Anthem insurance wastes a ton of money through too many mailings…
Taiwan when they were looking to re-establish their healthcare system did a study of systems by most of the major first world countries. Their conclusion, a single payer system with private health care delivery.
It's all about political will.
There is one thing no one likes to mention.
The medical procedures that are most costly no one can go and "shop around".
No one with an coronary has the leisure to shop for bargain treatment.
And even if, how does an normal educated person judge if it is an cheap or an bargain offer (every craftsman will if honest explain to you that there is bargain and there is cheap)
Most important, you can do good medicine or medicine that earns you money, not booth.
Healing an patient by the least invasive means is the best option, but the option that will not earn you much money, using the least ammount of drugs necessary is the best medical procedure, but the one that will earn the producer of drugs the least.
Good medicine means that you try to do as little as possible to reach the desired effect, healing the patient, that is about as anathema to earning money as it can get.
Every medical procedure and drug has side effects, possible so severe that you need to do additional procedures to combat the side effects, so if you want to do good medicine you try to exhaust first the "home remedies" before you launch the real scary stuff, that is NOT what earns you money.
You can prescribe drugs to lower an fewer or do cool wrappings, booth are effective, at about the same level, guess wich one earns you money and wich one not at all.
Good medicine means you use it just as much as it is needed, not something that is sound buiseness practice.
While America has the most expensive health care system in the world by a long shot, having roughly "20 percent to 25 percent" of our heath care costs being chocked up to wasteful spending. This number should outrage every American, no matter your socioeconomic background. This amount of wasteful spending prevents roughly 28 million Americans from being able to afford insurance, and even those with insurance are crippled by this waste.
The article touches on the most important element to these findings, which is that while we understand the scope of the waste in heath care spending, we currently do not understand enough on how to fix this problem. According to the article, we waste at least 760 billion dollars a year within health care spending. Participants within the health care system, such as heath care providers and our own government, need to invest resources into solving this solution before we waste any more money. An investment into finding a solution to this problem would save money for our government, our insurance providers, and most importantly: Americans. The little information we do know on solving this issue could save up to 200 billion dollars--which is enough to "provide health insurance for at least 20 million Americans, or three-quarters of the currently uninsured population". We must act on this immediately to fix our broken system of heath care in America.
"Ineffective treatments" as in chemotherapy where providers and drug companies cook the books on what actual 5 year survival rates are from cancer? Those which were deemed quackery even 5 years ago are commonly used effective treatments today. An issue with determining what is an effective treatment abandons genetic outliers for whom outcome based percentages lend little relief to health struggles, both acute and chronic.
You want to reduce waste and administrative costs? Get rid of the large number of middlemen that have gotten in the way of you and your doctor. This "waste " is an enormous profit for a large number of nonclinical folks that live large off of healthcare, starting with the Humana CEO in the article. It has become a significant chunk of our economy and workforce. If we were to succeed in this quest, what will we do with the large of number of paper( computer) pushers, regulators, and executives who would end up unemployed? That is the million dollar question. Plus the " deep state " of health care does not want to be removed.
Why don't we look to other countries to see what works? Are we too proud? Medicare for All sure sounds good to me.
2
No surprises in this article. Everyone in medicine also realize that there is a huge amount of money wasted in administrative areas. I am a supporter of Medicare for All - (single payer not Medicare Advantage for All ). It is extremely disheartening to see how people's health and lives are valued by the insurance coverage they carry and it has only gotten worse. Our current fractured system is also a huge public health mistake and undermines medical decision making. Elizabeth Warren also alluded during the debate on Tuesday night to the frightening fact that once you get a chronic illness such as MS or cancer and can't work, it won't matter that you had insurance in the past - you are in serious trouble financially. I applaud her continuing to drive home the issue. It resonates with all who are members of the club who have a serious chronic illness or know someone. It is a club we will all join. Bernie gets it and I am with him. I hope NYT could also examine how the large EMR companies are transforming medicine. It feels like use of these programs may have to be taught in medical school. What is the effect of this corporate influence? Thank you NYT. I will keep reading.
2
There are 250,000 individual Dr. offices/clinics in the US. Each on of those has at least one person who does nothing else but co-ordinate the different insurers, Medicare etc. I truly wish Bernie Sanders and Elizabeth Warren the best of luck in coming up with a health care system that isn't wasteful and redundant. I thank God for this and so many reasons I was born Canadian every day.
3
The article makes several excellent points, and then one extremely odd omission: it claims that it hasn't seen a study that lowers the cost of admin. Hello??? www.pnhp.org has oodles of studies showing that single payer reduces admin. All of them recommend a single payer system, such as H1384, the house version of Medicare For All.
This JAMA study is fantastic for verifying that administrative overhead is wasteful. In Hawaii, the states main health insurance officials, (recent) Insurance Commissioner Gordon Ito, Senator Baker, (Chair of Health) Dr. Pressler, (recent head of DoH) and Judy Mohr Peterson (current head of Medquest HI) all repeat this mantra: "there is very little if any savings to be had from admin simplification." This is what supporters of 'pay per value' Managed Care tell themselves to sleep at night.
This article proves them and their reasons for opposing simplified insurance rules wrong; we are over spending on admin.
What this article or study fails to do is to point out the obvious: single payer will cut admin, and streamline other delivery of care issues, and, by mowing the admin lawn, fraud will be vastly more complex to get away with.
One payer, with global budgets for individual hospitals in the context of repealing Medicare Part D and establishing a national formulary to negotiate prescription drug prices will be a massive economic stimulus and improve the health of our nation.
www.fixithealthcare.com
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@dennis miller Medicare for All will end up functioning like VA Care for All.
There is simply no way to end the fraud, waste, and corruption currently found in the hospitals, Doctor's Officers and Pharmacitual industries in America today without implementing a National Health System or USNCS.
Only ONE uniform authority - the federal government - which controls ALL aspects of the Medical/Pharmaceutical fraud industry can handle such a monstrous rip off of the American people. While a USNHS can handle the issue, private insurance would still be possible for people who want to pay extra for care, but a uniform standard of care and costs must be implemented and controlled by the federal government just like in the United Kingdom.
Until then, Americans will continue to waste tens of billions of dollars annually on the fraudulent American Health Care industry. We have the most expensive and least satisfactory health care system in the world.
Just ask Neil Armstrong.
It's simply a crime.
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@jayhavens
Question: Under your utopian dream of government rationed healthcare, would you and I receive the same level of care as the members of Conress, and secondly, how would you propose paying for it that is fair to everybody?
@Rezqewr
...not sure if this is going to display right. My closing statements *just* didn't fit into the char limit...but...
Disclaimer: Yes, this is over-simpilified. I don't know all the details of the M4A plan, or if there are other direct taxes/costs, and of course coverage level concerns and what-not, all I'm saying is that it seems like it's worth taking a serious look at *some* type of universal coverage, and not just summarily dismiss the notion because people are (mistakenly) calling is socialism...and who wants to be called a socialist, right?
1
@Rezqewr
I'm not going to address your first question, but your second...
...there's some entity(ies) that estimate the cost of universal healthcare to be x amount of trillions of dollars over some period of time, and then the question is posed of how of you pay for it? "How much will it cost?" is the question I see repeated over and over again.The right question is, "how much more will it cost us?"...or even less. The M4A plan presented was taxing payroll 6% of the workers salary, and the individual 3% of their salary...
...Right now, I've got health insurance through my employer. They pay about $500/month, and I pay $100, for a single policy. That's $6000/$1200 a year. If I'm making $50K a year, that means that instead of my employer paying $6000 a year, they'd only pay $3000 ...my employers cost of health insurance would be cut in half! I, the employee would pay a little more, 3% being $1500, instead of $1200. Or wait, what about a family? A family plan is far more expensive than what my policy costs. So families benefit greatly. A one-income family of four with $100K of income would have an annual cost of $9000, vs rather than what $16K-18K?...so like cut in half'ish potentially. What company employing 5000 people wouldn't want to cut their health insurance costs by 50%!
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From my understanding, which may be limited and biased, as per the usual, the US private health insurance system is the most expensive way to obtain health care on the whole planet earth.
The "insurance system" puts another layer of costs ( premiums, kickbacks, fraud, greed, stupidity) on the already absurdly high costs demanded by the providers (doctors, hospitals, administrators, pharma companies, medical device companies, medical supply companies, hospital REITs) (An additional costly element is the malpractice insurance, the lawyers, and the ridiculous "winner takes all" medical & drug court system, which pays one class of litigants billions while refusing to provide basic care. This things ARE connected, since if you pay billions out in malpractice premiums and awards, there is nothing left to do the "basic care thing".)
I warned you before I was biased. As we know, the US system is so expensive, and has next to zero incentive to look at cost savings, that many basic surgical procedures can be obtained at half or less the cost, including airfare, at hospitals in India, Europe, Australia, South America, without sacrificing quality.
The US system reminds me why I never buy a SANDWICH at a US airport: Same sandwich at four times the cost. I do not understand Americans. Reasonable people would boycott such a system.
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Oh, it's so hard, we can't do it. That's all I hear. We all know what the real problem is but no one is tackling it. Insurance obfuscates real costs and consumers with insurance are not willing to change. We need to tier health services. Every day items like physicals and the occasional treatment for a cold/flu does not need insurance. That can be self-pay. Insurance is for catastrophic items, heart attacks, strokes, cancer, etc. Do you call your home insurance if something breaks in your house? No, you pay. If something major happens then you use insurance. Once we extricate insurance from the everyday costs and the true cost becomes apparent, the consumer will shop around. That is actually needed badly. Upfront pricing for everything from hospitals, doctors, drug manufacturers.
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@Undecided You're on point. Using health insurance for primary care is like using auto insurance for oil changes or basic maintenance. I run a high deductible insurance plan and pay my doctor directly for regular care. I see Direct Primary Care as the future.
1
It might take more than $1 to prevent $1 in fraud -- at first. But if there were serious anti-fraud efforts, including punishment for perpetrators, the total amount of fraud should decline over time.
1
These "studies" represent a major flaw in the analyses. By far, Americans could reduce medical expenses by caring for one's own physical and mental health and fitness.
Although, I realize that good genes may account for some of my superb health and fitness, personal care, I am certain, accounts for most.
At 75, I have yet to draw the first dollar from Medicare (or any private insurance)--exercise for 50 years (running 30-40 miles per week, half-marathons and other races, too), hiking, climbing Grouse Grind multiple times per year, weight maintenance (same weight as high school), and food selection--though no rigid nor crazy regimes, just reasonably appropriate quantity and quality.
Just transferred flights via O'Hare from B to C concourses--stairs down and up--I was the ONLY one on the stairs (others for the most part, STANDING on the escalators--not even walking. I'm not bragging, but simply pointing out that most Americans seem to shun even a modicum of effort to retain fitness.
For me and for others I know in my age group, a huge difference exists--those who care for themselves and those who care most about scheduling their doctors' appointments.
Health care begins with YOU>
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@Gerry Professor I am going with Churchill's approach to exercise: Anything that hurts is bad for me. Things that make the pain go away are good for me.
I'd rather die 10 years earlier than pay a penny more to the rip-off system that is "US health Care". Yes, I boycott them, even if my wife says I am going "over the top". I recommend to anyone to go to Canada or Mexico for basic health care. I am sorry for you, if you live too far from either the Canadian or Mexican border.
@Constant Comment surfer
Going to Mexico can have catastrophic results. Case in point: "Bariatric" surgery. I order to receive said surgery in the US, a candidate has to 1) demonstrate a commitment to losing weight through lifestyle changes, and 2) be diagnosed with one or more comorbidities such as hypertension, diabetes, etc; in addition to morbid obesity.
All one needs in Mexico is the money to pay for the surgery, which often has bad outcomes. Post-surgical infections are common in Mexican surgeries, often leading to sepsis.
Not the best idea.
Rezqewr, RN
@Gerry Professor
Amen!
Our current system:
"What's it cost?...."
"How much you got?"
2
@Roger
No, it's not "how much you got".
It's: "Sell your house, your car, and how much can you borrow on top of that!"
3
I'd draw the analogy this way:
- CMS (Medicare/Medicaid) is the U.S. airport security "system" pre-9/11. Little security, little hassle, low cost. Lots of potential for Waste Fraud and Abuse (WFA).
https://www.nationalreview.com/2016/09/medicaid-fraud-staggering-cost-140-billion/
https://abcnews.go.com/Politics/medicare-funds-totaling-60-billion-improperly-paid-report/story?id=32604330
- Private insurance is post-9/11 TSA-provided security. High cost. High security. Not a lot of potential for WFA.
So, we can spend our healthcare dollars upfront making sure there is minimal fraud OR spend our healthcare dollars paying for Fraud.
Imperfect analogy to be sure but one I think demonstrates that preventing fraud costs money in the form of "administrative expenses."
@John S Really? You think the bulk of administrative expenses are actually fraud-prevention? You've obviously not actually worked in the field. Administrative expenses are more normally a euphemism for what other industries just call corporate profits.
Those articles you link to are really demonstrating nothing beyond how our legislators are mostly owned by the special interests that specialize in draining every last cent out of our population. There has been no real attempt to curtail the profiteering of the healthcare (and insurance) industries in decaded. Indeed, we continue to remove regulations and let the big players in the market drive more and consolidation. Said consolidation has rarely, if ever, been shown to benefit consumers. Rather, the primary beneficiaries are industry executives and large stockholders. Who then turn around and pump some of their ill-gotten gains back into more lobbying to slant the field even further in their direction.
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@John S your analogy completely ignores and contradicts the study in the article, and common sense. Our high admin cost is not aimed at reducing fraud. Our high admin system is a fraud which creates obstacles to care. We need to throw our entire private insurance market away, because it is dysfunctional in every way. If we switch to a Canadian style admin system, we'll see instant savings. i recommend you take a look at www.fixithealthcare.com
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@John S Private insurance only makes sense if one runs a high deductible. Using insurance for anything regular or ongoing is a waste of money. It's unnecessary paperwork. Can you imagine how expensive and time-consuming it would be to use your auto insurance for rotating your tires?
Well - IN DENMARK, we have UNIVERSAL FREE HEALTH CARE AND RETIREMENT PENSION PAYOUTS!
I wish to immigrate to the US for my retirement due to neural damage combat injury issues requiering just a hot climate, like TX or AZ or NM or California where I have family.
And I migth have some answers! Since I have worked in politics with Health Care for 23.5 years as also am educated within psychiatric patient and relatives advise and education!
I of cource have planned several trips to the US, and one thing stood out !!
Last 3 years the Health Insurance Travel Policy HAS TRIPPLED!!...
Now a 2 month insurance costs an added fee of 3 months cost. And a 3 month coverage is not possible!
So I MUST pay an external insurer 300$ USD for max possible 80-something days!
NORMALLY that would have cost me 75-100$ USD!
COMPARED I pay HEALTH TAX in Denmark @ 8% which covers EVERYTHING! Including a MAX 3000 USD$ SELF PAY for pharmaceuticals on RX! BUT EXCLUDED are some drugs as CANCER AND HIV AND MS+CS are dispensed FREELY by f.ex. a cancer ward!
EXCLUDED ARE dentistry and eye glasses IF you'are an adult 18+ yrs! Those are self pay.
BUT STD clinics @ hospitals and narcotics as alcohol or pharmaceuticals addiction treatment IS FREE!
And we manage that @ ONLY 8% Health Care Tax!
By f.ex. outlawing doctors having prof. relations with pharmaceuticals producers.
And law demands pharmacy ONLY sell the CHEAPEST RX meds! IF you wish specific brands you pay the difference. Hospitals included
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"The largest source of waste, according to the study, is administrative costs, totaling $266 billion a year. This includes time and resources devoted to billing and reporting to insurers and public programs. Despite this high cost, the authors found no studies that evaluate approaches to reducing it."
****
As Upton Sinclair said "It is difficult to get a man to understand something, when his salary depends on his not understanding it." Administrators are disinclined to scrutinize their own value to an organization. Their job as they see it is to justify their over-sized salaries by wringing every last ounce of efficiency and cost out of the people who do the actual work of the organization.
9
Health care in America is mediocre to poor. Primary care doctors are rushed, and spend more time typing into the computer than talking to the patient. Specialists order treatments that are unneeded to avoid lawsuits or jack up their billing. Even if you have insurance, you can still go bankrupt or broke if the doctor or hospital decides to bill you for whatever the health insurance didn't pay. Insurance is expensive and confusing with co-pays, deductibles, etc. This is a system designed to maximize profit, to profit from the sick and it is immoral at its root.
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@John Jones I hope you support Medicare For All via the house bill H1384. for additional info, www.fixithealthcare.com
Less focus on the money. More focus on the patient, or rather the people. This article references Netherlands and Switzerland. While the health systems in these countries provide more value per $ spend, also there much improvement is possible.
The administrative burden also there is enormous. As long as we do not yet truly place the patient at the center of the process, but rather the capacity of doctors and hospitals, and the need of the insurance companies to make a profit, health systems remain wasteful. In the US the stakeholders making a profit from an ineffective and inefficient health system may be far greater and more influential than on average in Europe.
When we all focus on placing the patients interest first, and help them to move as customers through the system. With focus on outcome and result, and apply transparency through data and digitization, also a health system can become cost effective. Let’s start treating people not admits patients, but as customers.
At the same time people are not enough aware on what their treatment costs. Placing the patient centric, also means that patients own all their data. Not the doctor, not the hospital, not the care giver, not the insurance company; no it should be the patient, the person in need of medical services. Only when the awareness increases different decisions will be made. Ultimately it’s the patient who pays.
We have introduced crappy systems to hide that fact, and let others get away with the profits.
5
Medical insurance companies used to be, for the most part, not-for-profit companies. Remember good old Blue Cross Blue Shield in the past? Once a company has stockholders all bets are off. Insurance companies have to make money so costs will go up.
7
@Jane
That's an astute observation. In fact, way back before our own system had for-profit insurers was when our system was also way less costly. The IRS published that the Blues, while non-profit, behaved like for-profits for years before they became for-profits. This is because it's not possible to have major for-profit insurers without distorting the healthcare economy so that non-profits have to engage in the same behavior. The one characteristic that all other first-world universal affordable high-quality healthcare systems have is not that they are single payer, and not even that they have non-profit care, but that they all have an all-non-profit health insurance system.
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We spend 18% of our GDP on healthcare.
Singapore spends ~5% of theirs to get comparable care.
Theirs is, according to Bloomberg, the best in the world. Ours, from the WHO, is a bit better than Costa Rica's.
If we had Singapore's system the 13% difference would amount to ~3.5 trillion.
That is the difference between the tactical savings you discuss and the strategic change that is needed.
Read Wm. Hazeltine's Affordable Excellence to get the idea.
4
@America's Favorite Country Doctor
Singapore has a population that is like New York City if you took away Manhattan and Brooklyn. It is also geographically compact and racially/culturally homogeneous. Healthcare gets much more complex the more variables you throw into the mix and Singapore has much less variability than the US.
@SJG, I wish I could say I was surprised to see this hoary old claim pop up...but nativists keep popping up everywhere these days. "Diversity is the cause of all your problems."
I find it hard to imagine that much of our healthcare costs are due to the geographic size of the country...that's just not a real medical issue.
3
I find it fascinating that both the JAMA piece and this summary fail to say literally a word about spending on compensation for certain people working in health care. When US physicians are paid, on average, twice as much as doctors in other countries or - even more egregious - when health plan executives rake in millions, does that not count as waste? For many people, the idea that some of us (I'm a physician) can make millions on other people's tragedies is outrageous, especially since our field makes such a big deal of being focused on professionalism, service and helping others. I can maybe understand if someone invents a device and strikes it rich, but from providing care to individual patients... I can easily see why many patients would say that's just wrong -- and it's wasteful. Also, I happen to have met Will Shrank, the lead author on the JAMA paper, and he seems like a terrific guy, but I also know how motivated reasoning works and that no one is immune. The fact that his current employer, Humana - a for-profit insurance company - was so deeply involved in developing this research could well have subtly influenced its framing to avoid asking more uncomfortable questions. After all, I don't know what Will makes these days, but the Humana CEO made well over $15 million last year...
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@Matthew Wynia Qualified people have to be attracted to study for and work in healthcare and higher salaries are a standard way of doing that. An alternative would be for society to raise subsidies for healthcare training so that individuals don't have to shoulder so great a financial burden to get in the door. That would likely yield a good return to society in the long run.
3
@morphd
All the doctors I know drive BMWs, etc. and have nice second homes, take nice vacations, etc.
@morphd, and yet...every other developed country has managed to find at least partial answers to attracting qualified people. Our inability to do so must be another example of American exceptionalism, I guess.
1
Get rid of the Chargemaster.
2
Since our so called leaders and the media won't ever ask patients who know the facts better than the rest of the "experts" the waste will continue. Our health care costs could easily, easily mind you be cut in half IF IF IF it can rid itself of all of the corruption and just plain old stupidity. And stupidity reigns supreme from the constant weight, temp and blood pressure to the recordings of "if you have an emergency call 911" which everyone and I mean everyone thinks is stupid and useless. Add to the fact that there is no way to effectively file a complaint and if somehow you do get one filed and they actually follow up it will take over a half a year and nothing will get done because getting nothing done is their job.
2
For all those commenting about "bias" in this article: the study was published by JAMA. NY Times is merely reporting on the JAMA article, which, presumably, was subject to peer review before publication. JAMA chose to publish several commentaries to the article, in order to increase the diversity of opinion expressed. I am no fan of for-profit medicine, but Humana would presumably like to reduce costs in order to maximize their profit.
1
@Retired and 70, I see a lot more comments about the bias in the study than in this article.
Humana has plenty of history of reducing costs...almost always by reducing care, rather than reducing non-medical waste. Only a fool would trust a for-profit company's study of costs of their own industry on the national level.
2
Have worked as a sub-specialist physician for over 20 years. Administrative costs are indeed the biggest problem. It's not just insurance administrative costs, but hospital admin as well. If your favorite hospital is a "not-for-profit", pull the Form 990 tax form at, say, ProPublica. You'll be able to see administrative salaries. Few administrators, if any, have any idea how much anything really costs other than what consultants tell them. How could they control the costs, then, if they do not understand them?
As for the physicians, the fee-for-service/RVU compensation model is a terrible way to ensure high quality, appropriate care. It encourages more care, not appropriate care.
Finally, what passes for "innovation" by the pharma/device industry is often simply not. To understand how it all works, listen to this classic NPR piece (https://www.npr.org/2009/12/21/121609815/how-a-bone-disease-grew-to-fit-the-prescription).
Philosophically, it remains unclear to me that "health care is a right". I do know, however, that the delivery of health care should not be an opportunity to perform a wallet biopsy on the patient/public. Please, let's start with single payor and then move on from there.
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@Grant Faraday Perhaps "basic healthcare" should be considered a right but if people expect to receive million dollar treatments that extend their lives by a few months they'd better have private insurance or be very wealthy.
2
@Grant Faraday You write that health care should not be an opportunity to perform a wallet biopsy on the patient/public.
Isn't it less like a biopsy and more like harvesting entire organs, and without anesthesia?
Have you ever seen a patient lose his home from an excessive medical bill? I have.
So, AS USUAL, the real savings come form cutting the waste that the people in charge are directly benefiting from. Therefore a very hard job to do cutting your own throat!
Let's revisit this issue in a few years after some more studies and the good people in charge garner another 20 million.
1
Berwick is dreaming or dishonest when he asserts the private sector is responsible for the waste in administration. The fact is that administrative waste has escalated sharply as HHS, CMS and FDA has\ve driven more and more excessive regulation, documentation, qualification testing and reporting. The private sector plays the game to minimize its costs and maximize profits but it is the interplay with federal overactivity that has created the current disaster.
1
@NRoad I agree that this is a major problem. An example is Centene a company with headquarters in St Louis. They 'manage' Medicaid in over 30 states. The CEO's compensation is $32 million. Meanwhile professional providers of services witness their reimbursements lowered.
2
@Mary This compensation is a travesty; just an unmitigated disgrace!
1
During the past year I have had some health crises and many physician appointments. I have noticed along the way that everything used is a throwaway item including blood pressure cuffs. The amount of discarded plastic is staggering. At this point it really is overkill. I consider this to be immense waste rather than normal hygiene.
4
@Suzanne Wheat The waste in not just in healthcare. How come Walmart and other grocers no longer accept plastic bags for recycling? No one I ask seems to know-blame it on the virus?? Plus, they no longer allow you to bring your own bag. So we have more plastic bags and no way to recycle them except in land fills.
One other comment, on reusing gloves. Gloves are used strictly to protect the health care provider from outside blood/infection,OK except maybe in surgery. When I donate blood/platelets, I see nurses typically change gloves 3 or 4 times. Why?? I'm the same patient for the same nurse so why change?
I have worked in healthcare as a provider for 40 years so here is my observations - first, the money is made by doing procedures, not by using your brain - if I can run a scan, do a biopsy or surgery, that pays a LOT better than if I spend a hour in the room discussing your symptoms, examining you and talking about the possible considerations and what the risks are. Additionally, everyone is scared to miss a diagnosis, even if it is an unlikely one, so we will run every test we can think of to make sure of that, even if the risk for most of them is very small. With folks willing to sue you in a heartbeat, you will feel obligated to run the expensive test they read about on Google in the very off chance it shows something. And I also guarantee that any one of these scans, labs, xrays, etc are going to show some little abnormality that now you have to run down with follow up tests. A single payer system could be set up with clear guidelines based on clear data, not a Google search - we would use these guidelines and these guidelines would also be protective of us as well. Providers would be paid by a salary, not by RVU's so maybe I can spend more time with my patients and we could set up good practices like sending nurses to new mothers homes to check on her and the new baby - doesn't make money but is a great practice to pick up problems early, observe the home environment for problems and reduce exposure of mom/baby to infections and get those vital first vaccines done
5
@DJ! Any time I mention high healthcare costs to the conservatives I know, they're likely to place most of the blame on "defensive medicine" as you describe (conveniently ignoring the fact that the fee-for service model itself is inherently biased toward prescribing excessive procedures). I do wish researchers studying healthcare costs would at least pay lip service to conservatives' concerns in their studies. Ignoring those concerns just feeds conspiracy theories.
