Healthcare USA: A Cancer on the American Dream

Abstract

The widely reported waning of the American Dream has been blamed on a litany of economic and cultural currents, but the cost of the U.S. health care system rarely makes the list. The U.S. spends at least 7 percent more of its GDP on health care than other rich countries, on average, leaving us with less to spend on infrastructure and defense, houses and education, and other worthwhile governmental and personal pursuits. And we have little to show for it, as the U.S. lags most other rich countries on many key health measures, including longevity. This analysis shows how since the 1980s, the cost growth of employer-provided health benefits has been shrinking workers’ wage growth, eroding their retirement benefits and becoming an increasingly important factor in growing income inequality. While the losses have been most painful for those across the bottom 60 percent of the earnings distribution, higher earners have not escaped the damage, especially when factoring in the total cost of employer-provided health insurance. The latter part of the analysis explores how the organization and delivery of health services in the U.S. sustain our abnormally high health costs, often without improving our health, and suggests several practical solutions that can both bring costs down and encourage evidence-based best practices. Failure to stanch the rising flow of compensation dollars into health benefits will close the door on the American Dream for an ever-increasing share of U.S. workers.