profit entities. The health care sector also includes regulators, some voluntary and others governmental. Although these various individuals and organizations are generally referred to collectively as “the health care delivery system,” the phrase suggests an order, integration, and accountability that do not exist. Communication, collaboration, or systems planning among these various entities is limited and is almost incidental to their operations. For convenience, however, the committee uses the common terminology of health care delivery system.

As described in Crossing the Quality Chasm (IOM, 2001b) and other literature, this health care system is faced with serious quality and cost challenges. To support the system, the United States spends more per capita on health care than any other country ($4,637 in 2000) (Reinhardt et al., 2002). In the aggregate, these per capita expenditures account for 13.2 percent of the U.S. gross domestic product, about $1.3 trillion (Levit et al., 2002). As the committee observed in Chapter 1, American medicine and the basic and clinical research that inform its practice are generally acknowledged as the best in the world. Yet the nation’s substantial health-related spending has not produced superlative health outcomes for its people. Fundamental flaws in the systems that finance, organize, and deliver health care work to undermine the organizational structure necessary to ensure the effective translation of scientific discoveries into routine patient care, and many parts of the health care delivery system are economically vulnerable. Insurance plans and providers scramble to adapt and survive in a rapidly evolving and highly competitive market; and the variations among health insurance plans—whether public or private—in eligibility, benefits, cost sharing, plan restrictions, reimbursement policies, and other attributes create confusion, inequity, and excessive administrative burdens for both providers of care and consumers.

Because of its history, structure, and particularly the highly competitive market in health services that has evolved since the collapse of health care reform efforts in the early 1990s, the health care delivery system often does not interact effectively with other components of the public health system described in this report, in particular, the governmental public health agencies. Health care’s structure and incentives are technology and procedure driven and do not support time for the inquiry and reflection, communication, and external relationship building typically needed for effective disease prevention and health promotion. State health departments often have legal authority to regulate the entry of providers and purchasers of health care into the market and to set insurance reimbursement rates for public and, less often, private providers and purchasers. They may control the ability of providers to acquire desired technology and perform complex, costly procedures that are important to the hospital but increase demands on state revenues. Finally, virtually all states have the legal responsibility to



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