Although the United States spends considerably more of our GDP on medical services than other developed nations, our health outcomes are no better, and in many areas, much worse. Even more significant, perhaps, is that when we look at health spending compared with spending on social services, the U.S. is a noticeable outlier. On average, nations that are members of the Organization for Economic Cooperation and Development (OECD) spend about $1.70 on social services for every $1 on health services; the U.S. spends just 56 cents.
The research on social services, health spending, and health outcomes suggests strongly that it is no coincidence that the U.S. has this unusual combination of spending and mediocre outcomes. We have the wrong balance of social and medical spending if one of our priorities is improving health overall and measures such as infant mortality and life expectancy. This pattern from the international evidence is reflected in data from within our own borders. States with a higher ratio of social to health spending also have significantly better health outcomes for such conditions as adult obesity, asthma, mental health indicators, mortality rates for lung cancer, high blood pressure, and heart attack, and Type 2 diabetes.
An important reason for such patterns is that in advanced countries, improvements at the margin in health tend to come more from additional investments in a good living environment and lifestyle habits than from more investments in medical services. Indeed, public health experts now agree that a variety of factors beyond access to and quality of health care influence population health. The U.S. Centers for Disease Control, for instance, estimates that health behaviors, medical care, and genes together contribute approximately 50 percent of the influence on population health, while social and environmental characteristics contribute the remaining 50 percent.
This suggests a three-pronged approach to improving health in the U.S.:
- First, to improve health outcomes while actually curbing health care costs, we need to rebalance federal spending patterns. In particular, the new Administration and Congress need to adjust the current ratio of medical-to-social spending by shifting some current health care expenditures to investments in tackling “upstream” social factors with a bigger impact on health. The evidence suggests that such a shift could contribute to decreased hospital utilization, and thus reduced spending by Medicaid and Medicare, while improving health outcomes.
- The federal government should help states take the lead in this rebalancing. The best ways to rebalance and reflect local conditions and opportunities will differ from place to place, and states are the best-placed level of government to facilitate large-scale cross-sector strategies to improve health. Moreover, the research evidence on the best combination of medical and social services to improve health is not as robust as we would like. Therefore, it is important to permit much more state investigation and experimentation with re-balanced funding, combined with solid evaluation of experiments, so that states and federal policymakers can learn from each other.
- The federal government should review the evidence that social services are often the route to improved health, and agencies should work with health officials on ways to reprogram funding. A particularly promising such area for the new Administration to focus on would be housing.
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