1
@morphd, Here I can agree. While blaming costs on "defensive" medicine, they ignore the fact that caps on malpractice awards have done zip to lower costs in those states that implemented them.
The number one cause of the high cost of health care is insurance.
1
@will nelson
Thank you Willie. We're on the same page. Read Linda Gorman's piece at the WPRI for more ammo. Or ours in The Boids and the Bees for an expansion.
““It’s perfectly possible to reduce administrative waste in a system with private insurance ...[other countries do]” Germany and Japan, whose economies are closer to the US's, have lower administrative costs and also use PRIVATE INSURANCE.
The article fails to mention that in ALL the other first-world nations, the single salient difference between other systems and ours is not whether they have single-payer or not – they don’t – it’s that health INSURANCE in every other first-world nation in the world is all NON-PROFIT.
The US is the only first-world nation without affordable healthCARE for all, the only first-world nation with all these medical bankruptcies – and it’s not because we get the best outcomes, we don’t -- and the only first-world nation without NON-PROFIT INSURANCE.
The reason for-profit insurance leads to higher costs is there is an irreconcilable conflict between paying for healthcare, and paying investors. (See TR Reid's book) Insurers make more profits when the overall healthcare economy is large, i.e., their incentive is to best CONTROL as LARGE a healthcare economy as possible to maximally extract their profits. Not surprisingly, the, healthcare economy remains as high as we can all collectively bear. The insurance denials are not to make the system cost less, but primarily for control.
Note that this is why insurers here also favor consolidation, cited as another reason for high costs, because insurers can best maintain CONTROL.
4
Oops, I need to make one major correction, between $ signs below. I meant:
The US is the only first-world nation without affordable healthCARE for all, the only first-world nation with all these medical bankruptcies – and it’s not because we get the best outcomes, we don’t -- and the only first-world nation without $ALL$ NON-PROFIT INSURANCE.
Unfortunately, having some non-profit insurers amid lots of major for-profit ones isn't enough, because the non-profits have to engage in the same behavior in order to survive. The solution is for *ALL* INSURANCE (not necessarily CARE, just INSURANCE) to be NON-PROFIT, as every other first-world system in the world, despite their differences in healthcare delivery and healthcare profits, demonstrates.
4
@AJ
I don't get why you're so interested in PRIVATE INSURANCE, but OK.
It seems, though, having a SINGLE PAYER system would yield the most dramatic savings in administrative cost because, you know, there would be a SINGLE PAYER.
One plan. One system. One overseer and auditor.
But we need to be careful. Our brightest political lights bandy about the imprecise term Medicare For All.
We can, and should, do away with all PRIVATE INSURANCE, demonstrably incapable of doing anything except the single thing they are designed to do, deny or limit care. Its why they exist, its how they make their money.
They had a nice, long, painful ruin. Its over. Once they're gone nobody will miss them.
Speaking as a scientist, its disappointing to see so prominent an article, decrying administrative inefficiencies, written by a self-interested, highly conflicted author with a huge interested in placing blame anywhere but where he makes his fortune.
Imagine if we had a system the opposite of ours; focused on providing care. Focused on improving effectiveness and the efficiency of providing quality care.
Instead all our health systems, private, charity, Federal begin with the premise everyone is trying to get free stuff they don't need or deserve; our first priority is catch welfare cheats, scam artists and SOCIALISTS.
Never mind that the worst cheats are private insurers, corporate health organizations, pharmaceutical companies, and a sad number of money-oriented physicians.
1
@oogada
I hear you, I agree in principle with everything you have said. The problem is that single-payer is a political non-starter in this country. Do you want to achieve affordable universal care, or is going after single-payer more important to you, because the former is far more palatable for all stakeholders, and as we know from the rest of the world, it is enough to achieve the results.
It would be simpler if we just had a dictator, too, but there are advantages to the messiness of democracy. The point of this article (and what I wrote) is that we can achieve the cost savings without transitioning to single-payer with all its attendant challenges. Going to ALL non-profit insurers is the easiest and least-disruptive thing to do, and it turns out, that is the one thing that ALL the other first-world nations have done. They are not all single payer, they don't all have non-profit care, but they all, in one form or another, have ALL non-profit health INSURANCE.
Retaining all-non-profit insurance also gives people choices if something goes wrong with one organization, which is important to people in this country. And most then won't have to change, they'll just get better coverage. Going all non-profit from the employer-based system is what Germany and Japan did, too. It's far easier than single payer here and there will be far less to not like politically.
The author states, "What is surprising is how little we know about how to prevent [waste]." That, quite simply, is untrue. We know entirely how to prevent it if we substitute for "waste" its other name: revenue.
Whether for-profit or non-profit, all of America's health care system -- hospitals, emergency clinics, big pharma and insurance, physicians and clinicians -- either survives or thrives on revenue. And it all works tirelessly on the side opposite the care's recipient to insure that revenue doesn't shrink.
How do we prevent health system waste? Remove the incentives for revenue growth.
3
It's simple. For profit medicine does not work. When there's a monetary incentive to find ailments, ailments will be found. Unhealthy people are the gold standard of our current healthcare system. Nationalized, not for profit healthcare would change the nature of a broken, capitalist market focused on ills and would refocus on keeping people healthy. Since so many in this country rely on the profits from this broken system, it will be nearly impossible to wring these dollars out of the hands of the complicit to effect change.
7
@Skidaway
There is much truth in what you say. But it's actually not true that for-profit "medicine" doesn't work, because there are other systems around the globe that allow doctors, hospitals, and labs to make a profit (for-profit medicine). The difference is that they have all transitioned to non-profit health INSURANCE. When insurance companies have to pay investors based on a percentage of the total healthcare economy, they have no incentive to reduce the size of the healthcare economy, only to best control it to maximally extract their profits.
I am personally not in favor of a nationalized system like in England, where the doctors all work for the nationalized system. I think it doesn't fit as well with our national disposition and would create unnecessary political battles. Going to all non-profit insurance would allow doctors to be more autonomous again, as the forces pushing for consolidation (because it favors insurers' control) would no longer be as strong, and doctors would naturally be more able to focus on serving their patients.
I do not understand why "human maintenance" (i.e. health care) is not charged for similarly to car and home maintenance - i.e. parts and labor. Have prices for drugs, equipment and material that is used in care, and then have a billable rate associated with the time spent by everyone from assistants to surgeons. If a given procedure takes an hour to perform, it should cost an hour of the doctor's time and should not matter what kind of procedure it is.
I love when they tack on billing codes just because something was discussed in a given 15 minutes visit - like various "counseling", when in the end they still talked to you for 15 minutes. For example, I told the doctor I was trying to get pregnant, so in addition to billing for a routine annual visit, the billed for "pre-conception counseling" which consisted of "take a vitamin".
6
@NH "Why" is very easy to answer. Because the healthcare industry makes more money the way things are. It really IS just that simple.
Physical Therapist working in a skilled nursing facility. The patients at my place consistently give a high satisfaction rating for the quality of therapy they receive. We need to thank the ethical and devoted therapists all around the country who are sacrificing themselves to make this happen despite the broken system. But looking behind the scenes, there is so much waste and it all comes down to the corporation running the therapy department, the facility we are based out of, and the insurance companies all wanting to maximize profit. Patients that require more therapy, are often denied it. Patients who do not require as much therapy, are receiving the maximum amount and for much longer than they need because, on paper, their diagnosis justifies it. The article talks about administrative costs- the time I spend documenting each patient visit, to prove that I am not being wasteful, is often longer than my face time with the patient. Insurance does not pay for the paperwork time, so my corporation has to swallow the cost of paying me for that time. Ha, ha. The therapists are commanded to make up that lost time elsewhere by double booking patients or more often than not, working off the clock, which the corporations know is illegal to require their employees to do this, so they deny it occurs. Meanwhile, many of these dedicated therapists have not had a raise in years. Many therapists, myself included, are getting out of healthcare. We can't afford it anymore.
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@Foodie
Completely agree. I hope your comment is read by those attempting to look at cost reduction in healthcare.
My vote would be to eliminate insurance companies.
Only the young stay in healthcare. The rest burn out or cannot afford to remain.
@Meg Conway, Insurance isn't really the biggest culprit in high healthcare costs. Even the worst case estimates of the cost overhead of insurance run somewhere around 30%. That's at most half-a-dozen years worth of average healthcare cost inflation, if you banished private insurance across the board. The biggest contributor to cost increases seem far more reasonably assigned to corporate consolidations reducing the competition among healthcare providers.
@Russ W
So, you are telling me that the health care purchasing entities do not have "volume pricing power"?
By comparison, look at what Walmart does to its suppliers: Always pushing for lower prices. Clearly, by comparison again, the health insurance companies have a WAY TOO COZY relationship with medical providers.
Correct me if I am wrong, but from the way it looks from the outside, what goes on on the inside must be like this: We quintupled our price says drug supplier A. OK, then, says the insurance industry.
Our price for a an ppendix removal doubled, says the Hospital B. OK, then, says the insurance industry. Our price for the new MRI machine is three times the old one, says medical device company C. OK, then, says the insurance industry.
In other words, even if there is no bribery and kickbacks, such behavior appears fairly silly or corrupt.
As long as income maximization at all costs is the top priority of doctors, surgeons and hospitals, not to forget insurance companies who employ whole armies who se nly task is to find out how a claim can be denied, the quality of health will deteriorate and the costs will keep rising.
The USA allows many doctors to come here from other countries including the less developed one such as my country of origin. In my COO the main topic of conversation among medical students is how they will migrate to the high paying jobs in the West after they graduate from a medical college where their education has been heavily subsidized or vene fully paid for by the government.
5
The number one complaint by hospital patients in the US? The incessant beeping, buzzing noises that don’t allow for decent rest.
I live a block from the ER of a busy urban hospital. We hear the ear-splitting sound of ambulances backing up at all hours. It’s 2019, it’s a hospital zone, is there not the technology to provide these vehicles with reverse cameras, strobes, radar, anything less intrusive and stress-provoking than these reverse alarms?
Have you tasted or at least seen the stuff most hospitals pass off as food? MRIs, sonograms, gene therapy, high tech operating suites; those we have, but food; tasty, nourishing, healing food, this is too much to offer?
The essentials necessary for health, rest and food, are somehow neglected in the modern American hospital.
Our system of industrialized, mercantile medicine needs a do-over, which could go far towards increasing health and reducing costs.
10
And let’s not forget what happens when doctors are focused on the insurance providers payment incentive and the patient is working to navigate the available coverage and cost. The doctor patient relationship, you know the real priority, has been demoted to a second class goal.
8
A healthcare system that is based in a pure capitalism model will never be "not wasteful." If you want supply-and-demand to work then people need to be able to take their "demand for a service" and walk away when the "supply price" of that service is too high. But a medical care consumer can not just walk away from needing medical treatment...
"Hmmm, just got hit by a car and need immediate surgery to save my leg from amputation...but this hospital wants to charge me $500,000...seems kinda steep...guess I'll wait and shop around for a better price."
When the health insurance company holds all the cards it's inevitable that costs will get higher...and higher...and higher. And everyone who's skimming off some of that profit, from what ever angle, will be disinclined to change the system.
The idea that a healthcare system based purely on an insurance model could even possibly work is just a huge fantasy sold to U.S. citizens by wealthy who want to stay wealthy.
If you want to maintain the so called "innovation incentive" of capitalism in medicine then there are 2 options.
1. Maintain a fully funded single payer system by the government for all. Then allow private insurance to compete against it.
2. Maintaining a fully funded single payer system by the government...for all. And spend federal tax dollars to invest heavily in medical research centers and their researchers at hospitals or universities...with all research results becoming public property.
5
@kathleen I live in Japan and honestly health care is one of the key reasons. Single-payer system that finds a way to provide "care" at the end fo the day. It's not perfect or free. Self-employed, I pay $1,000 per month into the system. My employer would pay that if I had a company job. For that, 80% of my costs are covered. Thing is, the costs themselves are so much lower. My 20% copay is usually about $5 for the visit and meds. Once I leave the doctor's office, I never hear about that transaction again. And the frontline caregivers while very busy haven't been reengineered into completely exhausted shadows of their former selves. Hospital food during two one-week stays for surgeries was nutritious and delicious. All this may sound trivial, but as an overall experience on the ground it's not even close.
2
@Mitch , you should have mentioned that at the back end the payers are insurance companies. The difference is that individuals do not have to deal with them. The government deals with them and keeps the costs down by negotiating with them with fixed fees.
2
See my new book, Enlightened Public Finance, which includes a major section on Health Care policy options, and provides perspective on what's feasible. Also, this article published last Monday in the American Society for Public Administration's online newsletter helps put the achievable policy options in proper perspective. https://patimes.org/the-rubiks-cube-of-health-care-finance/
Part of the problem is keeping health consumers in the dark as to what things actually cost. I have Medicare and supplemental insurance. The costs of my use of health care is often delayed by months, the dates do not match up with my own health calendar of when I was present for a procedure or test. The cost of the test is broken down into non-intelligible language. What the "cost" of a test or procedure is often five times what medicare and my supplemental insurance covers, yet I owe only 97 cents. I am not a stupid individual. I function well in my life and finances, but feel incompetent to try to understand medical billing. Simplicity in this area would go along way fo the consumer to make intelligent decisions.
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My primary care doctor referred me to a cardiologist for A-Fib. The cardiologist said no A-Fib, “benign arrhythmia”, but I’m wearing a heart monitor and in the middle of what seems to be every test Medicare will allow. Commendable caution or profit taking? How can I tell?
4
@gVOR08 Your case is a very good example of a gray area in decision making which allows a physician to justify tests to insurance company and get paid. On the other hand wearing a heart monitor and getting an Ultrasound of the heart provide significant data about your overall heart health and establishes a baseline for the future. Also we should not forget " Defensive Medicine" and the role it plays in decision making.
4
@gVOR08 It's why pickpockets like crowds.
1
Whatever happened to the Medical/ Health/Physician credo (or philosophical foundation/ethic?):
Do no Harm?
Seems like at every level , in so many ways , a lot of harm is being done to so many people and needn't have to be so.
Unless fundamental changes are made to the way Health Care operates in the U.S ...it will continue to become less Healthy , Less Careful and deliver Less Care at greater Costs to Fewer People.
That's a lot of Harm.
2
It appears that there is no mention in this article about profit making. It is at least an impression that I have that entrepreneurs are more likely to run hospitals, setting policies, than anyone having to keep healthcare professional ethics. Obviously health institutions have to survive financially. When $s made are the primary motivation, what happens to attention to patient care, especially if that person really knows little or nothing about patient care? Acuity of patients can be ignored, it seems to me, because attention to acuity can cost, but ignoring acuity may put patient care and therapeutic milieu at risk. But patient risk may not be important to the economics until lawsuits actually impose costs when neglect is proved or impossible to ignore. Paper pushing in a milieu that is paranoid about $s and liabilities can also easily put patient care at risk in this less than perfect world in which we live. Profit making can be based on ambition that does not have to have any cap. But if profit making is not in this tally, how would anyone know what is actually honest or truthful about costs? No one dreams of limiting one's own ambition. But the higher up the chain of command does not seem to lessen ambition!
2
There are several ways to estimate what costs should be in business. Simple benchmarking of other countries' successful systems would tell you that this study's estimate of 20-25% waste is way too low.
3
" But doing so would run up against powerful stakeholders whose incomes derive from the status quo."
That just above sums up almost everything that makes America the country it is but also why it is so hard to change things for the better, no matter how obvious, beneficial and make far more sense such a change would be.
Too many self interested parties with too much influence and desire to continue profiting or increase them no matter the consequences to others.
America is in much need of a lot more unity in a Common Cause working together to produce for the Greater Good of the majority of all its people and not its Powerful Businesses interests and the Wealthy and influential people who own or run them.
14
One problem with a healthcare payment system is that businesses do not have a system to relate costs to individual treatment activities. Hospitasl can't tell how much it costs them to treat a patient for a particular problem. Instead, they know how much they spend in total and then set prices on patient bills to ensure they get back that money plus a profit. You get a $200 bill for aspirin because the hospital needs to bill a total of $10,000 and that $200 is needed to get to that number. The $200 is unrelated to the hospital cost for the aspirin and the costs to deliver the pill to the patient.
We also have the case of emergency rooms where the unit has only three levels for reimbursement--level one, two, and three. Unfortunately, these levels are determined more by the patient ability to pay than the actual cost of the treatment. A patient with good health insurance will always be billed for level three, while patients who look like they will not be able to pay get billed for a level one.
Many doctors ensure that billing staff know how to make a service look like one which is eligible for high levels of payments. Codes chosen for billing are not closely related to the actual problem or diagnosis, but determined by ensuring the patient will agree to symptoms that support high levels of billing. This method of entering the data into a computer create real errors in the data within the system and hinders the use of computer data for finding better treatment.
6
There is no evidence that a single payor system would reduce administrative costs. Medicare as we know it now has administrative costs just as high as commercial insurance. One issue the study doesn't seem to have addressed is the waste associated with excessive care...too much health care when it is not needed, inpatient treatment when outpatient treatment would suffice, etc. Also, the over-compensation of physicians isn't addressed here. We pay physicians far too much and they are a big part of the cost problem. Medicine should not be a refuge for people to get wealthy on sick people, yet that's exactly what it is. Physicians need to make less and medicine need not be an occupation for the greedy.
8
@Tintin you are mistaken, Medicare administrative costs are a lot lower
"The trustees’ summary listed total Medicare expenditures of $678.7 billion for 2016, of which $9.2 billion was characterized as "administrative expenses." That works out to 1.4 percent, which is even lower than what Sanders stated."
"Average insurers’ overhead costs are about 12.4 percent, according to an April 2017 Annals of Internal Medicine article by Steffie Woolhandler and David U. Himmelstein. A February report from the Center for Economic and Policy Research totaled overhead costs for private individual and employer based plans at 12.3 percent in 2015. And America’s Health Insurance Plans found that 17.8 cents of every premium dollar goes to operating costs."
https://www.politifact.com/truth-o-meter/statements/2017/sep/20/bernie-s/comparing-administrative-costs-private-insurance-a/
Otherwise I agree with you..
35
@Tintin Even if Medicare administrative costs were no lower, it is the complexity of dealing with many payors with different rules and expectations that is additionally wasteful. And each provides a different incentive system. And so we hire 'consultants' who help us negotiate how best to document, implement bills, prioritize incentives in multiple sometimes competing initiatives. And who implements what the consultants teach? Multiple layers of case managers, document preeners, fiscal coordinators, and financial advisors. And then there is the doctors time needed to implement all of these along with audit processes, retrospective reviews, missing charge reports, and so on.
My regret for a single payor? All of these people would be looking for other jobs.
16
@David Greenspan The concern I have regarding single payor is that a government run healthcare financing system would be influenced by political forces. Medicare as we know it now does not have women's reproductive health as a coverage issue. Medicare for All would. I'm not interested in having the Trump Train Wreck and this Republican Senate vying for influence over how public money is spent on healthcare matters they oppose. The rush to a single payor system is foolhardy in a country where a significant number of elected representatives think the government has a right to dictate procreation. Higher administrative costs for pro-choice healthcare? I'll take it.
4
the quality measure and reporting add insurance complexity, physicians are payed to much particular specialist,the rent seeking behavior of elite administrators and gateway physicians add cost and last lack or explicit rationing ,we all get a bit crumbly. The emphase should br cheap management of chronic condition whether diabetes ,drug addiction or madness.
You know what else? If we had a single-payer system, the "magical billing" -the bills with $200 Tylenol and $1,000 Band-Aids- would disappear. Right now, hospitals factor in the uninsured when they bill the insured or self-paying patients. If everyone is paying taxes and the government pays providers for services on every patient seen, then bills are the same for everyone (and we never see them- they go to the government). Enough already of the faceless bullying of magical billing.
7
De-couple health insurance (which isn't health care) from employment like the rest of the developed economies in the world. Allow all Americans over 55 the ability to buy Medicare coverage since their is rampant age discrimination in the workforce going on.
Encourage investment in community based care, direct primary care and direct specialty care- get health care "systems and insurance companies" as middlemen out of primary care . People can then choose their doctors and avoid "are you in my network" hassles. Use HSA accounts to support the above. This is only way to save rural health care.
Add in major medical/catastrophic health insurance for major illness and injury. Higher deductibles because you will most likely never need to use it. It's insurance.
Stay out of the doctor-patient relationship, tell insurance companies to quit practicing medicine without a license and stop treating MD's and RN's like draft horses. BTW doctor salaries are not the problem.
Health insurance companies are now taking our money and denying us care via Prior Auths and Denials. System is beyond broken.
8
@Laura
One more thing to add to your list... after five healthcare availability that is not an emergency room. Is it impossible to have clinics located at the hospital for non emergency care when our primary care offices are unavailable? To have to make the decision to take a child to the emergency room for high fever and constant vomiting in the middle of the night is the difference between $120 and $2500.
4
There is a saying in business (although not in the US) that if you manage costs your costs will go UP, whereas if you manage quality you’ll drive costs out of the system.
The minute you envision the need to cut ‘waste’ rather than improve quality, you’ve lost the battle. You’re doomed to driving your costs higher.
The Japanese taught this lesson for making cars, 50 years ago. Yet we remain blind to the underlying philosophy in every aspect of our lives, including health care and government.
And there’s an underlying cultural reason. ‘Continuous Improvement’ requires deep understanding of the system, patience, and hard work - all aspects foreign to the American way. So much more satisfying for a senior executive to make executive decisions from on high - to be the big-decider who warrants the big salary with big bonuses and to pave the way for the next, inevitable round of foot shooting.
And as an exemplar, at the highest level, there’s Mr. Bigly Executive Order man in the White House making things worse on a day by day basis. But let me not go there...
7
I was recently hospitalized at the local university medical center. My welcome packet included a nice folder, a handbook and miscellaneous papers including a nice food menu that mimicked one from a restaurant like the Int'l House of Pancakes. How much did that thing cost anyway. The following day I looked at the menu. It was filled with options for 3 meals a day plus snacks. I was appalled to see eggs cooked any way one likes with sausage, bacon and pancakes. For lunch there was a huge burger with fries. It wasn't that easy to find reasonable food among that clutter. I ended up with bagels, steamed broccoli, Yoplait yogurt and a Diet Coke because the coffee was undrinkable. My description was" " made from coffee grounds that had been buried beneath the Himalayas and discovered after the death of the last Emperor." I discussed this situation with Patient Services and a physician. The latter told me that he once had a surgery scheduled that required fasting the night before. The patient showed up and demanded breakfast and, then, left for another hospital in a state of total indignation! My point of all this is that this particular hospital is spending far too much money on inferior quality food and untrained kitchen workers. It's not a restaurant.
4
The elephant in the room of single payer health care is that in countries with this system insurance premiums are a percentage of income, at least for salaried workers. For example, Germany charges 14.6%, half of which is payed by the employer. I do not dare to contemplate what I would have to pay in a health care system like ours that is the most expensive in the world. Unless I am going to see much more detail in the plans of Mr. Sanders and Ms. Warren on how to prevent huge increases in taxes I will vote for neither.
2
@Thomas
Taxes will go up but not as much as bills that will vanish and insurance premiums that will evaporate.
If I had a job with an insurance company I would certainly be worse off - unemployed that is.
The tax complaint gives a new meaning to tax dodge.
4
@John M. Phelan
Exactly! I'd rather pay a 7% health care tax on my income, than a $20K insurance on my income and including the employer burden.
Math for you
$30 K x 7 % = $2,100
$60 K x 7% = $4,200
$120 K x 7 % = $8,400
$180 K x 7% = $12,600
$240 K x 7 % = $16,800
People making more than that can do their own math.
If that's not enough, then an extra 3% tax on investment income, dividends, cap gains, even tax-exempt bonds would be just fine with me.
For you lovely Christians out there, who believe in "Feed you lambs" and "Loaves and Fishes", 3% is way less than the 10% your church demands, so, there is that. Maybe your pastor or priest needs a diet anyway. I am saying this as nicely as I can.
Our healthcare system is in fact not a system at all. It's split into many fragments. Living as I do between two towns, I see some doctors in one town and some in the other. They are beginning to share information with each other, but there is still duplication. For example, who prescribes reflux medication: the ENT or the gastroenterologist? The more test data and other information are shared, the better results are for patients.
3
Limit the number of hospital administrators and cap their salaries. The number of dollars being paid to everybody in the C-Suite is obscene and irrational. Also, make Hospital Administrator a licensed profession, so that there are minimum proficiency level for health care economics, policy and regulation. The fish rots from the head down.
19
I've worked in the healthcare field for 46 years.
Stories of waste? Where should I begin?
8
The market for healthcare is one of almost infinite demand and limited supply. We will pay almost anything to live longer. A market fails under these circumstances, as it cannot reach equilibrium. Hence ever rising prices or queues or both. Some kind of government intervention is inevitable, like it or not.
The other market failure of healthcare is that it always fails - everybody dies.
