What Factors Affect Health Care Expenditures and Health?

Victor Fuchs, PhD, conducts research on health economics and policy

Problem Synopsis: Understanding the determinants of health care expenditures and health is crucial to developing effective health policy. This includes understanding the effects of medical innovations and nonmedical determinants (e.g., smoking, obesity, socioeconomic factors such as income and education, and where a person lives) on health care expenditures and on the length and quality of life.

Synopsis of the Work: From 2002 to 2010, Victor R. Fuchs, PhD, a health economist with the National Bureau of Economic Research and Stanford University, studied the factors that affect health care expenditures and health, including geographical differences in the use of medical care and death rates among older adults across the United States. He also developed policy solutions for covering the uninsured and reducing the high cost of health care.

Key Findings/Results: Fuchs published some 50 publications and made more than 60 presentations. The publications included many articles in leading journals such as Health Affairs, Journal of the American Medical Association and New England Journal of Medicine, as well as several book chapters.

Among the publications Fuchs identified as key are the following:

  • "Government Payment for Health Care: Causes and Consequences." (New England Journal of Medicine, 362(23): 2181–2183, 2010) Fuchs noted in this paper that countries with national health insurance spend much less on health care than the United States. "The U.S. government, although it pays for almost 50 percent of health care, makes very little use of its power to restrain costs….Americans wind up in the worst of all worlds, with government bearing a big part of the burden of paying for health care, with the concomitant large burden of taxes, but exercising very little control over the cost of care."
  • "Eliminating 'Waste' in Health Care" (Journal of the American Medical Association, 302(22): 2481–2482, 2009). Fuchs explores the challenges of identifying and eliminating waste in health care, noting that eliminating waste is more difficult than identifying it and concluding that, "There seems to be no alternative to relying on physicians to practice more cost-effective care."