well-being, and to hold the health system accountable for yielding value commensurate to the resources we devote to health care.The need for such a system of accounts is illustrated by the following points:

  • The U.S. spends twice per capita what other industrialized nations spend on health care, but ranks 19th out of 19 countries on mortality amenable to medical care. There are wide variations in health care outlays across the U.S., with no apparent relationship to quality or health outcomes. Over 100,000 lives could be saved if all states in the U.S. performed at the level of the best state, at considerably lower cost. The U.S. could learn from best practices within the nation and from other countries on how to simultaneously improve quality and efficiency.
  • It is possible to slow the growth in health care spending and achieve better access to health care, improved quality, and health outcomes. Recently, The Commonwealth Fund issued a report, Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending, which includes 15 options for slowing the growth in health care outlays while improving access and quality of care. Over 10 years, the nation could save an estimated $1.5 trillion in health spending while providing health insurance coverage to all, ensuring the cost-effectiveness of care rendered, and investing in public health and modern information technology.
  • More health gains would be possible if all Americans had access to modern medicine and had a source of primary care that ensured they received all appropriate care. Lack of health insurance, particularly, undermines access to care, preventive care, and better health outcomes. About 20,000 adults die annually as a result of being uninsured, making it the fifth leading cause of death. The Institute of Medicine estimates that $65 billion to $130 billion is lost from poor health and shorter life spans as a result of gaps in health insurance coverage. Investment in healthy children and a healthy workforce would pay dividends in healthier lives and greater economic productivity. Twelve percent of all working-age adults are not working and report a disability, handicap, or chronic disease, or say they are not working because of health reasons. Investing in the health of children and reducing childhood obesity are particularly urgent needs, and should involve not only health insurance but a medical home for every child, and developmental and preventive services for young children to ensure a healthy start in life.
  • Americans place great value on improved health. Despite the evidence of inefficiencies and waste in the health care system, there is also strong evidence that advances in medical research, new health care technology and innovation, health services, and prescription drugs have contributed markedly to improved life expectancy in the last half century. Several studies in recent years have documented that health care yields benefits far in excess of cost for treatment of conditions such as heart attacks, low-birth weight infants, and depression. Yet, the nation focuses primarily on the cost of health care, not its health benefits.

To provide a firm foundation for health policy deliberations, the U.S. should establish a process, such as a Council of Health Advisers, parallel to the National Economic Council, charged with establishing national goals for the health system, setting priorities for improvement, and making an annual report to Congress on health system performance. Such a report should include analyses of health outcomes across geographic regions of the U.S. and different population subgroups, access to care, quality of care, efficiency, and our health care system's capacity to innovate and improve. Such a report would be an important complement to the Economic Report of the President, and to data reports on economic growth and employment.

Publication Details



K. Davis, Health and Wealth: Measuring Health System Performance, Invited Testimony, Senate Committee on Commerce, Science, and Transportation, Subcommittee on Interstate Commerce, Trade, and Tourism, Hearing on "Rethinking the Gross Domestic Product as a Measurement of National Strength," March 12, 2008.