The healthcare exchanges (like stock and commodity exchanges) were a good first step in repairing at least the first of these market failures
2
Totally biased on single payer, one system for billing would do the same without the massive increase in use. Try using quality management process, that would work!
2
Two things:
One, it's laughable that you think involving the government in this single-payer model would decrease administrative costs. The government thrives on bureaucracy and regulations. So don't even go there.
Two, the only thing that will reduce waste and make this workable is more free market, not less. And truly the only fix is imploding the system altogether. Pay cash. Like dig into your wallet and put down $20 bills. Virtually everything in medicine is affordable. Let's assume you're making $12,000 less per year because your employer is paying your healthcare premium - which really just gives you better pricing than you might get on your own. You work 40 years (25-65). Forty * 12,000 is $480,000.
You could literally buy any surgery, any brace, any vaccine, get two new hips, two new knees, medication. In our health practice we get paid by insurance $150,000 for shoulder surgeries + miscellaneous add-on "waste". If we did not have access to that $150,000 payer and we actually had to rely on patients opening up their wallets, we'd treat that person for $5,000. That would be surgeon + assistant surgeon + anesthesia + operating room + brace. Our self-pay website has our self-pay cost at $9,000 currently, but we'd do it for $5,000 and make money at $2,000. The other $148,00 is because we can.
Try getting a person with a job and family to spend $150,000 in cash on their shoulder operation. But $2,000-$5,000 is reasonable - take it out of the $480,000 in your pocket.
3
Re ‘it’s laughable’, just a reminder from Canada that its government single-payer system spends HALF as much, per person, as the US, with comparable or better outcomes. So don’t laugh too much about government involvement.
And on the subject of ‘free’ markets you might want to contemplate what one might actually look like, ie, one with genuine competition, no vested interests, no dominant players that can set unfair prices, and in which consumers have all the information needed to make informed choices. And once you’ve come to the (obvious) conclusion there’s no such thing as a free market, what is the appropriate role for government regulation.
7
All of this stinks of very real conflict of interest.
In the conclusion section of the study's abstract it states, "Implementation of effective measures to eliminate waste represents an opportunity reduce the continued increases in US health care expenditures." Just insert [single payer system] in place of [effective measures] and you hit the nail on the head.
1
Very depressing. And guess what?
IT WILL NEVER CHANGE in the USA.
Too many powerful groups are making too much money.
7
@William ,
Taking that idea , I fear the problem is broader...and to use most of your words would daresay:
THE USA WILL NEVER CHANGE ... (for the better...)
Too many powerful groups are making too much money.
2
In France, ranked #1 in health care services by the WTO, you meet directly with the doctor who uses a national computerized system to record his/her diagnoses and prescriptions, etc. As a visitor or foreigner, one pays about $27 for an ordinary office visit. I was shocked that I didn't have to be checked first by a receptionist to confirm the insurance then an LVN (to weigh me and check blood pressure) then an RN (to check blood pressure again) and finally the doctor (who sometimes re-checked the BP). So, OK, I get that this is one way to have "full employment" but -- really?
10
While high drug prices may motivate investment and "innovation," much of the resultant activity in the private sector, unlike at our universities, will be "innovations" that drive money-making schemes with little or no chance of therapeutic success, and indeed no intent to develop something of therapeutic value. Just ask the Sackler family or Elizabeth Holmes of Theranos. I think it's great too that my "healthcare" insurance premiums go to help Joe Swedish, the former CEO of Anthem, make nearly $50 million in 2015-2017. Much of this nonsense began with Reagan's deregulation of "healthcare." Time for single payer.
7
Our University-based non-profit research hospital system billed our insurer Blue Cross (also supposedly a non-profit) $12,000 for two shots of immuneoglobulin, and 4 shots of a rabies vaccine. At no point was the price discussed or alternatives presented. The first we knew was when we got the "explanation of benefits". BC ended up paying around $9K. Its not as if the patient is in any kind of bargaining position when dealing with pain, sickness or stress. And if they are billing that amount for a few shots these days, what about an actual severe emergency or sickness?
7
@Cowboy Bob
This lack of true bargaining power is the root of our inefficiency. Rand Paul once discussed how self-paid patients who could choose their doctor for cataract surgery allegedly kept the price of the procedure down and the quality up in his market. But, as you point out, most people and most medical procedures are not in a situation, either because of urgency or a lack of information and choice, to bargain sufficient to operate the 'invisible hand.'
2
I am disappointed that profits from various sectors of the health care industry are not mentioned or quantified. This includes monies paid to shareholders and executives of insurance companies, hospitals, diagnostic equipment providers, ambulance services, hospice services, etc. This is especially the case when the motivation is shareholder value rather than optimum quality health care.
6
While I also believe that we must shift to some version of single-payer, I’d offer the following: in any given state, require that all insurers accept a single state-specified medical claim form. To establish the form, convene a voluntary meeting of representatives of all insurers who write policies in the state. Require that panel to design the form, with the understanding that two years hence acceptance of it will be a requirement to sell policies in the state. I have no idea what the savings would be, but I think they’d be significant.
8
What about the huge duplication, triplication, and on and on that occurs from every doctor's office having their own staff and equipment? We must create regional health centers, so that the infrastructure to support health care isn't duplicated, triplicated, quadruplicated, ad infinitum, for every group of doctors that wants to start their own practice. And, how wonderful it would be, to go to facility that has everything in one place that a health plan covers, such as bone density scans; mammograms; skin cancer checks, so the patient isn't running all over the place to get the typical annual screening procedures done.
6
@Maureen Don't forget about paying for parking. The first time I encountered a medical center that charged for parking, I was appalled thinking about all the sick people who were having to trudge through a parking lot to get healthcare. I backed out of the place and found a spot 2 blocks away. Otherwise parking fees should be billed to insurance companies as a medical service. Scattered sites are often closer to home and have normal parking spaces.
4
Save huge amounts if Medicaid and CHIP patients are required to pay $5 at time of ER, office or hospital treatment. Anyone with a 2+ tats pay $10.
Save billions if each Medicare treatment or surgery required $10-$20 copay at time of treatment.
Reduce costs by huge amounts if we stop providing free treatment tor those who intentionally inhale carcinogens, tars and hot smoke from cigarettes or cannabis joints for decades - require a $50 copay at time of each treatment and $100 for each surgery.
Save billions if we stop providing free world-class advanced ER, rehab and lifelong care for gangbangers.
Use the above savings to expand temporary Medicaid universally (everyone) so the marginally poor in rural and urban areas can obtain the care needed.
5
@Dr. John
Dream on!
Look at it this way: what's free is overused and undervalued. So, I agree that there should be economic participation as you describe.
But charging according to tatoos, voluntarily behavior that causes bodily harm that costs tax dollars to treat is a no starter. But I'm all for what you propose.
I'm also for rendering the least necessary healthcare for illegal immigrants, so they can be safely deported and treated wherever they are deported to. But that's a no starter.
3
@david bloch
Understand.
If you can afford tats, you are not destitute and need to pay more of your own freight!
2
@Dr. John
I can understand not wanting to care for gangbangers (and many others,I'm an ER doc), but that is still not morally acceptable and it ain't gonna happen. What about the 93 y.o. demented patient with tubes in every orifice that still has a "full code" directive. Our culture needs to change..and good luck with that.
11
this same newspaper published an article about 2 years ago that suggested that healthcare costs would be reduced by 5% (without any corresponding loss in value or outcomes) simply by eliminating spurious lawsuits (achieving tort reform in order to eliminate defensive medicine). it's worth a shot.
4
GREED is truly the most terrible challenge of our times, and capitalism is its tool, its means to power and more greed.
Greed is a (contagious) mental illness, an unfillable hole, a hunger that denies justice, a brutal expression of broken egos.
Greed is having a million times as much as the poor and still feeling you don't have enough.
Greed consumes the earth without respite, and is a cancer on humanity.
Greed destroys us and our children and their future.
Greed is death.
2
@William Death comes to all, so perhaps does greed then?
2
@David
Joe Heller
True story, Word of Honor:
Joseph Heller, an important and funny writer
now dead,
and I were at a party given by a billionaire
on Shelter Island.
I said, “Joe, how does it make you feel
to know that our host only yesterday
may have made more money
than your novel ‘Catch-22’
has earned in its entire history?”
And Joe said, “I’ve got something he can never have.”
And I said, “What on earth could that be, Joe?”
And Joe said, “The knowledge that I’ve got enough.”
Not bad! Rest in peace!”
— Kurt Vonnegut
The New Yorker, May 16th, 2005
8
Decrease US administrative health care costs by moving towards single payer healthcare and that would be Medicare for All or Medicaid for All.......
4
The rest of the world was health services we in America have a health business.
12
RE: Frakt statement that there is downside if it cost more to root out fraud than it raises
From HHS press release on 4/6/18: "Health and Human Services Secretary Alex Azar and Attorney General Jeff Sessions today released a fiscal year (FY) 2017 Health Care Fraud and Abuse Control Program report showing that for every dollar the federal government spent on healthcare related fraud and abuse investigations in the last three years, the government recovered $4.
Interesting side note: there's declining returns on that investment. In 2014, the government spent $571 million fighting fraud and abuse and received $3.3 billion in fines, penaltiesand restitution. In 2018, it spent $1.03 billion fighting F&A, but only recouped $2.3 billion. There was a marked decline in recoveries after the Trump administration took office despite roughly comparable investment in the program, which was nearly doubled in 2015.
1
@Merrill
Interesting! Can you say more about how this changed since Trump?
I would argue that the 25% number is actually on the low side of the amount of waste in our healthcare system. What also should be accounted for is the waste in terms of life and resources related to the over 400,000 people a year that die in hospitals due to medical mistakes, misdiagnoses, hospital-acquired infections, maltreatment, etc. While studies have well-documented these events the dollar cost, I don't believe, has ever been estimated. And of course the settlements struck between hospitals and the patient/family when the errors, etc are discovered, are confidential.
This study is not too dissimilar to many that have been done decades ago. When I started studying healthcare in the late 1980s most of the same waste factors existed and were about the same in terms of percent of total spending.
We know how to reduce spending, we do not know how to overcome the fear, uncertainty, and doubt that is spread by the healthcare system participants over any significant, meaningful attempt to address waste and prices.
7
It is worth mentioning that much of the administrative costs are the considerable efforts to find excuses why someone won't pay for what a doctor has ordered. I use FAS at work and this year, doing the same checks that a couple at our age (57-60) did last year, my out-of-pocket increase to a degree that the FAS amount was used up by May. And my premiums went up.
5
Dr. Frakt's comment that it is not effective to spend more than a dollar to eliminate a dollar of fraud is mistaken. That is because, in addition to the thefts eliminated, there is a deterrent effect.
When the police lock up a criminal, there are several benefits. If the crime is a theft, the stolen property may be recovered. In addition, the thief will not omit additional crimes (at least while incarcerated). Finally, others will be deterred from committing similar crimes.
5
I am glad that when there is so much noise about our health care system being horrible and so many that are uninsured that Austin Frakt is focusing on the waste in our health care system. The roughly 20-25% of wasteful spending of American Health care is also due to to irresponsible patients who are either not compliant with medical advice and cause self inflicted harm to themselves and to each other.
Some Americans who think the grass is greener on the other side in Canada with respect to healthcare need to remember that Canadians take better care of themselves than average Americans. Another savings in healthcare is from Canada negotiating a better prescription meds prices. Canada also rations and prioritizes health care delivery.
Americans need to be proactive about their health and wellness and to everything within their power to prevent diseases such as by immunizations and that will reduce waste to a great extent.
A major reason for our sky high national debt is the spending on health care which is significantly wasteful.
4
Everyone is ignoring the litigation factor. This is a very important factor in contributing to the increased costs. Yes very more xrays and tests are being done for protection just in case to avoid a problem in the future. This is non existent in the rest of the world and and in Europe where often the comparisons are made. In addition, the medical education in Europe is free., .while in the US the student has to pay and go into bigtime debt to complete medical school. THese are that facts that people do not mention but play a role in the high costs.
11
Another article highlighting what we already know. That health care costs are high without much to show for it by way of health. In contrast , other developed countries churn out better health outcomes at a relatively low cost. The main beneficiaries are the health insurance Co CEOs, drug industry and many middle men( Not to forget Governor Scott of Florida who has a conflict of interest in not working for the good of his people while also working for HCA) . Then there is fraud and abuse . All these are costing us a lot, I mean a lot, of money and we keep paying it year after year . So , instead of publications like this( there have been countless others like these by the way) telling us the dismal information, we need real action to curb costs and improve health . The authors are just that, authors. Who would be the policy makers ? Just like climate action is picking up speed, we the people must act NOW.
4
Why is Lasik surgery so much cheaper and more effective today than 10 years ago? Because people pay for it out of their pockets and so they are price sensitive. Bringing price sensitivity back into the equation is the only way to reduce health costs without harming quality or timeliness of services. Giving people unlimited benefits at public cost, as the Democratic candidates are all advocating, will only lead to higher costs and more waste, and a demand for Rube Goldberg solutions to those entirely foreseeable problems.
6
@Douglas
I agree in regards to Lasik surgery, but it is a vanity based operation in all but a few cases. I would challenge anyone to come up with a case of emergency Lasik. No shared healthcare option covers breast enhancement or Botox either. No one is endorsing "unlimited" healthcare by this definition.
5
@Marvin Good vision isn't health? I guess no need to reset broken bones if wearing a caste works instead?
@David Potential lasik patients have the option of corrective lenses i.e., eyeglasses. I had lasik and it was fine but I payed for it.
1
While highlighting "waste" as an issue is a good thing...I can't but recall though the old adage, one person's waste is another persons gain. Who truly benefits from increased administrative costs and thus "waste"? The hospitals or even the insurance companies. Until you make a market that is more competitive where consumers could choose a healthcare system that is cheaper (due to efficiencies in reducing waste) there is no incentive for hospitals or insurance companies to reduce the costs because those costs are just passed onto the consumer or business that supplements their insurance. Unfortunately, the waste has just become the standard price of doing business and hospitals and insurance companies will never reduce it unless there is some competitive advantage to doing so.
4
@Michael Consumer choice doesn't exist when consumers can't opt out and experience time pressure.
1
@Michael And exactly which government program have we found to be cheap and better that what came before? Public schools? VA hospitals? Military purchases of toilet seats and hammers? Government-sanctioned monopolies like PG&E, Comcast....?
I will never forget the Dean of my Grad school, the former Nixon Healthcare Price Freeze Czar, gloatingly say the US was headed toward spending 33% of our GDP on healthcare in 2030 up from the current 18%...twice the proportional amount as any other country. Yet the US is far from the healthiest country--we're toward the bottom of industrialized countries in outcomes--but this pillar of the industry was delighted by how rich the sector will continue to be!
5
The Swiss health care system spends about $7,000.year per person on healthcare - and the Swiss live 2-4 years longer than Americans. Much of the "extra" expense in the for profit factor built into the US system, 20-30 percent more than in the Swiss system. Saying this is "only" 10 percent of the problem is disingenuous - 10 percent is a lot. We also need to eliminate the fraud. Rick Scott, former FL governor and now senator, defraud Medicare of $1.7Billion while CEO of HCA. He was never punished and the Republicans elected governor and then senator, not to mention his $40million golden parachute leaving HCA. We need to fix this type of fraud and going with a universal health care funding system will help.
11
@ALUSNA Is there any kind of study that tries to determine whether the differential life expectancy in Switzerland is due to other factors, such as higher levels of morbid obesity and drug-related murders in the US? Just wondering.
1
Numerous other countries have better healthcare delivery systems, and better outcomes, than the US does. Why can't we learn from them - and begin to incorporate changes that work well in other first world countries?
10
human (a private insurance company that is an administrative cost imposed on healthcare for employers and especially medicare advantage) touts private insurance company health care "value based" profitability improvement programs as a beneficial common good ... ... not using "real world" data but scanning disparate academic studies and summarizing them ... i used to respect the writer of the article as an objective academic but as his writing has become more commercial his views seem to have embraced "for profit healthcare"
2
My observations with health care providers has not always been good. From a primary care doctor that was a hard sell drug saleswomen that would not take no for an answer to a prince of a doctor thatt had to close his practice because he had a minimalist approach and couldnt pay his bills. Billing is totaly obscure and you never are quite sure what you got or what you are paying for.
3
The source of most problems with the wildly overpriced, unregulated and inefficient is health care “system” is how it’s dominated by corporations. Just like banking, it’s not not about consumers, it’s a rigged game for profit by a big, lobbying, protectionistic industry that’s convinced us there’s no other way.
10
Everything you are proposing, with the exception of reducing administrative costs, which will make millions of people unemployed, can be attacked as an attempt to ration health care.
Unfortunately, there is no easy solution, but whatever we end up doing, let's NOT hire more bureaucrats.
They are the primary reason why this system is so expensive. The bureaucracy needs it to be that way to sustain itself.
3
The article mentions three areas of waste and concern:
1) Administrative costs -- which can be largely eliminated by a single payer system. Medicare admin costs are a tiny fraction of private plans.
2) High prices -- which can be largely eliminated by aggressive regulation and larger buying power of a consolidated single payer system.
3) Concern about quality of outcomes and lack of innovation -- which could be improved by a better sharing of data to allow better, innovative analyses. Cancer diagnostics as an example would be transformed by better data access. Of course, this would require a system structured so that the shared data could not be used to punish the afflicted. That would require a system with citizen health as the metric, not shareholder value -- like a single payer system.
10
This article assumes that existing medical practices are the best. There are reputable studies showing that Diabetes can be reversed thus major savings in treatment and future diseases costing more in life and treasure. Heart diseases can be reversed with diet and lifestyle changes for less than five thousand dollars versus open heart surgery at $20,000 and a lifetime on blood thinners.
Glaringly, what patients can do for themselves is left out. Fitness and diet can save billions, yet no attention is given to that option. Why? Perhaps because no one except the citizen cares; even the insurers who would profit would lose customers when patients find they are their best healer.
6
@Monty Brown When other people pay, it's easier to get heart surgery than change your lifestyle.
2
Administrative cost is not only a problem for American medicine, but also the major driver to the cost explosion in American higher education. For both health care and education, the "providers" are secondary to expanding the number of managers: Vice President for bed pan management, Dean for toner cartidges, for example.
4
I've spent several hours this week on the phone and emailing my insurance company about a claim they won't pay for $246.00 for labs. They paid over $1000.00 for the other bloodwork but won't pay for a B12 and a sed rate, hardly esoteric requests for the symptoms I was having at the time.
I have a PhD in a medical field so I'm informed about my care. The hours that I have spent, the staff at the doctor's office, the faxing, the phone calls are worth more than $250. I'm convinced that a certain number of claims are rejected for no other reason than to see if the insured will give up and pay it. (Ironically my insurance company has "health care" right there in the name).
Single payer makes sense. Why does an insurance CEO receive 21.5 million in compensation per year anyway?
22
Why does any CEO get paid millions?
Austin should take the needle of the for-profit medical insurers out of his arm. His erudite grifter's defense of and dependence on the industry vampires is a curable disease.
7
How about looking at in in reverse with a zero-based analysis. Instead of identifying waste, first figure out what is necessary for a good system, then cut everything else. Many other countries* have effective and far less wasteful systems. If America would just get over its America-is-always-right delusion and take some lessons from abroad it could do great things for its people. ("You can have my exorbitantly-priced health insurance when you pry it from my cold dead hands.")
*I recently spoke with visitors from the US who were natives of Uzbekistan. They were aghast at how American health care was managed. Uzbekistan!
13
@Stevenz Uzbekistan has 80% of the population of California which has a fraction over 10% of the population of our country. Not a reasonable comparison.
1
@Stevenz To suggest there's a single "right way" to run healthcare is to demonstrate a lack of understanding of how healthcare works, is created, is delivered, is consumed, is twisted by mandatory insurance and requirements by employers, or how Americans actually treat their bodies and minds.
If the patient's end of life wishes were followed, instead of being overruled by family members, much money could be saved. Studies have shown that the poor are more likely to flog the living dead if the state is picking up the tab. The rich know better and remove care when quality of life is gone.
Put the issue on the ballot.
8
In my experience, the most wasteful part of the U.S. health care system is the time that patients have to spend dealing with insurance companies and medical bureaucracy in general. I have yet to see a study that properly accounts for this.
We have long recognized that physical pollution from a mine or factory comes at a cost. A study of U.S. industry would not be complete without a mention of environmental impact statements and the cost of complying with environmental best practices. And, of course, we know that physical pollution can be measured and addressed. Lawyers have actually done some good here.
Why should the mental pollution from a health care business be treated any differently?
11
Medicare for all is not the solution, it eliminates preauthorization thus cutting administration but has few mechanisms to monitor efficacy of spending. I think a national catastrophic insurance plan for health, covering all costs over a set amount (50K?) that was part of payroll tax would reduce insurance costs for regular maintenance and every day problems, then mandate all insurance covers what Medicare covers if you want to insure in the marketplace and let the market take over for the routine stuff. As to catastrophic, limit the number of place that can do real high end procedures and drive outcomes with QA holdbacks like we do currently with Medicare.
In essence you insure the public and medical insurance companies against outliers and spread the risk among everyone. Can also tax private insurance companies if costs rise above a set fee, much like a luxury tax, if they want to pay CEO 100M, treat them like a sport franchise and make them pay for their excesses. The costs can be indexed to er insurer, thus not penalizing smaller more innovative companies.
1
@Bob Healthcare is a finite resource and will always be rationed in some way. With MFA it will be rationed by access - long wait times, doctors working much fewer hours. In Norway, for example, they limit the operating room time for surgeons so they have to pick and choose who to operate on next. It WILL be rationed under MFA.
3
@Sarah99 OR time is already "rationed" in the US, although few would say so in as many words. In most hospitals in the US, surgeons have dedicated OR time, usually from one morning or day per week to several days per week depending on the tenure of the surgeon, volume of cases, and availability of OR staff.
In some rural areas, there are either not enough OR staff or not enough staff to safely care for patients after surgery. So patients have to travel to nearby cities for procedures that may have previously been offered at a local hospital (hernia, gallbladder, other general, ortho, eye procedures etc.)
Many factors influence when a patient will be put on a surgery schedule. We may not think of it as rationing or limiting but not having adequate facilities or staff is a factor in how quickly we receive care.
8
@Sarah99
Its already rationed NOW, its just that we've chosen to ration it differently than other countries.
"there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom." - stated by Friedrich Hayek, libertarian economist. Private health insurers already follow what Medicare dictates anyways but with slight differences in execution and at greater cost. Eliminate administrative complexity of fragmented health care financing and delivery in the interest of freeing individuals and businesses from the worry of being able to afford health care services, especially in those moments when we're most vulnerable.
2
Almost nothing about our current system is worth preserving. The only people who advocate for the current system are those that profit from it.
So there you have it. Reduce the profit motive. Create a public option and force private insurers to compete with it. They only way they'll be able to compete is to be lean and efficient. And if they can't compete they'll go out of business. And not a single American will shed a tear when a bloated, antiquated HMO or insurance company collapses.
13
My youngest was finishing his MS in England this summer. Half the cost and shorter in time. He held health insurance through his school.
Rock climbing in Spain with the school's outdoors club, a rock hand grip broke and he fell and broke his leg.
The rescue crew had to stretcher him out of somewhat rough terrain and ambulance him to the local hospital.
Total cost out of pocket was about $US 130.
His first follow up visit when he returned to the US cost more and it cost $15 to get a copy of the x-ray that doctor took.
There is something SERIOUSLY WRONG with the US health care system.
13
@cynicalskeptic yes but the care was provided by the countries he was in, so that part of the cost is hidden. Out of pocket costs are not an indicator of great care, just more government subsidy. My guess is most of the costs was Pharma, which is massively cheaper overseas, just like the Congress and their lobbyists like it.
2
How about requiring that doctors working for institutions, such as hospital owned practices, be put on salaries to receive government reimbursement, rather than working on a fee for service basis, which provides an incentive for waste. An incentive could be provided for some doctors by cancelling their student debt of providing free medical education on condition that they work on a salaried basis.
2
@RG it’s not doctors salaries, it’s administration, including the C-suite. You may be surprised to find out that the affordable care act mandates that physicians cannot own hospitals and that most CEOs of hospitals are not physicians but are in fact MBAs making several millions per year. Docs are the ones who do the work and we are not pulling in 7 figure salaries doing clinical work. The MBAs are overpaid and a huge administrative cost in my opinion. Time to let docs own hospitals again and cut the non essential administrative fat.
11
@RG
Your idea would virtually guarantee that the number of smart young people going into medicine would plummet. Who the heck wants to go through all that education to be treated like someone working at the post office?
4
@vbering They should be paid for their education and time. The problem is some in private practice and most that are on a hospital staff order needless procedures and tests. I've been in several situations where tests were ordered that I didnt need or the doctor wanted to perform an unnecessary surgery.
I was being discharged after an overnight stay and there were 5 doctors standing around while an aide took my blood pressure. They wondered why it was up. Because of them. Then another person came in to tell me that my co-pay was $800. I have private ins. and Medicare. I paid it, but found out later I only owed $275. I kept checking my bill online. When I called their people told me "I'm sure we'll refund it if you don't owe" They didn't. I had to fight with the hospital 6 months to get my $525 returned. While I was waiting to be reimbursed, I saw a different doctor in their practice who said I owed $55 for an office visit. Since they owed me I didn't immediately pay it, but they turned me over to a collection agency after 2 billings. I gave up and paid it while waiting for my $525 to be reimbursed.
