11/01/2013 09:46 am ET | Updated Jan 23, 2014

Distinguishing Health and Health Care

The United States tops the world in high health care spending per capita, and yet Americans rank near the bottom of the pack in terms of health outcomes. Per capita, Americans spend approximately $8,000 per capita on health care compared with the average spending across industrialized countries of about $3,200 per capita. Meanwhile, the US infant mortality rate is twice that of Sweden, the US maternal mortality is six times higher, and only 28 percent of Americans (versus 38% of Scandinavians) rate themselves in very good health.

These statistics are the subject of our newly released book The American Health Care Paradox: Why Spending More is Getting Us Less. We tally the total spending on both health care services and social services to derive industrialized countries' total investment in health. To the surprise of many, if we combine spending on health care and social services, the US no longer appears such a big spender. Rather, we rank more in the middle in total spending, making our lackluster health outcomes a little easier to understand.

Decades of evidence have shown that only 10% of the health gains in the last century have been attributed to health care services. Much more important are the social determinants of health (such as housing, job training and employment, nutrition and so on). If this is the case, why are we spending nearly 18% of the GDP on health care and only 9% of the GDP on social services? Many countries in Western Europe and Scandinavia do just the opposite; they spend 18-20% of their GDP on social services and only 8-10% on health care.

The American spending pattern has resulted in a distinct "medicalization" of life in America, in which we view social and economic problems as medical problems that can be solved with the pharmaceuticals and medical procedures at our disposal. Estimates suggest our proclivity to use unnecessary medical care wastes billions of dollars per year. Such is the impact of system incentives designed to reward providers based on the volume of medical care they deliver.

Large scale efforts to improve the nation's health and control costs have consistently relied on the reform of health care delivery as the primary lever of change, thereby reflecting our collective misperception that better health care systems will make us healthier. Over the past several decades, and particularly in the Affordable Care Act, we have focused on reforming health care payment schemes, medical provider networks, and health care insurance regulations, while virtually none of the legislation addresses the powerful, non-medical determinants of health. Such neglect draws to mind the principle of the drunkard's search, quoted by Abraham Kaplan in his classic work on The Conduct of Inquiry (1964).

A policeman sees a drunk man searching for something under a streetlight and asks what the drunk has lost. He says he lost his keys and they both look under the streetlight together. After a few minutes the policeman asks if he is sure he lost them here, and the drunk replies, no, he lost them in the park. The policeman asks why he is searching here, and the drunk replies, "This is where the light is."

Our propensity to reach for medicine in pursuit of health has deep cultural roots. Existing incentive schemes, which are widely regarded both parties as perverse, were designed, and in many cases have evolved, to support a distinctly American way of doing medicine. Health has historically been conceived of as a personal (rather than societal) good. This vision of health differs markedly from the nationalized, and collectivist approaches of Europe and Scandinavia, where better health outcomes are being attained at lower costs. Recognizing the firm cultural roots underlying the current incentive schemes sheds light on why effective reform is so deeply challenging.

To sustainably bend the proverbial cost-growth curve in the US will require shifting incentives in a way that resonates with American ideals in new ways. One suggestion is to create a market in which private companies and individuals can profit by promoting health, rather than simply treating disease. In this regard, a few US companies are leading the way.

For instance, Nike joined the growing industry of health-promoting mobile applications with an addition of its own: the Nike FuelBand. The Nike+ FuelBand wearable device tracks everyday activity, converting calories burned into user points, which customers can use to bid for Nike products. Renewed interest in incentivized health promotion programs is emerging among health plan providers. For example, the Vitality Group provides incentive-based health programs that reward employees for engaging in activities or adopting behaviors that lower health risks in order to ultimately reduce health care costs and generate a positive return on investment for corporations. It guarantees a positive return on investment and has clients including AOL, Coca-Cola, Goldman Sachs, and IBM. While these bright spots are fairly limited in scope, their early successes suggest that money can be made in the health promotion market.

If we really want to improve the health of Americans, the discussion must move beyond the partisan debates over health care reform in which we are currently embroiled. Meaningful and sustainable reform will only come from investing in upstream efforts that promote health and that temper our misplaced faith in medical care.