Excerpt: In 'Is American Health Care Uniquely Inefficient (NBER Working Paper 14257), researchers Alan Garber and Jonathan Skinner examine whether the apparently inferior performance of the U.S. health care system is real, and the reasons for the observed patterns of expenditures and outcomes. The authors distinguish between two types of efficiency. Productive efficiency refers to the amount of health that is produced from a given bundle of hospital beds, physicians, nurses, and other inputs. Allocative efficiency refers to whether an additional dollar spent on health care yields benefits that are as valuable to consumers as an additional dollar spent on schools, housing, or other goods. Some degree of allocative inefficiency is inevitable in any health care system, since by shielding consumers from the full cost of medical care, it leads them to consume care whose cost is less than their benefit. The authors ask whether productive and allocative efficiency are lower in the U.S. than in other developed countries.  MORE >>