They are still writing me, emailing me "come in for "fill in the blank" tests. I won't. No matter what I need, I won't go to any physician associated with them.
This is my actual experience, not just what I've heard.
Tell me there's not something wrong with this system.
10
As somebody that works in the fraud mitigation business, this statement drives me crazy, "More could be spent on reducing it, but there’s an obvious drawback if it costs more than a dollar to save a dollar in fraud."
Spend more than a dollar to save a dollar in fraud??? Give me a break. Just think of what could be done to mitigate fraud if a smart group of people were provided $1 billion heck make it $10 billion (of the fraud losses) to tackle the issue. We lose $50-$100 billion dollars per year in medicare/medicaid and income tax fraud. This does not even include income tax evasion (Look at our glorious king making the rules and cutting IRS budgets. The folks making the rules are the people that need to be investigated the most). These fraud losses come right out of Joe taxpayer's pocket. This is a losing battle. The corruption starts at the top. Total power corrupts totally.
As I have stated numerous times to senior leadership, the fraudsters spend a lot more time, resources, and money trying to defraud your institution that you are doing to defend the institution.
9
Ah...the "waste, fraud and abuse" solution, a phony claim made for every problem from US military to housing to health care. The "magical" solution that never delivers.
Suffice that the better health care systems in Europe cost 50% less, provide 100% care for 100% of the people and get 10% better results.
How do the do it?
Public health for everyone and elimination of insurance industry run health care.
Insurance companies Overhead and Profit are a 40% of US's additional costs and none of that wasted 40% pays for health care just for big salaries, fabulous real estate investments and thousands of clerks denying payment for health care.
Another 5% is the cost that insurance industry imposes on actual health care providers who have to hire people to negotiate with insurance clerks to provide medical care to patients.
It's really that simple.
11
@EaglesPDX
Our health care system used to be NOT FOR PROFIT.
This changed under Nixon in 1973 - as a favor to campaign contributor Kaiser - when health care providers were allowed to make a profit. This was the beginning of the vast changes we have seen.
7
Fraud is not being addresses because it costs too much.
It could be eliminated by taking the current billing system out of the hands of greedy hospitals, healthcare systems, and yes some providers as well.
3
@Dr. Fraud is not being addressed because it is the government and it's "other peoples' money." Do you think the typical government worker cares about fraud?
They don't - I have reported known cases of SS Disability Fraud and they have never ever gone anywhere.
One man's waste is another man's revenue. Many hospitals and doctors have such high costs, that if they don't make this money they couldn't continue. Every time we try to cut costs, they have to go out and find another way to bring in the money so they can stay in business.
2
@Jonathan it’s not doctors salaries, it’s administrative costs. Doctors salaries have remained stagnant for several years while healthcare CEOs make millions. This country is in serious jeopardy as the brightest and the best no longer have any interest in medicine as there is little incentive to the additional decade of training beyond college and the hundreds of thousands of dollars incurred through tuition (300k) and low salaries while in residency and fellowship (less than minimum wage).
5
@Concerned Citizen, you forgot about the accrued interest that is deferred for several years of training so it’s significantly more than 300,000$ by the time a trainee walks into the first job. There are plenty of docs in academic positions who are not making anywhere near $250k annually or even over $200k. Likewise, not that long ago, I was paid $52k as a resident annually in a high COL urban area, and taking home about $40k after taxes etc. Residents are capped at 80hrs of work per week (though plenty of surgical trainees are working more), which put me around $10 per hour, which is less than minimum wage in plenty of cities and states in this country. By the way, I was making $10 per hour to keep sick people alive.
3
The Upshot ought to report extensively on just what constitutes 'innovation' in healthcare. Is it just the new-fangled? Can it be weighted by health outcome value of the innovation? Or improvement over existing therapies? Surely someone is getting busy on this. We need to thoroughly investigate the contributions of the National Institutes of Health to determine if we get more bang for the innovation buck there. We can fund NIH far more if true.
Let's take it a few steps further. European and Japanese drug companies most assuredly innovate. We need to know more about this.
Innovation is fast becoming one of those terms like small government or freedom that seems like it ought to be good but ultimately is too vague and without context.
2
Only way to reduce waste is Medicare4All. Lowers administrative overhead which has zero clinical benefit; utilizes best evidence and epidemiology to guide treatment thius reducing misguided care; eliminates costly acute uninsured visits to ER with mandated unpaid hospital care that shifts cost to insured.
Arranging the chairs on the Titanic is the for profit insurance industry fix.
The real problem: How do we get to universal coverage ?
12
What you call waste is providing jobs for thousands of people. Pushing paper and denying health claims is a legitimate function in American society. Not very fulfilling, but it does put food on the table.
If we were serious about making health care more efficient, we would simply adopt the Kaiser model. Good basic health care at a modest price. But the monopolistic forces that control our congress will not allow that to happen...
3
@Psyfly John, to say that "Pushing paper and denying health claims is a legitimate function in American society" is like saying "deliberately pushing people toward greater illness and medical debt is a legitimate function." In fact, this is true, but it shouldn't be. Is it legitimate to make obscene profits on other people's disease? Unfortunately, in this country it is, and we need to change that. That is why a single-payer system (Medicare for All) is the only solution, because halfway measures like allowing private insurance with a public option perpetuate the profit and the waste described in this article.
5
@Psyfly John
Kaiser no longer follows the model created by Henry Kaiser. The Kaiser health care system is run by and for the benefit of the Permanente Foundation -- the physicians. The healthcare machine in the USA has erected walls and holds us hostage. The simplest way to control costs is "direct pay" by patients. If we have to live with "third party" payers (insurers, Medicare) let's open the doors to competition across national borders. All payers, including Medicare/Medicaid, should allow patients to spend the money in other countries. Same for medicine. No national borders.
2
@Psyfly John -- It's not legitimate if it results in costs in excess of its benefits, and in this case it does. It may be a common function but so is crime. It doesn't pay.
1
I’m not sure that any of these people writing about this or the people that are in the healthcare industry really understand the waste of time and money that is promoted every day by the same insurance companies and even sometimes doctors. Otherwise why would an insurance company deny an MRI for instance and say go get an X-ray first? If the injury is concurrent with that kind of exam why waste the money not to mention the patients time and health costs? The insurance company ends up paying for both exams, even if the more expensive test is the one the patient needs. Then if the test is denied the patient ends up paying the contracted amount from the insurance company instead of a reduced cost because they don’t use the insurance!? By the way NO HOSPITAL WILL ALLOW ANYONE WHO IS INSURED TO PAY THE CASH PRICE!!! If you have insurance you have to use it, bottom line insurance companies are being run by K Street and anyone who does not understand this is sadly misinformed.. we are consumers not patients.
10
@Elena -- When I returned to the US and went to find a doctor (my previous one had retired) I didn't have health insurance yet. I was told (by Aurora Health Care) I couldn't see a doctor if I didn't have insurance, even if I wanted to pay cash which I was prepared to do. What a travesty. K Street indeed.
3
@Stevenz docs are not happy working in this system either and many primary care physicians are turning to direct primary care models. I would recommend that you utilize them. Docs and patients both benefit.
2
@Elena You are incorrectly assuming the cash price is lower than the contracted rate but actually the uninsured are charged the highest price (the number before the contractual adjustment given to the insurance company.)
The NRA shut down all gun related research.
The JAMA 'study' is thus far following this lead.
Allow me to suggest "I don't know" is a favorite dodge of those in power to keeping the status quo.
Should have a quota on the number of times this dodge is employed in doing nothing? Of course not.
Thoughts and prayers anyone?
One big problem, among others, is the strict heirarchal system. Lower level workers in all areas can see where things could be improved but they are not encouraged or allowed to speak out. There may be nice sounding policy but those who speak out will be punished. The medical system is a total top-down design that can't, doesn't want, to see the details.
4
Call it what it is: MEDICAL INDUSTRIAL COMPLEX. Everyone is looking to profit from disease, prevention, hospital care, equipment, pharmaceuticals and of course administration. My suggestion: cut out the middle-market as much as feasible. get rid of antiquated physician control (example--there is no need for anesthesia care team where physician anesthesiologists sit in the coffee room all day, while "supervising" perfectly capable nurse anesthesiologists). rethink electronic medical records to make them more useful and less expensive and above all cut the waste.
4
@Annie Chon, docs don’t need supervision due to extensive training. The better solution is to get rid of the fat above and below. Nurse anesthetists were designed to be physician extenders but physicians can function perfectly well without them.
2
@Annie Chon you mean the anesthesiologists who have to manage 3-5 rooms at a time to make sure those crna’s don’t mess up? The crna’s who have a fraction of the training and experience walking out of school than a resident? You can have a crna manage your entire care. I’ll take the physician, thanks.
2
For the consumer, there is also the huge stress involved every time we interact with the healthcare bureaucracy. Will my test/doctor's visit be covered, why is this bill so high, who do I call for pre-approval, and on and one. I recently spent hours on the phone with IU Health, arguing about 10-month-old bills I didn't owe. The response "The computer says you owe." Finally, I gave up and paid the nearly $500. A few weeks later, I got a full refund of that payment in the mail. If that isn't inefficiency, I don't know what is.
21
@Kathleen Mills it seems like a cliche to talk about how stressful this is for consumers, and how that in and of itself is leading to worse outcomes, avoidance of care, etc. and yet, this simple fact is rarely addressed in pieces like this.
13
Everyone living in first world countries outside USA says “ thank God I don’t live there.” My total hospital cost for my quadruple bypass was $35 ( for the TV I hired )
14
@roger -- Same here. But Americans hate the idea. It somehow takes away their "freedom." Crikey.
5
BERNIE 2020.
8
Because single-payer health care is communism.
Naughty, naughty.
2
Last month a simple drug screen medication -a pee in the cup test cost more than 1100. My out of pocket expense- 750+. Im fighting it... ridiculous
5
One statement stands out: "Moving to a single-payer system ... would largely eliminate the vast administrative complexity required by attending to the payment and reporting requirements of various private payers and public programs. But doing so would run up against powerful stakeholders whose incomes derive from the status quo."
In other words, the health insurance industry doesn't add value ... it just sucks the life out of the system like a parasite.
The solution:
(1) single payer healthcare;
(2) no kickbacks to doctors for prescribing tests and drugs;
(3) rewarding doctors for keeping people healthy.
Some years ago, when I had great insurance through my employer, I had prostate cancer. My doctor recommended proton beam therapy. He also ordered test after test after test, and performed several experimental remedies (green laser therapy, for one) that didn't work. It was only later that I learned that proton beam therapy had already been discouraged as a treatment for prostate cancer, and that doctors routinely were rewarded for prescribing tests.
13
@Adrian Maaskant Another solution, one that could be done within the existing solution, would be to allow insurance rates to be set based on the health of the person. Provides a clear incentive for #3 (keeping people healthy) and we can ensure that the discount is moderate (25% cheaper if you have good BMI; 25% more expensive if you have unhealthy indicators).
Price difference is moderate, but enough to incentivize good behavior.
1
These numbers are all apples & oranges to me. What i do know with just quick math is, i have spent more money on healthcare than i have for anything else in life except food.
Yes, easily $250,000 and thats not all of it. Thats simply in Insurance premiums & deductables. Furthermore not including dental work which probably adds tens of thousands more [& not including teen-age braces].
In that number i'm not including my 2 surgeries- one a simple hernia in the 70's, the other a more complicated one which was a failure for which i am still suffering.
It also doesnt include Chiropractic. Chiropractors eased pain that led to a return to normal. Actually fixed a problem !!
Visits to a M.D resulted in........ a bill & a new prescription.
In all the discussion about Medical too little is discussing quality of care- IT'S AWFUL !!!
We have got to stop being bullied by Doctors !!
Ask them WHY you they are prescribing what they are. Make THEM tell you the side-effects and demand to know the price of service BEFORE you go in !
WE have to stop accepting status quo!
5
@jlyoung11
........... and this morning I was awakened by a text @ 5:30 a.m. from my local Doctor's office that I owe $28 !!
Yes, really. I wouldn't even TRY to make that up !!
3
@jlyoung11
Just avoid doctors. You'll be healthier and wealthier for it.
That we have a health system is news to me. There's a real failure in our country to learn from the efficiencies of countries that do have a system. We've become so inefficient that individuals go for surgical procedures in India, and have their teeth cleaned in Poland.
One can only admire the blame game between doctors, insurers, administrators and patients, too (for whom consumer protections are few and far between). The bills produced by the medical professions are clearly marked up and accepted de facto by the insurers, and patients end up paying outrageous fees.
Sometimes it's even difficult to categorize the type of fraud one is enduring: convoluted charges on a string of bills, and trumped up charges for services barely rendered. These bills are going not just to Medicare, but to individual patients. Frau contributes a fair amount to our waste.
We know the President promised us the best health care system ever. Well, the politicians at least have a satisfactory system working for them.
Where is the Greta Thunberg of healthcare waste to show outrage at our ridiculous inaction?
4
Best health care strategy? Don't get sick in America...
5
Direct quote from the JAMA article:
"The administrative complexity category was associated with the greatest contribution to waste, yet there were no generalizable studies that had targeted administrative complexity as a source for waste reduction."
They reported as administrative complexity only "billing and coding waste" and "physician time spent on quality measures" which they calculate at $265.6 billion, when actually recoverable administrative waste is closer to $500 billion (Himmelstein and Woolhandler).
Yet the authors did not include this "greatest contribution to waste" - administrative excesses - in their calculations of recoverable waste, passing it off as "not applicable."
The single payer model of Medicare for All would recapture this half a trillion dollars in administrative waste, and yet they disregard it. That is far more than the $191 billion in savings that the authors propose by multiple small tweaks to our dysfunctional system.
It is understandable how the authors from Humana would want to protect their industry, but it is difficult to understand why the editors of JAMA would widely distribute this article (for free!) that seems to be designed to counter the call for replacing the dysfunctional private insurance industry and the burden it places on the delivery system with an efficient system of Single Payer Medicare for All.
If you are going to ferret out waste, shouldn't you attack the biggest heap?
5
@Don McCanne You hit the nail on the head. Why would the industry want changes? They wouldn't.
2
The vast majority of developed countries around the globe achieve better health outcomes with lower levels of spending than we do, so are Americans stupid, lazy, or both? Enough with the hand-wringing about how hard the problem is. Pick a solution set that works well in a country that closely resembles the U.S. and then let's get on with the process of emulating it here. The reason this straight-forward approach hasn't already been proposed or implemented is the entrenched special interests that clearly benefit from all the fraud, waste, and abuse. After all, my overpriced surgery is someone else's shiny new BMW.
8
Make health insurance companies non for profit , like Germany.
Stop making profit , for not treating people who need healthcare.
6
Most of us physicians are shocked, SHOCKED to hear that administrative waste comprises a significant portion of the waste in our incredibly wasteful healthcare system. And drug prices! Whoever would have thought. And all these years we thought it was those greedy doctors.
7
@Mary May if only people knew that our salaries had been stagnant for several years while the c-suite profits off the work we do and that the outcomes worsen and worsen, while docs die of suicide daily, Med school tuition approaches half a million dollars and people who didn’t go to medical school are given the privilege of practicing medicine poorly.
2
I haven't touched the New York Times in years, and I consider my digital subscription to be value added to me - even if the production cost of one more digital paper is too small to calculate. Someday soon I hope never to touch my car because a self-driving taxi will be on call for a fraction of the cost of owning my own car.
Better yet, I would like not to touch or be touched by a doctor - except inn the rare medical emergency. The health system is broken because the non-profit health system are flush with money and have constructed offices and specialized buildings all over; staffed with well compensated and highly trained professionals. There are also bonuses for those that work fast and see more patients.
In sum, we have a system that revolves around care professionals and technology. We need a system that revolves around patient health that includes the following:
1. Central digital medical records maintained by insurance company, reviewed for best practices with artificial intelligence, and available to all caregivers.
2. Donate blood and get free blood tests.
3. Ninety percent of primary care should be supplied by nurse practitioners making house calls, who can renew all prescriptions, evaluate real living environments, nutrition, and activity; use immediate specialized internet consultations, and make referrals for high tech tests only when necessary.
4. Free prescription drugs for all.
5. Donate organs and get free health care for a year (or free burial).
3
The CMO of Humana is conflicted - whatever is said must be interpreted as for the benefit of the For-profit corporation, his employer. JAMA and the Times should know that - his opinion, whatever it may be, should be disregarded.
1
The REAL waste is in poor lifestyle, diet, prevention, AND excessive ‘care’ plus outrageous pharma prices. Obviously a JAMA study would fault admin costs [which are high] but ignore the over spend on care. Doctors popping in for a ‘all ok’ and billing a visit fee. Too many tests, which lead only to greater worry and no better care/ outcomes.
1
Most Americans don't realize that our healthcare system is not about doctors, nurses and patients, it's about profits. Healthcare businesses even when called "not-for-profit" are a profitable industry like Boeing. Goldman Sachs or Merck. The profits go to the non-healthcare participants like top administrators, insurance companies, suppliers, equipment vendors, consultants, contractors, lenders, real estate developers, etc. Income inequality is as apparent in healthcare with staff paid marginal incomes while CEO's make large salaries with golden parachutes.
Affordable healthcare will never happen in the US as long Wall Street is the business model. Of course the Wall Street model has infected everything in the US including education, housing, food, and transportation until large numbers of our population are having serious economic difficulties that are now bleeding into our cancerous politics by demiguoges.
11
Couldn’t have said this better myself. Thank you. Not all things should be treated as commodities. Health care is one of them. But here we are.
1
@Maine Islands it’s going to be dire straits for the patient when the number of health care executives outnumber the physicians (and we are not far away from that). Guess those CFOs will have to learn how to put in epidurals. Why would anyone consider Med school when it’s easier and cheaper to be a health care exec?
2
I have been using an anti fungal medication. The prescription cost $65 per ounce, mostly paid by insurance. The same cream is available from CVS over the counter for $12 per ounce, and from Amazon at $1.40 per ounce!!
5
@Mort Sternheim Yes. I went to the doctor for a medical condition. The first thing she did was schedule surgery. Before the surgery I was admitted for a different condition, same hospital group. During routine testing It turned out I had a simple bacterial infection. A dose of an antiobiotic cured it. Hasn't come back. Imagine how much more the surgery would have brought in. I mentioned this physician earlier. She kept calling me to come in for other things; I asked them to quit contacting me; I wouldn't go to their hospital or practice again. It just took me awhile to come to the realization that they're not always looking out for your best interests and you need to ask questions in advance when you can instead of blindly doing what they tell you. I used to do that.
I went to a different clinic for a routine visit. They asked if I had to hold onto walls to avoid falling?? I came in by myself. No walker, no canes. I go up and down stairs, move furniture, and climb ladders. I didn't return to them either.
I finally found a doctor in private practice that I really like, During my first visit he aske what tests I'd recently taken, asked about my alcohol intake (none) and smoking and vaping (I don't) and other questions. He was comprehensive and thorough without searching for something to treat me for. He was concerned that I not get stuck with unnecessary uncovered costs. Fortunately he is part of my network.
I hope he doesn't retire.
2
Another source of waste not quantified...advertising by doctors' groups, hospitals, "health insurers", drug manufacturers, et al. It's infuriating to contemplate that some portion of our absurdly high costs are due to advertising...and then, adding insult to injury, having to endure listening the barrage of "friendly, helpful advice".
4
The biggest argument against Medicare for All is that no one can explain to us how we migrate to it from our current systems.
2
"William Shrank, a physician who is chief medical officer of the health insurer Humana and the lead author of the study,"
Sounds like the lead author is compromised..working for one of the largest Health Insurance companies. Would he conclude that a Single Payer system is the answer?
I doubt it.
2
$760 billion is comparable to spending on Medicare? It's a bit over the estimated total spending on Medicare in Fiscal Year 2019. See the Federal Budget History Files, table 3.2, page 70.
That amount alone is about 3/4s of what would be saved by adopting one of the more expensive national health care plans in the industrialized democracies, Switzerland. Though the less expensive plans would save about twice that much.
And those don't have to be single payer to achieve those savings.
Yes, high drug prices motivate investment and innovation, but they also kill people. When do we decide we can have a bit less innovation because that innovation is not saving as many lives as are being lost to high prices.
When people can't even afford insulin it's time to cry "No More".
No, single payer is not the only way, but a system that guarantees top quality low cost health care for every single person in this country is the only way, which ever way that may be.
tinyurl.com/sickroundtheworld
This is what this study is trying to convince us to believe:
A study funded and presented by the billionaire-owned for-profit insurance, pharma, and healthcare industries conclude that they would like to complicate and already overly-complicated bureaucratic system so they can take more profits for themselves while pretending that it is a solution to the fact that American are forced to get healthcare by having private insurance, which is tied to employment, that routinely denies coverage, considers a headache I had at age 6 a pre-existing condition, and keeps charging higher and higher rates while increasing annual deductibles before my healthcare can even be used.
Okay. Got it.
Furthermore, they want the onus for reducing healthcare costs to placed on patients and doctors, thereby maintaining the status quo where outrageous profits flow to the billionaire CEOs, shareholders and Boards of those industries.
Yeah. We get it.
The billionaires further conclude that a socialized single-payer system (like Medicare and Social Security) is not the answer, even though EVERY other advanced nation (and many third worlds) on planet earth all have socialized single-payer healthcare that citizens love and is vastly vastly less wasteful and more affordable than in America... but never-you-mind. Free market. Capitalists. Blah, blah, blah. Propaganda...
No thanks "healthcare insurance industry." We don't want to keep making you billionaires at our expense.
4
Once talked with a friend who was a medical department head in a US hospital. I remember very well him telling me he spends most of his time (80-90%) dealing wth the health care administrators, lawyers and insurers, and wishing he could spend much more time doing patient care. This is waste.
4
Another term for "administrative costs" in the healthcare system: "jobs"—mostly for regular people doing things like trying to convince insurance companies to pay for treatment. And the proper term for another big chunk of waste is "profits", primarily for insurance and drug companies. I don't see how we can tackle the first until we tackle the second.
A few weeks ago I was waiting in the lobby of my family doctor's office, and could overhear (though I tried not to) one of the non-medical staff on the phone. It soon became clear she was talking to an insurance company rep. I could hear her patiently explaining the same thing over and over, eventually raising her voice slightly to say approximately "he's having an acute attack of APPENDICITIS. He NEEDS to be admitted to the hospital! The doctor has already DONE the diagnostics!!"
I imagine the money spent for this employee's time (and the time of the person at the other end of the line) is the kind of waste this study's authors have in mind. But we will need people like this dedicated woman to keep doing their jobs as long as non-medical folks with a financial incentive to limit care are in charge of deciding what healthcare we can get.
7
The healthcare system is totally broken. Costs and waste are a result and no one looks for solutions, because of conflicts of interest. Humana is part of the prblem. Their part in this study won’t change that.
2
What is left out of the article, but which is hard to measure, are the hidden costs to the patients and/or their caregivers. People complain about countless hours on the phone trying to talk to "the right person" at some insurance provider concerning a mix-up in billing or an explanation. Usually that "right person" is just a gatekeeper whose job it is to prevent any complaints or questions from going forward.
The patient/caregiver has to give up time, usually during a work day, to track down the answers to questions. More than likely that usually occurs at work. The result is that time is spent doing something that the boss is not paying for. In my experience, it changes the mood of the questioner, causing him/her to become distracted from their work responsibility.
Productivity goes down, mistakes are made, time is wasted because those EOBs (explanation of benefits) are hard to decipher.
Add this to the waste in the U.S. health system!
3
Shocked there is no mention of direct care or direct primary care in this article, particularly as a solution to cutting out admin costs (direct care doesn't bill insurance), pricing failure (transparent, posted prices & wholesale prescription pricing), and low rate of preventive care (primary care doctor becomes 24/7 contact point for all care needs). Most direct care memberships cost $50-100/month, so very affordable to have a doctor on-call whenever you need them.
2
@Christopher yes, docs and patients are happier for it. Many of us went to Med school believing that our clinical careers would fall into this model.
2
I've been to plenty of hospitals in the US and overseas. The US hospital rooms are luxury hotel room compared to the basic dorm rooms or barracks found elsewhere. Yeah, I'd rather stay in a Hilton than dorm, but not at $1,000 more per night. It's an illustration of the extent to which hospitals in America compete on comfort and luxury (probably viewed as stand-ins for quality) instead of on price.
2
@SAO ,
If the hospital rooms I've seen in the US could be compared to the Hilton, I would hate to see the accommodations in the rest of the world.
2
The biggest waste is overhead which include admin costs. Here I go to the doctor to a plush office with leather couches, tv, fountains , receptionists, a nurse for every part of the body, and of course insurance billing specialists none of which contribute to my health for $200 copay after insurance pays $300. In Mexico I go to a very capable doctor for the same thing but just a tiny windowless office with the necessary equipment but nothing else and nobody else, just the doctor. Same results, $25 cash.
My mother had both hips replaced in Mexico by a surgeon who does 12 of these a week for $5000 each cash. German implants, small clinic, private room, all medications , anesthesiologist, 2 nurses per room, ride home in ambulance and 2 post op visits at HOME by the surgeon himself. All for $5000 cash.
Don’t try this at home. My mother is doing great by the way 5 years later. She just turned a healthy 88.
6
@Jorge Romero My experience in trying to see an ophamologist for a possibly serious eye problem was just like that first description. I was amazed at the size of the building, the number of people doing things at different stands, it was like an assembly line. And then to go thru all the testing that is needed for new eyeglasses, which they also sell. Took a long time to finally see the ophamologist who spent almost no time with me and sent me on my way with no real explanation for what had happened. No wonder people try to google the medical problems.
