Health care is a complex mix of science, medicine, technology and the personal choices of patients and their families. Those choices often include whether to seek treatment, and which treatment option to choose. It also includes what type of insurance to purchase — comprehensive coverage or a more limited plan for doctor’s visits and prescription drugs, for example.
Moreover, health care is an extremely personal and intimate process, which incorporates the social, ethical and religious values of individuals and society. As such, health care decision making is frequently done in a highly subjective manner based on a belief that quality of outcomes is best achieved when the clinician and patient work together in a relationship characterized by trust and mutual confidence (Fuchs, 1988).
While it’s generally understood that the cost of healthcare has been rising rapidly, the exact magnitude of the increase remains uncertain. A variety of factors appear to contribute, including the cost of new technologies and better treatments; increasing costs related to sedentary lifestyles and obesity; and rising demand for services by aging baby boomers and their children.
The United States has a unique system of providing healthcare to its citizens, which combines a mixture of private and public systems: employees get health insurance through their employers; most people with privately purchased insurance receive care at hospitals run by their employer or an insurer; and many low-income Americans are covered by government-run programs such as Medicare and Medicaid. In addition, about 28 million Americans lack any type of healthcare insurance at all.
An important tenet of the efficiency approach to health care is that a good choice can be defined as one that maximizes benefits for the greatest number of people, while minimizing costs. But this view does not consider the possibility that there are some benefits and costs that cannot be quantified and, as a result, can’t be efficiently measured. In particular, there is little doubt that some forms of healthcare can do more harm than good and that the value of some services may be incalculable.
A key challenge in this regard is determining how much of a given service should be valued based on its value to individual patients or the societal benefit, rather than the relative efficiency of delivering that service. This is an ongoing area of active research.
In the ideal world of a market economy, competition among providers would drive up the quality of care. However, the assumptions underlying the concept of an efficient market, such as perfect information, homogeneous products and large numbers of suppliers and customers, do not apply to health care. In addition, the ability to make informed decisions about health care requires access to complete and accurate information, which is not always available to consumers in a timely manner and at a reasonable cost. This is especially true when it comes to choosing a physician or hospital for medical care. These problems are driving the development of innovative payment and delivery models.