It is proper to preamble an essay of this sort with the observation that anyone who has received health care for a serious illness is likely to agree that, with few exceptions, health care sectors in the USA and elsewhere tend to be staffed with millions of smart and highly trained professionals who sincerely seek to improve the quality of their patients' lives. Their admirable clinical efforts, however, are embedded in a ceaseless struggle over money. That struggle is be the focus of this essay. Every health care system naturally pursues two distinct goals, as is illustrated in Figure 1, namely (1) enhancing the quality of patients' lives and (2) enhancing the quality of lives of those who provide real resources to the process of health care (Reinhardt, 1987). Patients also play a dual role in this setting, of course. They are both objects of human compassion and biological structures yielding cash flows, which in the USA can be openly traded on the stock exchanges (Reinhardt, 1999). A strictly observed etiquette in public debates on health policy, however, is never to talk openly about the second goal of health care. Any proposal to enhance the second goal therefore must be styled to seem to further the first goal-e.g. 'enhancing the quality of patient care', 'innovating to create value for patients', 'saving lives', and so on. This essay will stray from that tradition.
Given that every dollar of health care spending is someone's health care income, including fraud, waste, and abuse, there must exist a surreptitious political constituency that promotes at least waste, which many health-policy experts around the world now view as a major ingredient of health spending. The long-standing opposition to cost-effectiveness analysis in the US Congress, for example, can be viewed in part that wasteconstituency's work (Carpenter, 2005). That opposition, in turn, can explain why health care spending per capita for statistically similar individuals varies by a factor of 2 to 3 across the USA, and even within one state, and why that variation has been passively countenanced by policy makers, without any sign of curiosity of what added benefits, if any, patients in the high-cost areas receive for the higher spending (see, e.g. New Jersey Commission, 2009a; Dartmouth Atlas of Health Care, 2011).
Policy makers in most other countries have allocated substantial market power to the payment side of health care in Figure 1, including the direct or indirect regulating of prices for health care by government (Marmor et al., 2009). For example, while the Swiss health system is sometimes viewed in the USA as a model for a 'market approach' to health care and of an arrangement that market devotees in the USA call 'consumer-directed health care' (Herzlinger and Parsa-Parsi, 2004), prices and many other facets of the Swiss health system actually are heavily regulated by government (Cheng, 2010), as they are in most other health systems outside the USA.
By contrast, US health policy always carefully and quite deliberately has been aimed at fragmenting the payment side of the health system, to keep it relatively weak vis-a-vis the supply side. For example, during