1
Of course, it's not necessary for us to reinvent the wheel here. All we have to do is look at other European countries who have managed to hold down costs in the areas cited in this article.
I'm always amazed how in the US, once we have defined the problem we have to have some monumental debate about how to correct it. The Dems say Medicare for All. The GOP says have more market incentives. Why do we have to go on one big experiment with either one? Why not just copy what works within other countries? It's like having open source technology.
9
US physicians make much more than the average physician in other developed countries, yet the AMA journal article failed to address this major source of our extraordinarily high health care costs. This strikes me as self-serving and makes me question the veracity of the whole article.
5
@Keitr US physicians also pay huge amounts of money for their education. Much more so than their counterparts in other countries. This is a fact I often find omitted from many articles comparing salaries of physicians globally. I personally will be 75 by the time my student loans are paid off. By then I will have paid nearly half a million dollars. And I’m one of the lucky ones. I went to a state school and consolidated and locked in a low interest-rate in 2004.
7
@Keitr Do you actually have any data or numbers to support this claim? Physician spending as a whole is responsible for something like 15-20% of HC costs and has not changed much over time. Do you realize the disparity in training, costs, education level, and time to earnings between here and other countries?
This strikes me as someone with an axe to grind and makes me question the veracity of the claim.
@Peter Physicians are not all paid at the same rate, which explains why there are so many specialists and not enough primary care doctors. I don't know how some primary care doctors make enough to pay their office expenses and still have enough to live on. Or if they can make it on insurance payments, they spend 10 minutes per patient. On the other hand, a surgeon in my town just bought a big shopping center.
2
My mother was the manager for private medical billing for a team of radiologists. The business expanded rapidly and took on many new medical practices at a cost for billing at 8-10% of the practices GROSS earnings of usually a million dollars a year. It was no wonder a team of radiologists decided to open their own billing company!
4
@Richard thanks for the tip!
Spending, even wasteful spending, is revenue to the firms providing the goods and services. So no, we can't agree.
1
Interesting how the most effective way to get rid of administrative waste, a Medicare-for-all system, is waved away so quickly.
We should also question the belief that high drug prices lead to innovation. With 40 of the top 45 drugs developed with government funding and then patents given away to pharmaceutical companies, one has to wonder if private drug companies do anything innovative at all.
11
Don't forget the high expense of the for-profit drug industry -- all the money that goes into advertising, sales teams, conventions, and perks for doctors. Imagine if in paying for medication, we paid only for the cost of the medication, not for all the fluff and profit.
9
As a patient, I can only say wonderful things about Medicare.
As a psychologist, I can say that health insurance companies are the biggest scammers on the planet. It costs me a tenth of my small income a year for billing and managing patient files due to the incredible time cost in managing multiple insurance companies and their endless layers of bureaucracy. FOR PROFIT INSURANCE COMPANIES EXIST ONLY FOR PROFIT!
Insurance companies pay their managers more than they will allow me to be paid despite 14 years of a college education and 35 years of practice. I made more money 30 years ago than I do now.
25
“High drug prices do motivate investment and innovation,” said Rachel Sachs, an associate professor of law at Washington University in St. Louis.
Innovation has been, historically, motivated by things other than "high prices", especially in medical sciences. To conflate the rationale of capital investment with that of scientific innovation deranges the philosophies animating both of these pursuits, and places any moral facet of scientific discovery in train to the profit/loss tenet pure business. Do we have a right to these advancements, because they were created? Or, are they a new commodity, strictly for purchase?
9
@moses
Very good questions. Thanks.
Go to single payer. Many of the workers in the health insurance industry will be hired by the government, which will need more employees to administer the new Medicare for All. The CEOs of the insurance companies can retire on the $Millions they’ve already bilked us out of. It’s not rocket science. Every other industrialized nation has figured it out.....
19
I believe I read within the past five years that CMS which administers original Medicare and Medicaid has a 2% administrative overhead. Medicare Advantage which is getting a real push now is administered by insurance companies with a cost of 6-8%. Corporate welfare at its best. Private health insurance has an even higher administrative cost.
14
There is one huge positive effect of the current system. It keeps the Postal Service afloat. Each week I get three or four multi-ounce mailings from my insurer notifying me that I have an absolute right to not understand the enclosed bills and statements in any of seventeen languages.
Underpinning everything is the necessity for the country to develope a consensus on what constitutes health care. Given that resources are finite, we must decide, for instance, how much should go for prophylactic measures and how much for therapeutic measures, how much should go for early childhood care and how much for elderly care.
In a society that currently had a sense of the desirability of communal compromise and less of a polarized sense of individual certainty, this could be accomplished, even if with difficulty. In 2019 America, where even vaccination and abortion have become defining political issues, the future looks dim for developing a consensus on what health care means, let alone how health care should occur, especially if publicly funded.
11
@Steve Fankuchen Just sign up to get those notices via email to save a lot of trees.
2
1) The U.S. has 329 million people. In comparison, Norway has 5 million, Denmark has 6M, Sweden has 10M, Belgium has 11M, Taiwan has 24M, Canada has 37M.
Combining these 6 countries, all with enviable healthcare, their population clocks in at 93 million people.
2) However, the U.S. is a spectacular generator of wealth. In theory, scaling this out to benefit 10x that of other countries is a non-issue for America - if we're basing this purely on the abundance of human ingenuity and capacity. One thing that we do not have on our side is a homogenous population.
3) Enviable healthcare countries are often extremely homogenous - also relatively healthy, but that's a topic onto itself. Canada, the most diverse, is 80% homogenous. The rest is closer to 90%, for instance, Taiwan is 95% Han Chinese.
Okay, so, lots of numbers. General takeaway -- America is an experiment. People like to take care of people who look like them. When they have to pay for people who do not look like them, they will politically mobilize against it.
Which leads me to think that efforts lead by sloganeering will run into limitations of human nature. The most effective politics in human history has been to dehumanize and mobilize against "those people" (however that's defined at the time).
Maybe the solution to the problem will be a technological magic bullet that reduces spending to the degree that it unifies people. Even then, I think some of the limitations will be all too human.
12
@Tessa
Tessa, an unusually perceptive comment!
I would only add that we are an "experiment" in a couple of ways.
For starters unlike other countries, we were created as a country by founding principles, largely expressed in the Declaration of Independence and the Constitution. We measure both our successes and failures by the degree to which we function according to those principles.
Second, unlike other countries (a number of dubiously functioning post-colonial countries in Asia and Africa notwithstanding), we have been multi-ethnic from Day One. Of course Blacks were slaves and the very diverse pre-Columbian peoples were ripped off, when not destroyed. Nonetheless, they were part of what made the United States, and even the founding European colonies had substantial (mostly religious) differences. And, of course, in the 19th century our diversity increased exponentially, even if not all newcomers were treated equally.
Thanks for adding substantively to the discussion. Such is rare.
7
@Tessa
Your analysis is correct, and applies equally to several other problems we face -- or rather don't really face, such as poverty and hunger. I am reluctant to encourage the inequality that comes from leaving these problems to the states, but it may be that the only other solution lies is to encourage that development.
2
Tessa,
Your points, especially on the resistance to providing broadly inclusive population based coverage has stymied any reconceptualizing of our health care system. We must note that the law passed under President Lyndon Johnson, Medicare does accomplish this. And it was hotly debated at its time of passage. Fast forward to today and the Trump immigration policy to have health insurance as a pre-condition.
America has from its inception struggled with its diversity (and its economy’s fundamental need for cheap labor to maximize profits) as evidenced in the hypocrisy of the Declaration of Independence and the Constitution’s “three fifths of all other Persons.” Those “other Persons” were slaves. This mentality of selective privilege continues and hurts all of us.
1
Other studies have shown overdiagnosis (diagnosing conditions than are borderline or are not proven, do not need or have an effective treatment, caused by side effects, major studies for minor problems) and overtreatment (treating for maximum results, giving ineffective or unproven therapies, choosing the most expensive option, treating conditions that heal themselves)
The drug and insurance industry are the largest lobbies spending over 2$ billion a year and employ 1/2 million unnecessary clerks and executives, many making $millions/year.
Other rich countries spend 40% less than the US and get equal or better results. We cn do much better with education and political will.
5
The non-profit CAQH has developed a range of software solutions that eliminate many of the costly duplicative administrative processes in healthcare. They also develop operating rules to enable more efficient electronic administrative transactions.
They do it by engaging a wide range of stakeholders, including health insurance companies, to focus on shared solutions (i.e., one size fits all) to shared problems.
This kind of creative, industry-wide approach results in tens of millions of dollars in savings each year, and reduces the administrative burden and aggravation for both providers and patients.
Even with our current fragmented healthcare payment model, there are ways available to reduce administrative costs - but we need to use them.
2
Want to reduce costs? There's no one silver bullet.
Single-payer will help a lot. Americans are stuck in jobs they don't like because of health insurance. This reduces entrepreneurship, and creates an unnecessary burden on small businesses and their employees (who pay a lot for substandard policies). It will hurt the insurance industry, but Henry Ford didn't help the buggy industry much.
Make medical school free for students willing to commit to becoming PCPs: GPs, internists, pediatricians, etc. Presently, our system incentivizes certain specialties over others, which skews our distribution of specialists in a non-optimal fashion.
Raise salaries for the same doctors as above. This will make these positions more attractive. PCPs earning 1/3-1/2 of what a radiologist makes it less likely for some to go into family medicine.
Develop goals and metrics for addressing widespread problems. We currently lose a quarter *trillion* dollars a year to diabetes alone. If we could reduce those costs by 30%, the quality of life for millions of people would be raised. This will require front line effort by PCPs. That money represents the full four-year medical education of 1 million medical students *every year*.
It's up to the politicians. Today's vested interests have their hands in the pockets of Congress. We need a grass roots effort to push these ideas. Fraud doesn't compare to the costs of preventable disease.
14
@Disillusioned
I'd vote for you!
Underpinning everything is the necessity for the country to develope a consensus on what constitutes health care. Given that resources are finite, we must decide, for instance, how much should go for prophylactic measures and how much for therapeutic measures, how much should go for early childhood care and how much for elderly care.
In a society that currently had a sense of the desirability of communal compromise and less of a polarized sense of individual certainty, this could be accomplished, even if with difficulty. In 2019 America, where even vaccination and abortion have become defining political issues, the future looks dim for developing a consensus on what health care means, let alone how health care should occur, especially if publicly funded.
There is one huge positive effect of the current system. It keeps the Postal Service afloat. Each week I get three or four multi-ounce mailings from my insurer notifying me that I have an absolute right to not understand the enclosed bills and statements in any of seventeen languages.
6
One of the biggest problems of our market-based system is that it is anything but. Markets require perfect information exchange (transparency) to operate efficiently.
Our healthcare system is mired in secrecy because someone is incentivized to keep it that way. That lack of transparency doesn’t allow the market to work.
I don’t know if single payer is the answer - but I sure would like to see some sunlight disinfect the swamp that exists today.
Patients and care workers deserve better. And corporations need not be considered the enemy. So many of their employees truly strive to create solutions that help improve outcomes.
12
The lead author of the study works for an insurance company. The means to save are already implemented by every other modern western nation through national care. Other nations pay a fraction of the cost with longer life expectancy. Americans pay more and die sooner. When will Americans learn what the rest of the civilized world already knows? Search "health care spending and life expectancy by country" for a graph to make comparisons. This illustration should be required every time this topic is discussed.
13
$700B/yr wasted on admin expenses, high prices, and poorly coordinated care. How much longer will voters tolerate such madness? How much longer can our economy absorb such wasteful spending?
14
@maqroll I hope they won't tolerate it forever, but they might. There are a lot of people out there like my sister, who firmly believes we have the best health care system in the world. What is her evidence? That Saudi princes and other fabulously wealthy people fly to the U.S. for treatment. (I may introduce her to the term "medical tourism", which mostly goes the other way.)
6
@dtm It probably IS true that the absolute best care in the world is that available in the US to the very wealthy (or very well-insured). But that's like saying all Italian cars are great because Ferrari and Lamborghini are Italian makes. They are, but most people are driving Fiats!
1
Yeah, yeah we need more studies even when there are plenty of proven(!) blueprints out there all around the world:
"Cliff notes for Single Payer health insurance"!
1. Comprehensive Universal Coverage!
2. 30% Savings (typical) in Total Cost!
3. No "Pre-existing Conditions" ever!
4. Never a "Surprise Bill"! Zero “Medical Bankruptcies” !
5. One "Risk Pool": No opt-ins. No opt-outs. Never a gap!
6. One "Network": No in-and-out-of-network shenanigans!
7. You can keep your current doctor and have the Maximum Choice amongst doctors/hospitals!
8. No premiums, No deductibles, No co-pays!
9. A Lifetime of healthcare for a Lifetime of paying TAXES!
10. Peace of mind - priceless! If you are a “worrier”, you can still buy all the private “cadillac” insurance you want - as long as it is supplemental!
Why is Single Payer the most cost efficient way to pay for healthcare?
1. Using Maximum Negotiating Power to negotiate Lower Prices from the de-facto monopolies on the supply side of healthcare! Prices that are on par or at least in the same ballpark as in other developed countries.
2. Cutting out all the unnecessary middlemen and their expenses.
3. Minimum Administrative Overhead! One health insurance instead of myriads of “health plans” to deal with.
4. Maximum Efficiency of Large Numbers: Spreading the risks/costs over the Maximum amount of people = Everyone, over the Maximum amount of time = Lifetime!
5. Preventive care for Everyone! Earlier treatment = Less expensive!
40
How can America compete in a global economy when it spends double per person or about 18% of GDP on health care? Half of Americans don't even have a passport. If they did and travelled to France, Australia, Germany, Canada, they would find that people in those countries with universal health care have a better system that cost half the US and covers all.
America will continue to decline as the special interest control the economy. Special interest can rely on FOX news to spread the anti government anti universal health care scare propaganda.
26
The real harm to healthcare budgets is bad nutrition - sugar and flour and processed carbs. The ‘diabesty’ epidemic will cost us $500 billion/year soon. The corporate food lobby owns the FDA and Congress. Get rid of the bad carbs and sugar, the diseases go away without doctors, medicine, hospitals and the consequential waste, fraud and abuse. 50% of America is diabetic, pre-diabetic; add obesity, that’s 70%. That is bankrupting America. Worse than gouging - gorging.
15
@Jake
not just bad nutrition. there is also something called food deserts where people cant get fresh fruits and vegetables. I am lucky we have wegmans grocery stores which is far cheaper than whole foods. fresh fruits and vegetables are more expensive than processed foods.
also, we need someone to look at the effect the environment has on areas which have cancer clusters.
it is not all related to nutrition. now, round up and chlorpyfiros is being allowed to be sprayed.
also, alzheimers is becoming more prevalent because of an aging population.
2
The savings for bundling procedures and paying doctors a flat rate may come from less admin work rather than another mechanism relating to care and quality. I don't see this elucidated in the NYT summary. Do any commenters have insight?
1
One man waste is another man profit
4
Bernie! Please get well and steer us out of this nightmare. You have been saying this all your life and suggesting ways to get there.
This OpEd is a very poor substitute and it comes a little too late and the fact that the principal author works for Humana says be careful!
5
One question: isn’t it quite wasteful to reallocate taxes (in marketplace subsidies, Medicare advantage, and Medicaid managed care) to shareholders of for profit firms?
5
@Marian
I'm also not too happy about allocating taxes to hospitals with religious affiliation.
10
@Marian
Answer: No. Waste/efficincy lies in how the money is spent (treatments, prevention) and outcomes, not in who receives the payments.
@Marian
there are no more subsidies with ACA. and medicare advantage which is for seniors is taken out of our checks each month.
The real issue whether people support a single, publicly funded insurance pool that provides equal benefits to all. They payment side can be single payer like Canada or multi-payer like France. Medicare uses both systems. The benefits of publicly funded health insurance are manifold; creating the best attainable coverage for all residents with the smallest possible differences among individuals and groups, fairness of financial contributions, and cost reductions through increased efficiency. Publicly financed health insurance should include the principles of universality, accessibility, portability, and public, non-profit administration. We still have time to get it right.
15
@Keith
In all single-payer countries,
government regulates how much hospitals,
doctors, drug-makers and device-makers can
charge for their products & services.
Is the big problem that drug-makers over-charge?
No.
In the U.S. Hospitals & specialists account for the major share of our health care spending. more than double what we spend on drugs & devices.
Our single-payer plans do not call for govt to
regulate providers' prices.
Why?
Politicians know that
Americans don't want govt telling docs & hospitals what they can charge.
What about Medicare?
Cong decides what M-Care pays
& lobbyists have made sure that Medicare pays U.S. specialists & hospitals 2 to 3 X more than they would be paid in other countries
for the Same Procedure
This is why a Single-Payer Plan in the U.S. Cannot make healthcare Affordable for All.
We really need to study what Europe, Canada,
Israel, etc. have done to regulate doctors'
& hospitals' prices, while also reducing
over-treatment by insisting that they provide
care based on medical evidence.
Compared to other countries, U.S patients receive far more Unnecessary Surgeries &Meds.
Why?
We are the only nation that has turned healthcare into a for-profit enterprise.
& when medicine is a for-profit business,
over-treatment is v.profitable.
Most docs & hospitals Are Not Aware they're Over-Treating.
This is just what they have been taught in
our for-profit system: "MORE: is better- more surgeries, meds, tests, etc
A common base medical records system where each record traveled with the patient would save vast sums--and make choosing a different hospital or doctor as easy as choosing a different gas station. It would also make verification of overcharging and upgrading charges (where a splinter removal is billed as hand surgery). It would also identify use of best practices and also identify which practices are most effective--and which doctors and hospitals get the best results.
With common -- honest -- identification of problems, procedures and outcomes, based on common records and record-keeping (and portable records), consumers can make good choices--and so can hospitals as they seek to do a better job based on best practices.
3
@Mark Johnson
Nice idea in theory, but lots of difficulties putting into practice. For example, how do you pick the "best" system -- almost all systems are imperfect -- and will picking that system, likely from the software services built by the private sector, be influenced by lobbyists? Easily could see a motivation towards cronyism if there's one "winner". How do you migrate data and deal with legacy systems? Gigantic costs there -- who pays? What about training costs, IT upgrades? Etc., etc.
1
@Mark Johnson "A common base medical records system where each record traveled with the patient would save vast sums--and make choosing a different hospital or doctor as easy as choosing a different gas station."
No, it would not. I listened to that silly argument from health care IT people for more than 15 years. A portable medical record doesn't reduce the pay of the insurance company or hospital CEO. It doesn't change the contracts between insurers and care providers saying where you can go. Doesn't do a thing about surprise medical billing when your doctor turns out to be out-of-network. and higher cost, even though the hospital is in-network. It doesn't change the fact that private insurance payments to hospitals are negotiated, typically at 150% to 200% the Medicare rate. Etc.
4
@Io Lightning : President Obama's EMR was to reduce costs by the billions. It is still not functional and has cost billions.
3
So the biggest problem is admin.
And single payer would get rid of it.
But "interested parties" are against it.
So we must trust the interested parties
to reform their admin systems.
- says the man from one of them.
Blind spot indeed.
17
@David Burke
The waste pales in comparison to government waste of taxpayers money, i like it when you think the government is your friend, why were there no layoffs along the beltway during the Great Resession?
3
@David Burke The biggest problem is not administration. I am quoting from the study the JAMA study references for its $266 b estimate: Although administrative costs contribute to the high expenditures in the United States, they are not the primary reason for the health care spending gap. As economist Uwe Reinhardt and others candidly put it, “It’s the prices, stupid.”50 The United States pays more for care than other countries do—both for administrative services and for other components of health care. Doctors who over treat, or who have the market power to stay out-of-network and charge exorbitant fees, hospitals that price gouge, drug companies making 60% profits, all would rather you focus on administrative costs than the real issue of how care is delivered and priced.
1
Someone's waste is someone else's profits. Cutting "waste" reduces the profitability of parts of the health care system. The more that waste is cut, the more profit is cut.
It is that simple. Any chance of removing the profitability in health care? Fuggedaboutit!
7
@Brad the problem is much worse than you cite. Profit on the waste is almost cetainly only a very small part of the cost of the waste. Eliminating the waste not only eliminates a small amount of profit, but a much bigger amount of salaries and wages.
Let's all get rich on sick people. They are the best customers. They either pay up or die. They are highly motivated to give us all their money. Capitalism is a great system if you can kill a baby and feel no remorse.
11
I'm surprised that defensive medicine was not mentioned. It is often a stealth factor, since when a physician orders a test, he or she doesn't list "CYA" under "diagnosis" or "indication". In a judgement call situation, I'm sure many physicians would be tempted to order the expensive test rather than risk their career and livelihood. In Obstetrics, the doctor is never blamed for doing the expensive, resource-intensive cesarean section, only for not doing it.
7
The last time I had a mammogram, the technician commented that there were guidelines as to the age to start doing mammograms, but not when to stop doing them. She remarked that she had done a screening mammogram on a 99 year old woman! At some point, it seems wasteful to do screening procedures such as mammograms and colonoscopies - would be good to have guidelines in this regard.
7
@JC In fact, guidelines recommend that routine screening mammograms be stopped at age 75. That doesn't mean that a doctor cannot appropriately order a mammogram for a patient who is older than 75, at high risk, and in good health. I can't think of a situation where it should be ordered for a 99 y.o though.
6
Underpinning everything is the necessity for the country to develope a consensus on what health care even means. Given that resources are not infinite, we must decide, for instance, how much should go for prophylactic measures and how much for therapeutic measures, how much should go for early childhood care and how much for elderly care. In a society that had more of a sense of the desirability of communal compromise and less of a polarized sense of individual certainty, this could be accomplished, even if with difficulty. In 2019 America, where even vaccination and abortion have become defining political issues, the future looks dim for developing a consensus on how health care should occur, especially if publicly funded.
As I see it, the greatest positive effect of the current system is that it keeps the Postal Service afloat, as evidenced by the fact that each week I get three or four mailings from my insurer notifying me that I have an absolute right to not understand the enclosed bills and statements in any of seventeen languages.
7
The primary goal of the US healthcare system is to ensure that all the insiders, Doctors, Insurance Executives, Drug Company executives, Hospital administrators, Dentists, Testing lab executives etc. retire as millionaires. It is meeting all its goals. Patient care is a secondary, optional goal.
17
@Rahul You nailed it. It isn’t broken, it’s working as designed and patient care is, indeed, secondary to profit. That is unconscionable, yet here we are.
7
I love that a man from a health plan (Humana) helped write a study that makes clear administrative costs from multiple payers are part of the problem of high-cost care. Appreciate that his employer was bold enough to give him an avenue to publish this data.
Beyond that, when I read studies like this, I always wonder if we are examining the right thing. For instance, how much could we save in healthcare dollars if the average adult exercised five days a week and ate mostly vegetables and fruit? It would probably stave off countless instances of disease and early death due to preventable diseases like diabetes, chronic kidney disease, heart disease and some cancers.
3
@Wendy
I believe the healthy route may get more satisfaction and longer life to a person but nonetheless arthritis, cancer, vascular disease, dementia, etc. still get their grip and take health care resources. I'm not sure if lifetime costs are lower for the virtuous ?
1
@Wendy
and how do you get a healthy diet if you live in a food desert where fruits and vegetables are limited access for people. and not all cancers are linked to poor diet. leading pediatric cancer is brain cancer.
Please note. The author is a physician. He says the other guys, the administrators, are the culprits. Surprisingly, he does not see anything amiss with physicians in the USA making more than twice as much as their European counterparts.
1
Yes, the system is broken. It's embarrassing how much we spend to be ranked 37th in the world for healthcare by WHO. Malta, Cyprus, and Costa Rica rank higher. And we are all a bit complicit--from the CEOs of the health plans to clinicians to the individual patients. I already effectively work in a single payer (Medicare) environment and yet there is still waste. And excessive documentation and paperwork, and the need to prior authorize prescriptions with the many part D plans, and the painful conversations with families about how "medicare doesn't cover that". (routine eye and dental care, long term care, personal care assistance, etc). Don't get me wrong. I am grateful for Medicare and appreciate much about the program, but it's not a cure-all for our ailing healthcare non-system.
6
@GeriMD
Please tell me you aren't equating M4A with Medicare?
Only the name is the same.
Those eye, dental, long term care, personal assistance, including mental and much more are included in M4A.
For your (and others...) perusal...
https://www.sanders.senate.gov/download/medicare-for-all-act-of-2019
@GeriMD
Indeed. It's a terrible artifact of historical biases that eye, dental, and mental health care are not fully included in the rest of health care.
3
@GeriMD
Routine eye care?
I go and see an Ophthalmologist, once a year for routine "Glaucoma" screening, though I have never been diagnosed with glaucoma.. Nearly all paid for by Medicare, and my Medigap F supplemental plan.
So I am getting eye-care, as part of my Medicare coverage. I do pay a $20 charge, but I also get an updated prescription if I need new glasses.
1
What about self-referral?!? Healthcare providers should not be able to refer patients for services that bring the referring provider profit.
1
The US spends twice as much on healthcare, per person, than Canada and the UK. Despite the ridiculous amount of money we spend on healthcare we still have 28 million people who are uninsured and many people face financial ruin due to medical emergencies.
This feels like organized/institutionalized theft. Most people only recognize it as theft when they're charged $500 for aspirin when they're admitted to the hospital, but it's happening everywhere. My employer subsidizes a huge portion of my $900/mo healthcare plan. I'm very lucky that is the case, but if health care costs were cheaper then more of that money would be going straight into my retirement savings. Instead it's being stolen to fund this monstrosity we call a healthcare system.
