It’s Not Just Profit Wrecking American Healthcare


Maggie Mahar in INET Economics:

Americans can be glad that the Affordable Care Act has brought medical care to millions of the previously uninsured and underinsured. Nevertheless, our healthcare system remains hugely expensive and wildly inefficient.

Too often, care isn’t well coordinated. Meanwhile, we don’t have enough unbiased research showing which treatments are most effective. Everyone just assumes that the newest, most expensive product or procedure must be the best. As a result, we now spend over $3.3 trillion a year, or roughly $10,000 per person on healthcare —more than any other nation on the planet.

Why is our bill so high? It begins with overtreatment.

In Medicine, More is Not Better

In the laissez-faire chaos that we call a healthcare “system,” one out of three dollars is squandered on unnecessary tests, over-priced drugs, and treatments that provide little or no benefit to patients.

This may seem an outrageous statement, but nearly three decades of research done by doctors at Dartmouth’s Medical School demonstrate the waste. (Others, including McKinsey, the New England Institute of Medicine, and Dr. Donald Berwick, former acting director of the Centers for Medicare and Medicaid, confirm their estimate: 30 percent of the money we lay out for medical products and services does nothing to improve patients’ outcomes.) Part of the problem is that some providers simply order more tests and recommend more surgeries than others, yet research shows that their patients fare no better.

It doesn’t seem to matter whether a government-controlled program like Medicare or private insurers are paying the bills; in recent decades medical spending has headed toward the skies. From 1970 to 2006 private insurers’ reimbursements for care soared by an average of 9.7 percent each and every year. Medicare pays doctors and hospitals less, but even so, Medicare payments for medical services and products climbed by an average of 8.7 percent annually.

The point is this: Neither the public sector nor the private sector has found a way to cut the waste and rein in the underlying cost of care. Since the Affordable Care Act passed in 2010, health care inflation has slowed. But not enough: it still outpaces economic growth.

More here.