12
Is our health care system wasteful--biglie. But are all administrative costs waste, of course not. We should find what part of this is wasteful rather than equating administrative costs with waste.
1
This piece concludes with: "we need to do a better job of amassing evidence about what works."
This is very disappointing. We do know what works. And the article itself says it: Single-payer system that is found in the rest of the civilized world. We don't need to re-invent the wheel, do we?
The conclusion should be: What can be done to break the undemocratic, totalitarian control exercised by the "powerful stakeholders whose incomes derive from the status quo." “What stands in the way of reducing waste — especially administrative waste and out-of-control prices — is much more a lack of political will than a lack of ideas about how to do it.”
16
Waste isn’t the only reason for the high cost of medical care in the USA. Greed is the greatest reason. Greed by physicians, hospitals and pharmaceutical industry is the reason costs in the USA are almost three times Europe’s with far worse outcomes for people. The august editors of erudite publications will rail against the faceless health insurers. Blue Cross and Blue Shield were started by physicians and hospitals to assure themselves of payment. Soon they discovered they had pricing power. Not convinced? Do the research. What were the full names of Blue Cross and Blue Shield? Examine the payment system. Do you, dear patient, ever sign a receipt stating what was done to you?
5
Rooting out fraud and abuse can be justified even if it costs more than $1 to expose a dollar “lost” to fraud and abuse... but ONLY if those caught engaging in such behavior are PUNISHED. If so, what might be an initial loss can quickly turn into an asset. We ought not predicate the prosecution of thieves, for example, solely on the value of the goods or services stolen.
"Administrative costs" is code for "dealing with health providers, Medicare, and Medicaid."
1
greedy doctors practicing defensive medicine.! Health care reform requires how the mistakes, omissions, and neglect are handle.
2
@WH Greedy lawyers and greedy patients making doctors fear for their lives and savings!
1
Ask any doctor, nurse practitioner, or hospital administrative person and they will tell you that the dysfunction in the system is because of all the 'competing' health insurance companies and their thousands of 'products'. For every doctor, nurse practitioner a clinic or hospital mush maintain four administrative personnel, just to deal with the nonsense. The for profit private health insurance industry is a parasite that bleeds America. In Switzerland and other countries that have private health insurance the government administers the system and makes structure. In the US, it is the golden rule of free enterprise, charge as much as the market will bear. Every person that pays a premium is also paying for stockholders' profits, million dollar salaries, and over six hundred thousand unnecessary jobs. Changing the health care insurance over to government control and streamlining it would be the obvious place to start. This would provide the structure to address the rest of the problems.
19
Shrank failed to define "waste". 1) Unneeded materials, 2) uneven processes, and 3) overburdening are THE three universal waste conditions. Value is defined when a patient seeks to gain or keep a feature of their health state. Waste happens when it is done wastefully.
Shrank Google scholar searched and found 71 articles; this takes <60 seconds). He trimmed his reading list to 54 and summarized them. JAMA gave him a podium for offering not one single implementation for adoption. Useless chitter chatter. Yawn...
3
Another misguided story on US healthcare.The problem is not “how do we make our for-profit system more efficient?” It’s “how do we end for-profit healthcare?”. Granted, our current system indicates that “25 percent of American health care spending is wasteful”. But our current system costs twice as much as any modern, government run healthcare system in western Europe and Canada. We’re paying at least 50% more than we should, for healthcare that is substandard when compared to non-profit systems. We know how for-profit corporations work. They want to sell as much of their products and services as possible, for the lowest cost. They don’t want us to be healthy, they want us to be frequent consumers. Healthy people don’t buy prescription drugs, don’t visit hospitals, don’t require specialists. Americans need to wake up. Our healthcare system exists to sell us healthcare, not to keep us healthy. The NYT needs to write about the real problem. Stop with the puttering around the edges.
11
America! The rest of the industrialized world has already figured this out. Single payer. Get it?
15
@Daryl , Wait, wait wait! I have single payer, and still pay HIGH premiums, have a HIGH deductible, and every time I go for a procedure, three or four separate "participants" in the process have their hand out for bills that, it seems, I am ALWAYS on the hook for. How is this good?
3
I spent 40 minutes on the phone with an insurer to get a pre-authorization for one of our patients to have scan for metal done, to determine the safety of a necessary MRI.
First I called the insurer. I gave the automated system the doctor's name, his NPI, the patients name, his number, and chose the option pre-authorize radiology.
I was transferred to the outsourced pre-auth company, where I gave another computer the doctor's name, phone, NPI and the patient's name and insurance ID. The computer kept saying- after I read out the 11 digit number - "you said "zero, zero. Is that correct?"" Two rounds more of this and I started demanding "Human! Representative!" ("You said "representative." Do you want to speak to a representative?" YES!!! YES!!)
I was transferred to the first of THREE humans who typed in, you got it, the doctors name, NPI, phone, the patient's name and the paitent's ID. The last asked all sorts of questions about why a scan was needed.
She then told me it would have to go to a doctor for authorization, and might take another two days.
One scan. Two automated computerized preventers of communications and FOUR humans.
Wanna know how to cut costs? Eliminate any four of the six above.
54
@Cathy yes, so true. Repeat, repeat, repeat, then usually get hung up on and start all over. Then talk to someone in another country who will not know what you are asking. Get nowhere. Start over. It’s insane.
13
Waste, corruption, incompetence and a lack of regard for patient care characterize the bill em and kill em philosophy of health care in America today.
It is a sad day when you realize that even with the best health insurance it is a waste of time to go to a doctor with a wall full of diplomas in their office because they don’t pay any attention to you. Waste and very upsetting when you are trusting this system with your life. High stakes!!!
6
Forgive me the obvious but illness accounts for the greater cost. Sepsis, as an obvious example sucks up 30% of hospital cost even though a disproportionate die anyway. Old people, the last six or seven days if life is extraordinarily expense. Labor and delivery and neonatology are killers and caring for renal disease is incalculable. Sick people are expensive and the first solution is a single payer.
5
@terry brady If only there were more ice bergs -- and more conveniently located, at that!
1
Austin, the real numbers are way, way bigger. Here's how Publius Audax put it in "The American Death Curve" in July.
"We are spending 2.1 times per capita more on healthcare than Canadians do only to have increasingly shorter lifespans than they do. To get to our ever-shorter life span, we waste 2.3 times our defense budget, or $1.7 trillion a year. The American Death Curve.
Our Death Curve gets steeper by the day as we waste ever more for ever less. Between 2013 and 2016, we spent 15% more on healthcare. But, our lifespan dropped 0.7 years. Canadians, who enjoy roughly the same median income that we do, now live nearly four years longer. Imagine what freeing up the wasted $1.7 trillion, almost 9% of our GDP, could do for our economy. These numbers are staggering.
At $1.7 trillion in waste, think of the amounts being sucked out of individual pockets and corporate coffers for absolutely no purpose. Except, of course, to shorten our lives."
7
"just get rid of the waste."
"JAMA, finds that roughly 20 percent to 25 percent of American health care spending is wasteful."
---
If you define the waste in such a limited way then the "solution" you find will only be to plug obvious holes.
That's *not* the solution. If other developed countries pay half as much for (at least) comparable health coverage/care -- and they do -- then the "waste" is ~50% of what we pay, not 20-25%. Off by a factor of at least 2.
Stop judging the current "system" (cough) by itself, looking for some explicit waste here or there within it. Look beyond the *holes you see* in our system.
Thought experiment, to start with: phuggedabowd our system. Start by seeing *what other countries are doing right*.
Should what France (or Canada or...) is doing be exactly our model? Is it perfect? Certainly not.
Should it be our *starting point* -- what we think about at the outset? ABSOLUTELY it should.
Other countries learned long ago to look around at what others are doing and try to learn from it, to try to get the best of this and that system. Why is it that Americans can't ever seem to do that? NIH?
We're #1! At least we think so, with our blinders on. With that narrow point of view we'll never find our way.
Did that Journal-of-the-AMA (!) investigation include the profits of private health-care providers, insurers, etc. in the "waste" it estimated? If not then the investigation itself is likely part of the waste.
Circulez ! Il n'y a rien à voir.
3
As a senior citizen who spends a lot of time in Europe I've often gotten to compare administrative cost first hand.
I have an internist in New York, just one doctor with three assistants and one of them is usually on the phone with an insurance company, sometimes two of them are. So you have one person on the doctor's payroll arguing with one person on the insurance company payroll and this goes on day in and day out. How many people make a living doing that?
I have an internist in Paris, shares the space with four other doctors. You need a four digit code to get into the building because they don't even have a receptionist. The doctor does all of her paperwork on a tablet while I'm there. Since I don't have French coverage I pay cash and it is about the same as my co-pay in the states with my "Cadillac Plan."
But the differences in administration can be seen so many places once you visit a nation with sane healthcare. Go to a British hospital and ask for a tour of the administrative wing. They will laugh at you.
I was treated for an emergency in Paris. I got a 55 year old specialist instead of a 21 year old treat em' and street em' intern. I would not have left that Paris hospital with a referral and possible recurrence. I left fully treated and besides the fact that more people live that way it also makes a cost difference.
There are so many stories but not enough space. I tell Americans who are against single payer "Take a trip somewhere, anywhere but here."
29
@Edward Crimmins
When my local hospital would not tell me what a spinal fusion would cost ("that's proprietary information") I received a second opinion in Canada.
Long story short, I had the procedure in Montreal, and cost was based strictly on a flat fee, for the days I spent in the hospital. No operating room charges, no additional fees for MRI or CT scans. Just an extra fee for the surgeon. I was told, and paid in advance what it would cost, based on 7 days in surgery and recovery.
I had to return for a follow up CT scan, cost $150.00. The billing office, was in a room the size of a bedroom.
9
@skier 6 When I was in the Paris hospital I produced my travel insurance but they didn't even bother to charge me.
I asked why and was told "Because it is an emergency." I said to myself "That's the most un-American thing I've ever heard."
When I compare an American emergency room to one in Paris, my injury was minor, in New York I would have waited hours in pain. In Paris I was being treated in fifteen minutes. There is a huge difference between healthcare and the healthcare business.
Every experience I've had in Europe, walk in clinics that charge 22 €, pharmacist that will diagnose and offer proper treatment, countries where billing is never the top priority. Combine that with all of the stories Europeans had told me about their treatment in the U.S.A. I met a German once who had to go on the internet for instructions on how to properly self administer tropical fish antibiotics because his student visa required insurance plan was refused by every doctor.
It takes just a little travel to see just how bad the U.S.A. really is, free market health care or death by spreadsheet, as American as medical bankruptcies. I just wish more Americans would go witness lobbyist free healthcare and see what we are missing for the sake of profit and campaign contributions.
9
Pharmaceutical companies have spent billions on stock buy backs yet they refuse to lower prices. For many the high price of drugs is a major part of health care costs.
5
In Spain we are fortunate to have a public health system that is much cheaper than the American and that allows practically the entire population to access the national health system.
It needs improvements but it is more fair and efficient, being also Thanks to all this we have the best transplant service in the world.
From Europe it is difficult for us to understand the mentality of American citizens in some aspects.
20
I find the comment that "more than half of all medical treatments lack evidence of effectiveness" surprising. Why would insurance companies or Medicare pay for treatments that are ineffective? With all the publicity over denial of coverage for certain treatments, how are all these ineffective treatments getting funded?
4
@J. Waddell : They aren't. What's happened is that they haven't been *proved* effective, and if no one stands to make a profit, it's hard to get anyone interested in doing the research.
President Obama was able to get a national health policy and Lyndon Johnson was able to get Medicare and Medicaid approved only after getting super majorities in congress. Both Johnson and Obama took big hits in the mid term elections following the passage of their health programs. As much as people talk, the voting American public have not supported a national health program so it is not likely we will get one until the mood of the public changes
4
You know what would decrease costs for both the insurance companies and those insured? Letting the DOCTOR decide what test is needed instead of having to do three less expensive tests AND THEN the test that will actually show what the problem is. The patient ends up paying two or three deductibles and the insurance company pays for the xray, the extra blood work that shows absolutely nothing, the CT and FINALLY the MRI that shows where the problem is. Think of the money that would have been saved if only the MRI was done first to confirm what the doctor suspected all along because he/she is the actual medical expert.
11
MRI is expensive, and it will be huge waste of the resources if we will use MRI for conditions that could be detected by simple blood work.
2
Single-payer healthcare is the answer to lowering healthcare costs and exposing fraud. Between the lobbying of the AMA, insurers and hospitals, single-payer will never see the light of day.
14
@judgeroybean
That depends upon whom we put at the helm of the largest bully pulpit in the land doesn't it.
And of course that persons drive to see M4A through to completion without giving away the store.
Which brings us back to We The People taking agency of our gov. and who and what it works for.
You get what you vote for.
5
"The largest source of waste, according to the study, is administrative costs, totaling $266 billion a year. "
And THAT is not limited to the health care sector, but concerns every part of the economy.
We are hopelessly overregulated where we pay disproportional attention to minutiae instead of the big picture. The minutiae are being regulated at an expense of 10 cents savings for $20 expense on the administration required to do so.
Easily half, if not the vast majority of our annual budget deficit is caused by these inefficiencies. Add to that how the overregulation stifles the economy and one sees why America is struggling to remain competitive.
The medical cost is not due to regulation, it is due to variety of systems with different demands involved in healthcare. Single-payer will greatly simplify the system and decrease administrative cost.
10
I have been in healthcare IT since 1990. I know what changes our systems force down physicians throats, all to capture information to bill better. CMS and other regulators force clinicians to jump through hoops to get paid. In 2020, for example, hospitals have to prove that they have a system for evaluating use of imaging, based on indication/diagnosis. So software vendor and myself spends gobs of time building matrixes of codes appropriate for tests, and then system suggests better tests based on what patient needs. “Better” for billing, not for care, of course. So now doctors have to click through more buttons and hope they didn’t pick the wrong code or indication or they start all over again. This is what it takes for a small subset of tests to get billed. Now do this for every single thing. I feel for clinicians, so much clerical work has been shoved downstream.
17
@Momsaware I have been involved in heath care clinical IT since 1980. Billing oriented systems are a waste of all resources. Classic lipstick on a pig Clinical systems to improve patient care are the priority.
7
Uh, what about the obscene *profits* that the private for-profit health insurers rake in every year by pocketing those huge premiums you pay to them while fighting you tooth and nail to NOT actually pay for your healthcare should you actually need it? What Americans don't realize is that you are actually paying full freight for your healthcare while subsidizing the profits of the for-profit health insurers. The job of the health insurer should be to maximize public health, not shareholder value. I would call those profits WASTE.
Nationalize the health insurers and make them non-profit entities. There, I fixed it.
41
Fraud doesn't seem to be mentioned. In my personal experience, fraud such as overbilling is responsible for a major portion of the outrageous cost of US Healthcare.
Example: Sometime ago an elderly relative without insurance was seen by a neurologist, had a CAT scan, findings reviewed by a radiologist. I received 3 large bills from each. I called each one of these and asked for a n explanation. In all 3 cases, they said, "oops, that was a mistake", and reduced my bill by 50%. Total saving was about $6000.00 in 2019 dollars.
Those with insurance rarely ask these kinds of details, and the insurance company doesnt care since it can always increase premiums, So my guess is that 50% of the cost of the US healthcare system is fraud. It benefits the payors (insurance companies) and to a smaller extent the providers.
4
@Ram13 Did you not read the whole article?? The last several paragraphs were about fraud. And it said this was real, but represented only about 10% of the total waste of the system. Even so, it gets outsized attention from politicians but represents a very small part of the problem.
2
@Ram13 When you read the article you will see in the second to last paragraph that fraud is about 10% of the overall waste. Which is quite a bit of money still.
1
@Will and @Plimpington Thanks. Sorry I missed the last part. Please regard my anecdote as supporting the article as regards fraud.
But I think its more than 10%.
This is why private practice medicine should die. This is where the waste is. HCA used to buy up all hospitals in an area, close all but one and jack up rates. Bill Frist was one of the architects of that. coincidently was a senator and new exactly how to increase his bottom line based on what he supported.
Concierge medicine is another smoke screen. There is no way that a small group can compete with efficiency but also keep up with the kind of guidelines that really push efficiencies. Unfortunately, if you want to get efficiency AND Quality, you need systems.
6
Ask any doc what they spend most of their time doing that has little to no benefit to patient care. Answer? EMRs. What should be a digital helper and aid to efficiency is at best a waste of time and money and an infuriating distraction and at worst a real threat to patients. Scrap EMRs or make them work. They are simply an inefficient aid to billing now and a danger to patients.
7
@AT Oh please Clinical EMRs are vital to improving patient care. I agree that tying it to billing is a waste of all resources.
Vince: that was the sales pitch on EMR but is not true in the majority of cases. My EMR hinders care and increases errors unless you are hypervigilant double checking everything.
It is outdated ( using control keys instead of the mouse), dangerous because you can’t view labs and vital signs while you are writing orders, dangerous because the patient ‘s name isn’t always on the screen when you are ordering things, and inefficiency such as having up to 3-4 pop ups per medication, when ordering.
There is chart bloat, where a note which used to be 2-3 pages max, now is 11-12 pages of worthless filler. This interferes with patient care because it puts obstacles in the way of obtaining useful information.
I can speak for my EMR but my friends at other institutions say theirs is almost as bad.
We would all give anything for an EMR that actually helped the caregivers and the patients but I haven’t seen one yet.
6
@Vince
Oh please?? Read the studies. The internal medicine people spend more time looking at screens than talking to patients. Show us ANY study that even hints at any improved outcomes due to EMRs.
5
I was told by a so called independent reviewer for Humana Medicare that a patient who is still psychotic doesn’t meet criteria for continued admission because he’s not suicidal or homicidal. For much of my career first as. PA and now as a physician, I have watched hospitals nickel and dime the nursing budget. We are the only democracy that does not employ price controls for medications. This is not rocket science. Cut the legions of parasites in suits who prey on those of us who do the work and nationalize health insurance.
41
The piece is informative, and cites sources, which is what we readers need in order to assess. May I ask that in the print version of the story, which will appear in the paper tomorrow, I assume, that the author's credentials are placed at the bottom, at least in brief, as would be done in any op-ed? He is not a journalist, rather a scholar-commentator. Vital to keep the distinction clear. (credentials have been absent from Mr. Frakt's past pieces, which are not, strictly speaking, news stories.)
2
Uwe Reinhardt, the late Princeton University economist and blogger here, said all the time “every dollar of waste fraud and abuse in healthcare is someone’s dollar of income”. People will do everything they can to preserve the status quo.
11
Another huge waste in the system - having to cover your rear end so you don't get sued. Huge impact to ordering tests, more tests, more x-rays, MRIs, PET Scans - you name it. This also needs to stop. But the trial lobby has deep pockets.
4
@Sarah99 The data do not support your claim. Doctors are more afraid of peer criticism. There is also pressure to use the expensive equipment.
2
@Vince What data?, the legal profession in America is full of leaches who add to the cost of health care, something you don't see in other countries.
1
@Joseph B I have taught health care risk management in the UK Yes they have malpractice litigation too. the difference in other countries is that the health care systems owns and is automatically responsible for its errors. The USA health care system does everything possible to AVOID responsibility for its errors. Oh, and FWIW my wife was a physician. And my sister was a hospital executive when the hospital committed incredible malpractice and destroyed her body.
I was in an auto accident a few years ago. 3 of 4 limbs broken. After multiple surgeries, discharged to a rehab center for bones to heal.
A couple of weeks before discharge the rehab center started sending people to my room with letters. "Perhaps you overlooked the bill we sent". I asked how could I have rec'd a bill at home since I was discharged from the hospital to the rehab center.
Next I got a visit from a different gentleman who asked me to sign a 27 pg contract. With lots of time I read through it. I'm not a lawyer but I did pretty much did understand the contract stated "you agree to pay anything insurance won't pay I declined to sign it. They let me know they weren't happy.
Next I got phone calls demanding $5,000 immediately. I asked where would I get $5,000 since I'd been with them for 2 months, not working. They told me to borrow it from relatives. They threatened me. We'll withhold physical therapy. I knew I was going home in a few weeks so I ignored it I asked were they going to put me on the street. They backed off somewhat.
I did go home to outpatient physical therapy. When the ins company settled my bill, I owed about $1200. I paid it in full. Imagine what they could have done to someone more elderly or confused.
36
@Ann
My father, visiting from Canada, had a sudden heart problem, while vacationing in Florida. Long story short he needed a pacemaker implant.
I flew down asap from Vermont, then spent time with him until he could be discharged. He was getting calls, in his hospital room, two days post-op about paying for his ambulance ride !
I went to the social-worker for his floor, and said no more collection calls ! I also said his travel insurance would be negotiating with the hospital for any charges, and he was not to be bothered with any bills, or papers to sign. Period.
@Ann
Wow that's awful.
I'm tired of reading articles such as this about health care in America. We have been hearing and reading these same facts for decades.
Then after yet another study everyone walks away wringing their hands, ignoring the 30 million uninsured, ignoring the 500,000 medical related bankruptcies every year, ignoring the excessive pay for senior executives in private insurance, medical equipment manufacturing and pharmaceuticals. We spend 18% of our economy, the largest economy in the world on health care while the average in the rest of the industrialized developed west is 13% and they get substantially better health care results (we are ranked 27th).
It is a relatively easy fix. Pick a program that is successful in another western country such as Canada. Why reinvent the wheel. The problem as the author points out is the political will to upset the apple cart of all of the "greedy takers" of our health care dollars. who also happen to be major campaign contributors. Want health care reform, eliminate Citizens United, lobbyists, campaign contributions from companies and PACs. Without this NOTHING will change.We protect oligarchs fortunes in this country not the nations health.
99
@Steve
“It is a relatively easy fix”
No.
@Laidback ya
more like an "incrementally challenging fix"
The regulatory and administrative overhead is significant, but the thought of deregulation or self-regulation brings another Pandora's Box of problems.
Truth be told, there are regulators at every level of government and often among professional or industry groups and much of it overlaps or is duplicative. It takes an army of people and considerable computer resources to comply and track and account for everything.
It would be helpful if representatives of the various state and national agencies that are involved could sit down with insurers and the various professional and trade groups to rationalize and streamline to accountability and compliance. Unfortunately, turf battles that justify jobs, titles, and income would be on the line.
In a best-case scenario, the Federal Government would take over all regulatory authority with the same standards applied to all and let the states follow those rules and enforce them. The quality of care and competence of those providing it needs to be the same in small-town Montana as in the most exclusive wealthy enclave, and that is not the case far too often.
@David Gregory The quality of engineers, car dealerships, schools, cultural activities, restaurants, air travel, public transportation, sports entertainment,etc should also be the same in small towns...... Cities with amenities attract talented providers. Not all providers are equal in ability and those with the best ability (like every other field) have a choice of where to live and practice.
2
If you are looking for a more extensive look at the US health care pricing/cost debacle, read Marty Makary's new book, "The Price We Pay". If more people understood the depth and breadth of the problem as illustrated in this book, maybe Americans would rise up together against the waste, fraud and unethical incentives that currently exist.
7
"Moving to a single-payer system, he suggested, would largely eliminate the vast administrative complexity required... But doing so would run up against powerful stakeholders whose incomes derive from the status quo."
Bingo.
Powerful stakeholders with Congress--or at least Republicans--in their pockets.
36
@SRF I'd be interested to know more about those highly efficient single payer government healthcare systems. I'll direct you to the nearest VA or wait times at county hospital ER for an example of government run healthcare. It is not a model of efficiency that everyone seems to assume will magically arise.
2
Government run healthcare in other countries is a priority, just not our country.
4
@Texan Come to Australia, Canada, or France if you want to see an example of government run health care the covers all and cost half the US system.
9
I'd give up my corporate insurance in a heartbeat for something like they have in Canada. It's a full time job just trying to get billing and coverage straightened out, and that is WITH the help of yet a third agency meant to work between patients, providers, and the insurance company.
As 'Private' insurance gets more expensive, perhaps the nation will wake up and decide to join the civilized world. However, there's a lot of money to be made by people who never touch a patient, and in this country greed not only rules, it's worshiped.
Sad.
50
The employer provides and pays for the employee and his wife to have a health insurance policy. The employee and his wife can make as many claims as often as he or she likes without knowing the cost of those claims. The employer is not allowed to know who is making the claims or what they are for. The employee pays a relatively small amount towards the cost of that insurance and usually has no knowledge of the costs incurred and is un-involved in paying the bills. The employer is on the hook for whatever the insurance company and the service provider decide.
Now imagine this scenario. I employ a married man and give him and his wife an unlimited credit card. They can shop where ever they like, but none of the shops show the price of the goods. I am not allowed to see what has been spent each month and the employee and his wife have no idea either. The credit card company and the shops agree what a reasonable price is . All I know is that I can't afford to keep doing this and the employee and his wife are oblivious.
7
@MrC Maybe... maybe it is just insanity that employers are on the hook like this. I have insurance through work. A pretty good size deductible, a significant amount to pay in coinsurance. I try to do the right thing, find out how much things will cost up front. (Surgeon to me: When you find out how much it costs, could you let me know?) Good luck with that. I'd like to shop around, but -- it turns out -- there's only one provider in town, and I discover they charge quadruple what providers in bigger areas charge. Oops!
The system is broken, top to bottom. Please don't lay all the blame on your employees.
5
One of the reasons patients demand that every imaginable test be done or avoid the system entirely is because they don't trust the physician or the insurance company to act on their behalf. They know that they are the least important part of the entire interaction by the way they are treated by the doctor, the staff, and the insurance company.
When we go to our doctors we're not greeted with any real concern. The first thing we're asked is if we still have insurance. Next, if we do, has it changed. Then the receptionist checks to see if our insurance will still pay the office. We arrive early and are often kept waiting because doctors overbook, a patient needs more time than the usual 7 minutes, etc. If any testing is done and our insurance doesn't cover it we're on the hook for it. If we need a drug that our insurance won't cover, even it's covered it before, once again, it's up to us to fix the mess. God help us if it's a drug we require to survive.
The only value here is that patients and their families give up at some point. The insurance companies win. Patients are considered difficult when they demand accountability, request prices, ask why one test is covered and another isn't, etc. Worst of all is how we're badgered, lied to, and have our "debts" turned over to collection agencies because no one wants to do it right the first time. It's easier to drop dead in America.
10/7/2019 3:37 first submit
33
Eliminate excess corporate profit—I don’t know if that is covered in the “administrative expenses” but make the industry not-for-profit or regulated, like a utility.
Streamline administration, so every form is the same, the standards are the same.
Allow free markets for medications, allow international drugs access to the US. We do it for sneakers, cars, avocados and T-shirts, why not meds? (Because the “capitalists” running the drug industry don’t want a free market and they pay people to let them monopolize the market and price-gouge.)
Make medical education debt-free.
That is a start. Notice I didn’t mention those who actually work in health care because nurses, pharmacists and doctors are not the recipients of the wasteful spending.
6
Ask us front line healthcare workers we can give plenty of examples. I’ve named 4 several times in these posts but here again is number 1 STOP TV advertising. I saw an anti-depressant ad the other night. These are not to be treated lightly. Yes greed lets this continue.
17
1. Access to care doesn't equal quality of care. Poor quality of care (misdiagnosis, delayed treatment, complications) costs more.
2. Insurance payments are based on a percentage of covered cost. This has resulted in a nuclear arms race in fee schedules.
3. Vendors (Johnson and Johnson, etc) spend millions per year on lobbying efforts to influence the provision of healthcare.
4. Drug manufacturers are likely using a version of planned obsolescence to enhance patent protections using enantiomers or delaying trials on similar chemically structured formulas.
5. Transition to disposable supplies in almost every area of healthcare when sterilization techniques are effective in reducing disease transmission. Disposables increase revenue for vendors.
6. Lack of patient responsibility in maintaining a healthy weight, diet and exercise regimen.
7. Society should be taught how to die with end of life initiatives to avoid extensive costs in the last six months of life.
8. The VA system is extraordinarily wasteful and is a "single payer system". Eliminating a market place through government control almost never improves efficiency.
9. Physicians and surgeons provide treatment and diagnoses for free, likely to the tune of billions of dollars through uninsured, under-insured, and undocumented patients. This isn't usually considered as part of the equation but will soon filter away as it costs too much to become a physician and the liability is too great.
8
@Texan Disagree with number 8. Come to Australia, France, Canada, government run systems are far more efficient than the US, cover all, and cost half the USA.
3
@Joseph B Review both population size of those countries and relative health. We will have more people with
diabetes in the US than the population of two of those countries combined. Diabetes is a costly disease and self induced for many type 2 patients. Comparing the US to other single payer systems is misguided. Could ot should India have a similar system to Norway? We will end up with a single payer system but it will a) not be efficient b) not lead the world with new advancements, and c) will not improve health.
2
@Texan
I agree that size of population and diversity of the USA is more challenging than say, UK, which has about 60 million pop. I would suggest a common core approach mandated by Congress with separate single payer or regulated price systems for states or regions, as Canada has different systems for its provinces.
You mention the challenge of preventing disease by tackling population behaviour, but I suspect the USA's very fragmented and incomplete coverage health insurance system is a deterrent to this. For example, implementing national screening and immunisation programmes must be more difficult as so many people don't have a GP to contact them if they are eligible and for those that do there would be disagreements over who pays what. Also, with many separate insurers it is more difficult to work on a community basis that is often best for preventative health measures. In my local area of the UK, I help to run a programme where the local GPs can refer inactive adults with certain conditions, e.g. prediabetes, to a 12-week physical activity programme with activities run through the local government's sports/gym centres. It's effective in getting inactive people into exercise and sport. Some of the funding comes from the local GPs. It's difficult to see how such a programme could receive funding in the US health system, even though it is highly cost-effective in preventing healthcare costs.
The article says, "Likewise, studies show that when hospitals are paid less, quality can degrade, even leading to higher mortality rates." If this is true, why is it called waste? Unles there is a way to decouple outcomes from costs, it's not waste.
5
While everyone may agree about the general notion of waste being bad, the thing about "waste" is that in our current system, some one is profiting off the "waste".
Every "wasteful" procedure results in revenue for the organization administering it. They will fight tooth and nail to prevent that revenue from disappearing. When the motive is to maximize revenue and profit, and not necessarily the health of the patient, it becomes very hard to cut down on "waste".
55
Why is it necessary for the USA to re-invent or create a single payor system if only we studied and implemented what the Swiss and Dutch are doing to control administrative costs and not touch how care is delivered. This should avoid the label of "socialized medicine" and produce the desired results.
21
@Marine Dad it's "necessary because our politicians are being paid off by these companies. These companies spend more money on lobbyists and advertising than they do on pharmaceutical research. Then, to put the cherry on the sundae, they blame the patients and families for the problems. In most cases patients are NOT the problem. It's the system.
Try asking any doctor or hospital how much something will cost and you won't get an answer or the one you get makes no sense. Plan everything out concerning a scheduled hospital stay and watch the costs balloon as you receive bills for out of network labwork, doctors, or whatever. And while you're recovering the stress over paying the bills might just impede your return to your job. Then you lose your job.
It's a lovely vicious circle brought to you courtesy of our politicians and the wealth care industry.
9
@hen3ry: How is a doctor supposed to know what something costs? There are as many difference prices as there are insurance plans.
1
@Joe Bob the III If you don't have insurance and you ask doctors should know. And you are highlighting one of the biggest problems in our wealth care system: the complete inability of anyone to predict how much something will cost or if it will be covered no matter what the insurance company says on paper. Thank you for your comment.
1
I am frankly but pleasantly amazed that
the lead author works for Humana, a health insurer, and yet supported a single-payer system. Look at how many assistants are required just at the doctor’s office to handle paperwork, figuring out whether a patient’s insurer pays for a procedure and how much, then has to continually follow up with the insurer to get paid.
I have often posted about how my private doctors in Paris didn’t even have an assistant, or maybe one at most.
Then there are the millions spent on gleaming new facilities (I know, I work at one). Space was needed, for sure. But all the latest bells and whistles ?
Huge sums were also spent on electronic medical records. Necessary to some extent, but increases the urgency to secure them, and I wonder, like other large software projects (I work in the field) whether we were overcharged for what we got.
The article doesn’t mention the cost of higher education in the US, which leads to new doctors having a debt to pay off and possibly preferring to practice a better-paying specialty in a better-paying location (see recent article on the dearth of rural physicians)
Last but certainly not least, the often shameful unaffordable cost of medicines compared to the real cost of developing them (not the cost of advertising or paying doctors to prescribe them), or compared to the identical product in a Western European country. Unlike one-time procedures, medications are often required for long periods or a lifetime.
24
Anyone who has ever been sick and been to a doctor knows how to reduce health care costs. The only people who don't know how are the Senators and Congresspeople in Washington who have free, government health care and huge political donations from the health care industry. In this case the blind spots are easy to see.
16
@Paul
Senators and Congresspeople in Washington do not have free, government health care. They, like all federal employees, have employer sponsored health insurance in which they chose from several health insurance plans and they pay a portion of the costs in premiums, deductibles, and copays. You can get these details from the government website opm.gov.
1
If William Shrank, the chief medical officer of the health insurer Humana, estimated that 20-25% of health care spending is wasted, you can probably double that to get the actual figure.
43
Stay away from doctors. Stay even further away from hospitals.
A nurse practitioner is fine but see no more than once a year maximum. Haven't had a payment on medicare claims for five years even though I pay about 125 per month for the premium. Just had a flu shot, paid cash at walmart for 25 bucks. Take one pill, costs 10 dollars for every 90 days. Paid cash.
6
@riley You have been lucky. Even people who adopt healthy habits can develop diseases, some of which are exceedingly expensive, such as lupus, rheumatoid arthritis, lymphoma, asthma, etc.
7
@riley Well, glad to hear you've never had cancer, or been in a bad accident, or suffered from congenital defects, MS, or had a debilitating mental illness.
Everyone should be just like you and then all would be just jiffy. You should speak to someone about that.
9
“What stands in the way of reducing waste — especially administrative waste and out-of-control prices — is much more a lack of political will than a lack of ideas about how to do it.”
Hate to say, "well, duh" but...well DUH!
10
The total for these 3 areas of waste is three-quarters of a trillion dollars.
Since other nations have universal coverage with better results and lower costs, it seems as if the only things that would stop us from fixing this is (1) greed, (2) corruption and (3) stupidity.
So, should I be optimistic?
38
@Stephen Rinsler Greed, corruption and stupidity is what makes america great!
6
Insurers bought up hidden profit centers named Prescription Benefit Managers (PBMs) and now inflate Prescription costs to American consumers. After saving money by filling my RXs at the big box wholesale pharmacy in a large wholesale store, I wondered why. How could it cost about 20% of what it used to cost at national pharmacy chain? Why did my insurer’s pharmacy charge more than twice what the big box store charged me for the same generic meds and same suppliers? What explained such a disparity in costs?
It turns out that “BigboxCo” had a modest profit but didn't charge me for kickbacks or bloated profit margins manipulated by the Prescription Benefit Managers (PBMs). The largest Health insurance Companies NOW OWN the Pharmacy Distribution businesses. United Health owns Optimum Rx., Aetna owns CVS, Signa Owns Express Scripts & Humana owns Humana Pharmacy Solutions. Anthem opens IngenioRx in 2020.
Insurance companies concealed their new control of drug distribution. By avoiding transparency, they avoided public scorn for their unbridled greed. Congress cannot figure out how to do what the Canadian government did and Pass a Law that requires drug makers and distributors to charge “reasonable prices”.
In the end my insurance company (whose name rhymes with "Die, sir") told me on a recorded line to complete & submit the forms. This saved the insurance provider 77% on my RXs. In the end they saved even more by denying the claim.
17
@SilencedbyForce Not enough is said about PBMs...my HDHP will only count a maintenance prescription expense towards my deductible if I buy it from the PBM via mail order, because that's how the PBM gets the volume they need as leverage in negotiations with drug manufacturers and distributors.
7
The article correctly considers the enormous "administrative expense" in our health care system as waste. But corporate profit, executive compensation, and shareholder return on investment also impose a significant cost, which those executives continually strive to increase. Is that also waste, because it doesn't provide any health care for patients and is too often an impediment to providing that care? Or is it the paramount aim and purpose of the American health care system, which calls health care for patients "medical loss"? That's the real question.
A single-payer scheme, including an expansion of Medicare, would eliminate the duplicative bureaucracy of multiple insurance companies administering myriad plans, along with the corresponding bureaucracy doctors and medical groups need to to do constant battle with all those bureaucracies. That's a significant cost saving. Eliminating (or more likely, greatly reducing) insurance company profits and executive compensation would also be a significant cost saving.
I have no sympathy for the morbidly obese pigs in insurance company C-suites and on Wall Street, who stand to lose the trough at which they have so lavishly gorged themselves at our expense. But there does need to be some recourse for the legions of ordinary people who labor in the "administrative" trenches of the Medical-Industrial Complex, who would lose their livelihoods under true health care reform.
18
@Ted
Well said. Though, those ordinary people in the "administrative trenches" would not necessarily lose their livelihoods. They would theoretically move into other industries where their talents could be utilized to actually do something productive.
We are forgetting about the vast human capital which is being squandered here as well.
7
It is worth remembering that every dollar spent on health care is a dollar of income to someone, and that the recipients of this income are unlikely to reduce their incomes voluntarily.
I agree that there are many areas of waste in the health care system that will be difficult to root out and reduce/eliminate. However, this article does not acknowledge the far bigger cost problem, which is the amount we pay health care workers and facilities for their services. On a relative basis, the U.S pays far more than other OECD countries for health care services, with no better (and by some measures, worse) health care outcomes .
The oft cited solution is to increase competition in the belief that increased competition will magically drive down health care costs. While competition can indeed drive down costs in the case of many products or services, the effect is greatest where pricing information is transparent AND a wide range of similar products or services are readily available. Unfortunately, health care pricing is anything but transparent and few patients have the ability to discern whether one doctor or health care procedure is better than another, especially in a moment of medical emergency.
Some form of single payer system would indeed help to reduce costs on multiple levels, but given the current influence of the health care lobby on Congress, bold legislative action seems unlikely anytime soon.
7
I used to work for a major health insurance company in this state. Against my better judgment I took that job, only to be shown that my first instincts to run the other way was the correct one.
Insurance companies don't care about their employees much less their members. They make a lot of good talk about both, but it really does come down to numbers. They want their profits high. They pay their executives lots of money (BSCA paid the head of their marketing over $1 million a year) to keep their numbers up.
The other thing not mentioned in this article is that the plethora of plans offered by insurance companies will surely require lots of people to administer. Simplifying plans and payment would cut a lot of waste.
BTW, this company is now building a big new headquarters in Oakland.
15
Our CEO and I (CFO) have spoken repeatedly (internally and with payers) over the last 20 some years about therapist billing by companies to Medicaid, government organizations and Managed Care Organizations. We should know, we run a practice that constantly roots out therapist (our) errors towards the goal of 100% billing accuracy. Its tough. And the organizations we bill appreciate it, especially compared with other providers. Basically, nobody checks anything, everybody gets paid and if an error is identified, reimbursement of the payer takes months. When we identify an error, payers get a check that month. Everybody looking the other way ... its not waste, its theft and corporate corruption.
4
1. Malpractice reform. Medicine could use an insurance system "medical misadventure", similar to workmen's compensation, to cover all but the most egregious cases. This would benefit patients who would not have to wait years for the result of litigation.
2. In other advanced countries where health care costs are so much less, medical education is usually free, so doctors do not graduate with a mountain of debt, and have less incentive to enter high paying specialties and offer expensive tests and procedures.
3. Most countries with a national healthcare system also have private healthcare available for those who want it, paid for out of pocket or by private insurance. There are no studies showing that such private care provides better outcomes than the national healthcare systems.
12
Weed out the docs who want to be high earners at the med school application level. That is doable. Look for the soft heart, not the hard eye. Medical doctors should be really interested in people.
Increase the number of primary care MDs. Make prevention a part of med school training. And, maybe psychotherapy should be also.Have more physical therapists and fewer prescribed meds.
9
@Sunny Day
It is not the Doctors who are getting the big money. That is a common fallacy. The big money goes to the army of administrators that now dominate the healthcare industry and to shareholder profit. I would guess that the average Doctor income adjusted for inflation is little different from what it was 25 years ago. The administration now has huge numbers of high paid people with no involvement in delivery of healthcare beyond creating false costs and denying false claims. Most doctors are now salaried employees of hospital group. the hospitals make the money - even the no profits - who pay the legions of administrators.
9
@Sunny Day
If you think this is the solution, then you clearly don't know what is actually going on.
5
@MrC How do doctor wages in the USA compare to countries with Universal health care, say like Sweden? America has the highest paid doctors in the world and highest malpractice insurance.
I accompanied my child to a specialist appointment in Toronto last week. I'm very familiar with standard appointment procedures here in the US, I was a little surprised at what happened in Toronto. Instead of wasting time on vitals, exhaustive review of systems, and superfluous physical exam to pad the chart or "protect" against malpractice, the physician efficiently focused on the issue at hand and ordered a single appropriate test. The main difference that I saw was that the physician treated the patient and the issue, there was no concern for wasting time and for the biller. I'm a huge fan of obtaining vitals, but honestly, using one's judgement makes a lot of sense and cents.
54
@Diane
That's 99% about protecting against liability.
Private providers => private liability.
Social provision => social liability.
2
@Drew I don't know about that. When I go for my cancer checkups, they take my vitals 3 different times. The check in area, the nurse, then the resident and doctor. Come on. How much can my vitals change in 15 minutes? I can understand taking them once, but 3 times?
3
Imagine if car dealerships were run the way our medical system is. On your first visit to each new showroom, you would be given a clip board with pages of forms on which to fill out, by hand, from memory, all possibly relevant information about your credit history. When you needed a loan, they would fax this to a bank along with the purchase details, were someone would need to enter everything by hand into their system.
4
@Larry J Then you would buy the car without knowing the price you paid until weeks later when you get the bill.
5
“What stands in the way of reducing waste — especially administrative waste and out-of-control prices — is much more a lack of political will than a lack of ideas about how to do it.”
The bulk of waste in healthcare is because of bureaucracy, and the absence of the political will to change any of this is effectively underwritten by the very corporations who would stand to lose the most.
It’s just an untold number of Americans continuing to suffer and die. As long as no corporations are getting hurt, we should all be counting our blessings.
13
If we made smoking illegal, the amount of money we spend on heart disease and cancer would go way down. I'd bet that would save more money than any of the authors ideas.
1
@Jeffrey Jones Then the illegal trade would start. And you have to declare a "war on cigarrettes". That would cost money also. Better to legalize "all" substances people abuse and deal with the health consequences. And invest on prevention/education to minimize use/abuse.
3
If you trust a study on waste in the U.S. health care system where the lead author works for a health insurer, I have some studies on climate change by Exxon Mobile that might interest you. Single-payer system, anyone?
19
@Steve Bower Yes says me, an expat American living in Australia. Our system cost half the US system and everyone is covered. Not perfect but way better.
4
Really? An industry that still relies on beepers and fax machines is inefficient? Who would have guessed.
The insurance arguing and drug advertising is beyond comment.
8
"But doing so would run up against powerful stakeholders whose incomes derive from the status quo."
Throw this on the pile of bad reasons we don't have decent healthcare.
All of them, every one, related to greed; related to "business" we worship even more than god in America, which wants us to be sick, wants us to suffer, doesn't mind all that much if we die, just so long as the bucks roll in.
If we're scared and desperate all the better; we'll try more things, spend more money.
Anyone who utters "socialism", any stooge who talks about "death panels", any little mind that implies if people can't afford healthcare maybe, yeah, they should die, is on the side of money. Expressly on the side of not you or your family.
Private health insurance is a casino. The House always wins, and is happy to lie, cheat, steal to do so.
Private insurance exists to deny care to as many people as it can. The only numbers it cares about are executive salaries and shareholder returns. If they have to send you away, they will.
They'll do it terms that sound scientific, they'll do it in ways that make you feel unworthy. and they will make certain, before anything else, that you have no way of understanding what you are about to get or what it is about to cost.
Everything about healthcare in America is adversarial. Every system considers its first obligation is to keep people from getting too much. Private insurance is ruthless in that pursuit, and has perfected the process.
25
The largest identifiable component of waste is inefficiency in the way health care providers bill insurance companies? That would be hilarious if it wasn't tragic.
The problem isn't waste related to billing, the problem is that virtually all Americans -- directly or indirectly but mostly directly -- rely on the for-profit HCO-insurer complex for the delivery of health care.
Look, you could root out all the inefficiency and cut 25% of the total cost. Then you could wave a magic wand and cut out the same amount again -- and Americans would still be paying more than any other developed nation for health care.
And what do we get for spending more per capita than any other nation? Way, way more? We get outcomes that place the US between 30th and 40th amongst all countries.
The problem isn't inefficiency, it's insurance. When a HCO and an insurance provider negotiate rates, it's the only negotiation in the history of commerce in which both parties will make more money if the price goes up.
This story normalizes the US system, which is not normal. Or good.
46
Humana behind the study. Enough said. An insurer cannot be anything but bias.
9
These discussions make me laugh - sort of like the old blind men and the elephant tale. Given that US health care costs $10,000 per person, per year wouldn't you think we would have all the details, comparisons to other nations and specific recommendations nailed down? When I worked in industry, we knew how much every part cost, how much it cost to install it and what the probable warranty costs would be of that part. And there were thousands of parts. But here, we have hand waving, estimates and scaremongering by all the lobbyists and affected parties. Until we wrestle down the lobbyists and reform campaign spending, this charade will continue.
11
Read the small print (and $$$) on the claims made to your insurance companies (and Medicare) for the most routine services including those provided by PAs, LPNs and technicians. The game of charging big, and taking a much smaller payment (plus “deductible”) is almost absurd and must employ an army of adjusters.
7
Call any health provider administrative office and ask them how much a procedure -- any procedure -- will cost.
They won't answer because they don't know. Nobody knows.
There's your $760Billion wasted every year right there.
11
It's really, really hard to reduce costs says the Humana physician who works, presumably, for Humana.
You know, it's weird. Everybody complains about government waste. Those horrible, dreaded words: 'we're the government, and we're here to help.' Yet, Medicare seems to work pretty well.
This is a grand example of how the rapacious greed of private industry has created a system 'too complicated' to fix. Excellent job, all!
Dear commenters: remember this the next time you feel like doing a little government bashing.
15
The best way to eliminate waste in healthcare is to quickly eliminate fee-for-service (FFS) billing. FFS creates perverse economic incentives for overuse, inefficiency, and waste.
With FFS, providers make money only when you get sick and lose money when you are healthy.
In Kaiser-like HMO systems, there is no billing because the insurance function and the healthcare delivery function are combined in one organization. And in Kaiser-like systems, providers lose money when you are sick and make money when you are healthy.
This provides strong economic incentives for Kaiser-like systems to intelligently reduce use, and to increase preventive care, education, and efficiency.
At the same time, due to fierce competitive pressure, they must increase patient satisfaction and the quality of care. Kaiser’s patient satisfaction and care quality are very high. Partly this is due to the availability of all services (hospital, emergency, urgent care, outpatient care, GPs, specialists, imaging, lab, pharmacy, etc.) at each campus (one-stop shopping). Other systems, such as Sutter and Stanford, are racing to become more Kaiser-like.
To reduce waste, we should immediately begin the transition to a nationwide system of competing regional Kaiser-like healthcare organizations by using the already-existing Medicare Advantage program. This would immediately reduce waste, fraud, inefficiency and administrative costs and increase patient satisfaction and the quality of care.
8
I always love an NYTimes article on the health care system where the only nation in the world with a completely broken system continually finds it impossible to improve said system. This article even referred to working systems in other nations, only to conclude that more research is needed!?
Ok, Fox News. Health care is this big mystery that the richest nation in the world can't afford. Sure it is.
11
@mjw
Sorry about that broken health care system. Can we interest you in another tax cut for the wealthy, or perhaps a new war?
About 10 years ago the institute of medicine estimated 1/3 waste and gave ten suggestions to help.
In the last few years Ezekiel Emmanuel and others have published detailed cost comparisons,
Who cares??
1
Where do we begin here? There are at least four major causes of waste.
1- Number one is our de facto criminal health care system where billionaire big phrama and HMO exec. make trillions of dollars over time over a corrupt system.
2-"Hypos" usually women who go to doctors every week for non existent maladies running up billions in costs.
3-Macho neurotics usually men who never go to a doctor and then get really sick and cost a bundle to deal with.
4-Outright thieves who rip off the system.
2
Make health care cash only, you will see a reduction in costs. It’s either that or single payer. When I tell patients the true cost of their meds they call me a liar.
1
@Harry B
What do you think the millions of uninsured people do right now? A cash system without fixing all these other issues would lead to a lot more sick people not doing preventative care, and will not fix the profit motives of insurance companies, drug companies, etc. The poor will simply suffer more.
I've said it before and I'm say it again. You can unleash a lot more competition in medical costs by making pricing transparent.
You make pricing transparent by eliminating where you can insurance companies each negotiating prices and each setting co-pays.
The answer is to make a lot of things uninsurable. That is stuff that is common and much less than insurance premiums. Mostly this relates to prescriptions like blood pressure or diabetes medicines. But there is also X-rays and a host of other services.
If you are paying $10 k / year in premiums, the $1500 you pay for medication or odds and ends can be paid out of pocket. With no insurance for these, people will advertise their better prices and people will actively seek out generics. All the infrastructure is already in place.
A final thought, what about the people who can not afford their $300 / month medication. Well first off these prices will go down with the full transparency that eliminating insurance companies provides. Those who can still not afford it will not be able to afford premiums either. So there is an exception to making these things uninsurable. Only a federal insurance program which is means tested will provide these coverages. That program is Obamacare and again already has the infrastructure in place. With transparency outside of Obamacare, prices would be set competitively based on what is happening in the free market.
1
@John
A thoughtful comment. Transparency is mostly a panacea, a shibboleth among devotees of St. Market. BUT, like capitalism itself, it has a place when handled properly. The ACA does indeed provide a basis for this.
Some missing pieces in your plan:
1. Negotiated drug prices.
2. Regulated value-based payment for individual medications, procedures, and other interventions. The use of evidence-based medicine and ACOs (established through the ACA) can enable this. Sorry, St. Market, your influence over health care in limited.
2
@John I worked at a health tech start up that is trying to prove that people will shop for healthcare (within their Health Plan’s network) by offering cash, and for some procedures significant amounts (it is their “share” of the savings to their self-insured employer for choosing a lower cost provider), but the concept can’t be proven. A major, but not the only, reason for this is a lack of health literacy. People don’t understand their benefits, how the system, works, are suspicious of why one place to get a mammogram is lower priced than another, etc.
Price transparency is not the answer.
2
If college bound students and their families can all use the same forms to apply for financial aid (FASFA) then hospitals and insurance companies can standardize their forms too. Standardized forms lead to clean data which lead to easier processing and easier data analysis. We (America) are not even trying to reduce health care spending, in my humble opinion.
7
The premise of this article is that we have a blind spot on how to remove waste. Yet at the same time, Mr. Frakt says, “Moving to a single-payer system ... would largely eliminate the vast administrative complexity required by attending to the payment and reporting requirements of various private payers and public programs. But doing so would run up against powerful stakeholders whose incomes derive from the status quo. What stands in the way of reducing waste — especially administrative waste and out-of-control prices — is much more a lack of political will than a lack of ideas about how to do it.”
So we don’t really have blind spot. We know how to accomplish the goal, but given the enormous place of healthcare in the economy, do politicians want to risk the ire of stakeholders — and their votes — to do the right thing? And correspondingly, will those stakeholders settle for less, if it means righting the healthcare sector of the nation?
For example, Mr. Frakt points to the issue of hospital costs; reducing them poses the risk of worsening care. The study he links to focuses on Medicare reimbursements, and argues that as they go down, hospitals either shift the cost to private patients, or reduce staff, or close and consolidate. But that only assumes that all the profit margins have to stay the same. If healthcare is no longer priced by unlimited demand, and if workers and administrators do their jobs because it is the right thing to do, quality should not suffer.
3
"Likewise, studies show that when hospitals are paid less, quality can degrade, even leading to higher mortality rates."
This should not be read to mean that the converse is automatically true: Hospitals that cost more do not necessarily provide better care.
7
I have epilepsy. I've had good employer-sponsored health care most of my life so I hadn't given much thought to costs until the last few years. If the doctor said I needed it, I'd have it done.
I've still have my employer-sponsored coverage but as a recent retiree, I've started paying more attention to costs. It's now cheaper to fill prescriptions with an independent company rather than using my insurance. The medical providers are trying to get as much as they can from the patient, up front, rather than deal with the insurers.
I went to the doctor for one condition; she wanted to perform surgery; but a simple antibiotic cured it. Her practice sends me notices: come in for (unneeded) routine tests. I won't go back. With another provider I was told to schedule an EEG; the day of the test his office said I had to pay $1k because I hadn't met my deductible I don't have a deductible but they do need a pre-auth. I told them I'd reschedule if they got the pre-auth. I guess it wasn't urgent as I've not heard back. I've had similar experiences with other providers. Much of what they want to do is unnecessary with no value other than to pad their wallets.
When I find a good doctor that balances my health with equal concern for costs, I stick with them. There are some, but mostly private practice not driven by a large hospital system.
It's a bad system. The providers want more; the insurers want to pay less, the patient is stuck in the middle.
14
America needs to decide if we have a health care system that is about health or a system that is built to take as much money out of patient's pockets as possible. Hospitals hire an over abundance of high paid administrators while leaving the personnel who actually provide the care, such as the doctors, nurses, nursing assistants, respiratory therapists, blood bank staff and pharmacists, blowing in the wind. Administrators should not be paid such exorbitant salaries for the little they provide.
14
One man's waste is another man's job or profits. In a free enterprise system, people have the right to compete with those who would get rid of their jobs or profits. And they do . . . successfully.
Measured by the standards of business, our health care providers are very successful. They compete for resources with the rest of the economy . . . and win. They compete with each other, too, but only in ways that do not endanger their success in competing with the rest of the economy; the mechanisms by which they achieve this are many, complex, mostly secret, sometimes illegal, and powerful enough to get them 18% of the economy. No other country spends nearly as much of its GNP on health care; this is what competitive success looks like.
To fight this success is to fight the free enterprise system under which it happened. So in this country the fight must pretend it is not undermining free enterprise while undermining free enterprise, and this is doable only to a small extent.
A health care researcher from Humana does a study of waste in health care, but a chief source of waste is the existence of organizations like Humana and the carefully preserved environment in which they operate. Our present health care system is safe as long as the authors, readers, and publisher of this study do not see the ironies and opportunities for parody contained in it.
16
Until we have publicly financed election campaigns, there's little chance of fundamentally changing the U.S. health care system. It's too easy to buy legislative protection.
20
We have a for-profit medical system. Even the non-profits are really for-profit. When the focus and rewards are from making money, for doctors, hospitals,labs, diagnostic facilities, and all services, then there will massive overutilization because they will be rewarded by making more money. So, of course, people will receive huge amounts of unproven interventions. The system is so broken it would be laughable if it weren't so dangerous for patients.
17
The argument for price controls is less about competition, and more about what you could call, "supply side moral hazard." Because insurance pays a large part of the cost of care, the discipline that the demand curve would otherwise impose on the prices even monopolistic or oligopolistic providers could charge is eliminated. The doctors and the hospitals can raise prices without losing many patients. That's why all-payer price regulation makes sense in health care markets.
6
As an American expat for 17 years I’ve experienced the advantages of national health care.
The costs are less and the quality of health care is better.
Medicare for all is an alternative national health plan for Americans that can combine a private top off plan for comprehensive coverage. This is the same formula in many Western European countries.
81
"Because American health spending is so high — almost 18 percent of the economy"
For comparison, the entire defense budget, all the services together, is about 4%.
Health care is 4.5x the entire defense budget.
That is huge. Any significant 5 waste is therefore huge.
Waste is worse than this article suggests. Other advanced industrial countries get the same advanced health care as we do, they get it for everyone, and they pay little over half what we do of their GDP. It runs 9-12% everywhere else under every other system of paying for health care.
Almost half, that is twice our entire defense budget, is the waste if we are like every other advanced country.
Some people are making out like bandits.
They'll fight to the death for that. Fine. Political death for them is a good outcome.
14
1 -- One waste not mentioned is docs wanting regular, forever post treatment checks when in many cases (most probably) the patient could be effectively educated on the signs (often unlikely to occur) indicating that a follow-up appointment was desirable.
2 -- How about an analysis that translated charges/costs from another developed country into the U.S. health care system. What would this mean in $s for docs (by speciality), hospitals (by component), nurses (by speciality), pharma (drug producers, benefits managers, pharmacies), physical therapy, etc.?
8
imagine every person who is now employed in america involved in billing and collecting for health payments, now free to provide nursing care to all of our citizens . Imagine how much better our healthcare could be for the exact same price! Now imagine hte cost savings on pharmaceuticals if medicare was allowed to negotiate the costs of medications (and how those savings would transfer to non medicare patients). So imagine either single payer, or integrated systems, where an insurer provides for both primary care and specialists, as well as hospitals and services, so that the only billing that takes place is collecting premiums. No profit motive, no wasteful treatments, and cheaper (probably better) healthcare. these fixes aren't hard, it is just hard to break the stranglehold that insurers , pharmaceutical s and doctors ( i m one) have on the for profit system we currently use.
14
I've been a primary care physician for 40 years now. I'm still seeing patients--as a volunteer.
How to reduce medical costs:
Pay doctors a salary. This is done at the Cleveland Clinic where care is excellent. This greatly reduces the incentive to provide valueless care.
Eliminate doctors' ownership of laboratories and imaging centers. I know orthopedists who order MRIs on everything when a simple x-ray or clinical judgment would do as well.
Eliminate advertising for prescription medications. The United States and New Zealand are the only two countries that allow this.
Single payer system: Medicare overhead is 2%. Private insurance overhead is 12-18%. Draw a conclusion.
363
@Frank Baudino Agree I would include malpractice reform and not sure salaries would change a lot.
7
@Frank Baudino I doubt that the Medicare 2% overhead rate include the billions of dollars of payments made for fraudulent claims, or takes into account the fact that as a federal program, Medicare does not pay local property taxes or state and local sales taxes like for-profit insurers do on many of their purchases. The Centers for Medicaid and Medicare Services estimated that 10% of payments made were for fraudulent purposes in 2014, about $60 billion, or somewhere around there. Not doing due diligence on claims submitted means Medicare is not an insurer, and should not be compared to such.
3
@Frank Baudino
Another 40+ year doc here. Your are totally correct. Too bad that ignorance, greed, and Randian dogmatism are standing in the way of rational reform. Ignorance, greed, and dogmatism kill people.
69
I am simple person but with a lot of common sense.. Here is my take:
For market based economies to work.. price is THE mechanism that transmits information about the market (supply & demand).. and determine the prices.. is the most important part of any any any functioning market.
If the prices are hidden (or impossible to know until u check out of the hospital), then we end up with a system closer to monopolies..you have a racket.. you have something close to price fixing.. you have something close to the opposite of free market
If you wanna fix it for good..make trading service as clear as buying a financial instrument or an oil contract.. whenyou have asks and bids competing for services and goods. And technology can play a BIG part in this
Health care industry have been keen on protecting their prices.. and they have an Mafia style way of calculating it
4
@Salah Mansour
market systems only work if the person purchasing actually cares about the price. In our systems, physicians do most of the purchasing for the consumer ( at no cost to them). the other problem is that healthcare is rarely a commodity we can walk away from if it is too expensive. Can you convince someone who's child has cancer that their treatment is worth what is being charged? Healthcare does not lend itself to market system behavior. The market does not cure all ills, society (us) must decide what we want from our system, and what we are willing to pay to get it.
10
@alan
I hear u.. I used to work for a pharma company for 5 years... however... I believe we can.. Technology could be used to solve these problems. At the heart of your question lays trust.. and technology can be used to relay trust/prices to patients.
For example, see how Amazon & Yelp ratings are used to communicate trust+prices..I use them for all sort of things.. that is how I found my dentist..
Overtime.. the Healthcare procedures could be standardized. FYI, do you think we were able to standardize contracts in commodities overnight? of course not. However, once we did it.. price discovery becomes easy.
Here is another example, I wish if their is market place where I can look for a doctor that can do implants or root canal within 75 miles radius from my home.. why that is difficult? Isn't that standardized? of course yes.. especially for tooth extraction... This business model could be extended. Imagine the savings!
Look I'm not saying that what I suggesting here is easy.. no no..it needs to be brain stormed.. but at the heart of it... lays price discovery
We need that... this is a game changer if we do it. But the forces against implementing such simple ideas.. have been enormous.. this is not new.. they fought the new deal with tooth and nail in the 1930s and medicare in the 1960s. This is were the problem. The problem is deeply political
3
@Salah Mansour
Aggregating opinions about dinner is a wee bit different than determining the best course of action and price for a medical procedure.
Also, Amazon and yelp reviews are often stacked or rigged. You have to do a lot of reading between the lines.
I agree that more transparency in health care would be a good thing, but it will not be the panacea.
Excellent comments! One colossal waste in healthcare dollars comes from paying the businesses' CEOs eight figure salaries. Putting business apparatchiks between people and their healthcare to exploit their sickness and misery for a profit is a moral outrage. Categorically. There's just no way to spin the obscenity of it.
Business is like fire - it has its place and it can do wonderful things when carefully controlled and tightly regulated. Seeing either through the mindless lens of a blinkered and discredited ideology invites disaster.
84
So many tests are unnecessary but are ordered to protect the physician from a law suit. If an 80 yr. old is in the emergency room and "dizzy" he/she will be given an MRI to look for a brain tumor. There are myriad reasons for the symptom of dizzy, particularly in an 80 yr. old, but on the remote chance that it is caused by a brain tumor, the physician must order the test, or risk being sued should one eventually be diagnosed. We need sensible tort reform in this country if we hope to rein in the cost of spending on medical care.
22
@CAM You have not idea what you're talking about. More likely, the physcian is looking for evidence of stroke, much more common than tumors, and potentially treatable. The MRI is about possibly preventing brain death and loss of qualoity of lie for people and their families.
10
@CAM Why is the patient in an ER for "dizziness"in the first place? The patient should go to their Primary Care Provider, er Doctor's, office first. Using the ER is a huge waste of money in most circumstances. I agree with you otherwise, as ER Doctors are not Internal Medicine doctors or Neurologists. But getting into your PCP's office and/or getting a referral to a Neurologist can be difficult. And many PCP's are not competent to diagnose or treat things more complicated than a sore throat, and even then they overprescribe antibiotics.
1
@CAM
" If an 80 yr. old is in the emergency room and "dizzy" he/she will be given an MRI to look for a brain tumor."
This is just false. You clearly don't know anything about emergency medicine.
6
Even well-intended plans can incentivize waste/ fraud. About five years ago I was briefly on Medicaid and living in South Euclid, Ohio. Medicaid provided excellent coverage. Fortunately I didn’t need much from it - but did take the opportunity to get my teeth cleaned for the first time in too long. When I went to the Medicaid-certified provider (a national dental chain with offices in strip malls everywhere) the waiting room was packed with us salt-of-the-earth types. After waiting two hours past the time of my appointment, they called me back and immediately ran three different kinds of xrays/ scans using brand new equipment... then told me I’d have to come back because they were too busy to clean teeth and had to run more xrays on other people. I immediately realized the con game here... run up the amount they could charge Medicaid for scans and just hope people don’t bother to come back for more labor-intensive cleaning. I complained loudly and within a few minutes they agreed to clean my teeth. Amazing that they’re allowed to operate like this. Am pretty certain no dentist ever looked at those scans they took of me that day.
112
I am no longer certain if single payer system is what this country needs and if it would substantially decease waste in medical care.
I spend half of my life in a country with universal health care (Poland) and although there are obviously some positive aspect of single payer system, there is also waste and substandard treatment.
I though think that the real cause of high cost of health care in USA is premise that it should bring profit, hence so many procedures, tests, interventions which are of dubious medical benefit to the patient, but obviously are benefiting care givers( mostly corporations, not health care workers). There is no health care system here, but loose conglomerate of health institutions, competing for patients and profit, some already dominating market on a regional or even multi state level. We need to create system, where everybody cooperates, not competes and this would in my opinion decrease the cost.
I know I am a dreamer, but I hope I am not the only one…
6
@Marek Domanski
"I am no longer certain if single payer system is what this country needs and if it would substantially decease waste in medical care"
I agree. It's probably not the magic solution that everyone thinks it is.
I would take the $266 b in admin complexity as the largest source of waste with a big grain of salt because there's an apples to oranges problem. The JAMA study looks at 6 waste domains, admin complexity plus failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud and abuse. Notice how the other 5 are inherently negative (failure. . .). The authors should have estimated "Unnecessary" admin complexity -- my guess is they didn't because of the challenge in deciding what is unnecessary.
For example, the $266 b estimate is based on two studies, one of which is titled "US physician practices spend more than $15.4 billion annually to report quality measures." Now perhaps we have too many quality measures, perhaps too many physician practices lack the interoperable electronic systems to track and send data efficiently, but whatever the reason, it seems unreasonable to assume that reporting quality measures is unnecessary admin complexity. Indeed, many of the interventions needed to curb the other failure will require higher administrative spending. Want to curb fraud and abuse? Then spend more money on data analysts, field investigators, lawyers, all counted as admin costs.
Unnecessary admin complexity is, of course, a problem, but it is not the main driver behind health care waste. As medicine becomes ever more sophisticated, and the population ever more needy, we may need more administrative complexity in the future.
4
@Joe The “quality measures” are onerous and ridiculous. They have to boil down complex systems to checkboxes to be able to report the metrics on a large scale. You need data extractors to pull the data out, sort through it and report it. It doesn’t really reflect the quality of care, it reflects the institutions that are good at extracting data.
Clickbox medicine is not actually medical care, it doesn’t achieve it’s goal of representing medical care, it’s one more administrative hoop to jump through.
2
Insurance companies add no value to my health care, just the opposite. I know the solution is complex, but as several folks say here and in the article--there are incentives for waste: it is in fact, how the "wasters" make money. What's more it adds to GDP . The way we measure it, waste adds to economic growth. The incentives in health care are perverse from the waiting room to Wall street. Until we face that we are just rearranging the chairs and pretending to make the room bigger.
10
None of the studies use the obvious data: relative increase in costs.
This data confirms that administrative costs have risen much faster than any other costs, and it confirms that recent hospital consolidation has resulted in a 24% increase in hospital costs.
But I doubt any studies do what capitalists do: analyze specific markets to discover an opportunity for control and profit. Congress' recent stop-gap funding bill included a provision to address the New York market for anesthesia services. Capitalists had bought up all the anesthesia practices and exited any in-network agreements, forcing patients and insurers to pay out-of-network costs.
Until regulators are as nimble as capitalists, or until health is not for sale, we'll have rising health care costs.
In the 1980's people objected to the wholesale conversion of a not-for-profit service into a for-profit industry because health care is a urgent need where the consumer cannot monitor the quality, and thus cannot be disciplined by market forces.
7
Affordable, accessible , red tape free, same cost for procedures and hospitals nationwide including prescription drugs etc .
In short a Canadian or European healthcare system .
No Canadian or European would switch to the chaotic and fragmented American health system .
Many millions of Americans are uninsured and many more underinsured.
Any doubt ?
35
@inter nos "same cost for procedures and hospitals nationwide including prescription drugs etc." Well this is a non-starter for one. Costs have to be adjusted for where you are as (for example) office rents are higher in NYC, NY than in Keokuk, Iowa. But I get the gist of your comments, and agree.
1
We do not have a health care “system “. We have a mix of profit driven health companies, non profits and government based entities. In a Country where special interest groups and for profits increasingly control decisions, the future is bleak for a “system “ that should be concerned about access to and quality of care for individuals and families. It is telling that this report was authored by people working for a profit driven company. A lot of the “waste “ of resources in our Country Involves administrative middle man costs. Although I appreciate the contributions of some for profits and the limitations of a totally government run system, the greed of many of the for profits will drive us to a single payer system at some point. Perhaps the model of some European Nations where you can have private clinics and Hospitals but insurance costs are shared equally by individual, employer and government could temper and more efficiently regulate healthcare. Our “ system “ is becoming increasingly unaffordable for all but the wealthiest, or the people the President and the GOP truly serve. I believe healthcare to be a right, not a privilege.
15
Supposed non-profit health entities (and just about every other non-profit) are just as guilty. They have no one to answer to or any reason to look for savings.
2
@BB
" In a Country where special interest groups and for profits increasingly control decisions, the future is bleak for a “system “ that should be concerned about access to and quality of care for individuals and families."
And there you have it. I have been a successful and well-regarded physician/academic/administrator for 40+ years. Despite my apparent success in providing care, training others, and bringing about change here and there, I feel that I have spent a massive amount of energy spitting into the wind. We have no system, only a hodgepodge that allows some sharp operators to make a bundle and many others to go without care, or be ruined seeking it.
Being still somewhat idealistic, I guess I'd do it over again. But if I were counseling young beginners with a desire to create change but an strong aversion to spitting into the wind, I might suggest that they consider other places or other paths. Or that they get used to the wind.
5
@BB this is one of the best, most cogent, and clearly written comments I’ve ever read here at the NYT on healthcare, and it spells out exactly where the villains are- the profiteers, in administration of private insurance. I would also add hospitals, millionaire doctors, and big pharma/medical equipment suppliers to that list of villains. The “some point” for single payer is when MfA becomes a reality in 2021- it will collapse the private insurance business, and make healthcare a human right.
1
Fraud in health care is a tremendous problem in this country and greater effort should be made toward rooting it out. However, it means adding to administrative expense: more medical review of claims, more medical records copied and sent to the payer, etc. Pay for performance seems like a good idea, but it means more collection of treatment data from providers and more administrative verification. It's less simple than it seems.
@PWR
Blaming fraud for the high cost of healthcare is the insurance companies' way of trying to deflect blame from the true cause of the high costs- which is them.
8
In this very paper one of your op-ed columnists, Bret Stephens, who quite clearly is evidently an ardent opponent of all wasteful government spending, suggested that single-payer health care was not a good idea because of all the jobs in health insurance administration that would be lost if we were to make that transition. It isn't the government alone that's capable of profligate waste. The system of private health insurance we have now does little or nothing to harness the vaunted 'market forces' to produce efficiency. At length we might, after pondering the examples all around us in the developed world, come to realize, almost against our will, that not every economic activity is best guided by appeal to the profit motive
11
Oh, let us count the ways! I was a health insurance exec for years and continued to be baffled by the resistance to single payer:
1. Each insurance company has to maintain literally thousands of plan designs because just about all large employers want custom benefits. Why the custom benefits? First of all, reducing benefits every year shifts to costs to employees so most employers do this every year. So each firm has to maintain all of these plan designs, submit filings to regulators.
2. Different medical policy. Each insurer and Medicare have different medical policies as to what is paid.
3. Utilization controls. Each health plan has their own utilization control processes for everything from transplants, to hospital admissions, approvals of surgeries, approvals for prescription drugs and so on and so on. Each provider has to manage these.
4. Different incentive programs. Each insurer and Medicare has their own incentive programs for rewarding provider "behavior" even though these have minimal impact on costs or quality.
5. But the biggest one is pricing. The entire system is riddled with "monopoly rents" from what your insurer pays for hospital care dominant facilities like large systems and academic medical centers to what your hospital pays for drugs, implants, medical devices and so on and so on. It is one big exercise in maximizing monopoly rents where in some markets, like Indiana, insurers pay up to 5 times Medicare for the same service.
242
So we are spending an additional 800 dollars per person in the USA for health care? My question is if we can justify raising taxes on everyone and shift the cost from corporate entities onto the backs of individuals now our rate falls from $10,000 to $9,200 per person magically. If the system will cancel out all medical fraud waste and abuse by moving to one payer. Lets say all of that is true .
My question is will all heath care workers then become one government union a complete voting block which will unionize against the people they are tasked to serve? Thus cause government bankruptcy like Illinois, California etc will that voting block demand defined pensions and at least treble that 800 dollar savings, or multiples that will be much much higher ? It is a slippery slope NO? In Sweden they ditched the defined benefit pension system for that very reason.
3
@Andy . Not sure where you get the figure of $800 per person. On $10,000 per person, that would be 8%, a fraction of the saving that could really be achieved by moving to a single-payer system. In 2017, we spent $10,224 per capita; in France, the country I know best, the figure was $4902. The OECD average was $5280. (https://www.healthsystemtracker.org/chart-collection/health-spending-u-s-compare-countries/#item-average-wealthy-countries-spend-half-much-per-person-health-u-s-spends)
As for raising taxes, that would only be necessary if the total amount spent on healthcare exceeded what we are already paying in personal and business insurance premiums, out-of-pocket expenses, existing government healthcare payments, and the like. And sine that is already double what other countries pay, we have a lot of room to make efficiencies before taxes would come into play.
24
@Andy FYI. Commercial payers pay almost 3 times what Medicare pays for the same service. Providers will complain (although there is little if any data that supports them) is that they have to get more money from private insurers.
But in fairness to hospitals, they have to deal with a mind boggling array of rules and regs from each insurer. That is what drives up their costs.
I would bet that if all hospitals were guaranteed (along with payment incentives to lower costs) a profit margin on all of there business of 3-5% (which is more than enough) overall health care costs would drop by as much as 10-25%. Some hospitals in Indiana are making 10%+ profits.
10
A fundamental disconnect that has never been fully debated is whether Americans view healthcare as an entitlement or a benefit. This confusion shows up even with CMS which runs two separate programs, one as an entitlement and the other as a benefit. Most European societies view healthcare as an entitlement, and a single payer works best in such situations. On the other hand, if healthcare is a benefit as most employer-based programs claim, then the best insurance design would be those that offer catastrophic coverage, and allow employees to price shop and pay cash for their routine healthcare needs which will greatly reduce waste. A simple change to achieve that state would be to remove the pre-tax deductions currently available to employers, and make that tax deduction available to employees. However, our dear US wouldn't be US if getting simple things done were that easy.
6
Some of the administrative waste in health care deals with the repeated, periodic recertification of need for certain medicines. In some cases, unless a miracle occurs, a person might be on a certain drug for the rest of his or her life.
Question: Why do we need to recertify the need for the pharmacy benefit manager's approval if the person continues with same doctor and treatment of care?
Answer: That re-certification is nothing more than a brute force way to try and cut costs; not treat people's ailments.
Question: How much do those annual re-certifications nationally cost in such "life time condition" cases?
Answer: Probably in the hundreds of millions of dollar annually. (That's probably a good thesis project for some PhD candidate.)
18
America's problem with its health system is not so much waste as it is the cost of procedures, hospitalization, physicians and prescriptions, but each of these areas have strong protective lobbies preventing meaningful change so we turn to "waste" for which there is no noticeable lobby.
The high cost of health care in this country is a uniquely American problem. There are many studies supporting that thesis, one of which is a 2018 Kaiser Family Foundation Study that found , e.g., that the total health expenditures per capita here were over twice as high as the that of the average of 11 comparably wealthy nations.
Even assuming that we take out 20% of the waste in the US, that would still mean that it cost 60% more here than in those other nations.
There is one notable area where US health costs are far less than that of , e.g., the UK, namely, colonoscopies. A fact that will not surprise the many who pay for their health insurance.
4
@GerardM
I assume the cost is less because one has already paid for it in the insurance premium.
The major problem with US healthcare is that it is a non-transparent, non-competitive delivery market paid for by third parties. More and more testing and follow up procedures are added to the “standard of care” and these costs drive up our insurance rates and routine utilization by patients who don’t have to scrutinize whether these things are really needed in their case.
The US healthcare is based on fear. Fear of getting a disease that most won’t get and most who do get it won’t survive anyway. This is an inconvenient truth and any attempt to fix this will face a lot of fear monger and entitled patient pressure.
4
Think of the overhead costs that could be reduced by having a monopolist in smart phones, computers, cars ...
Now you see the flaw in that argument for health care.
As the beneficiary of a single payer system I can say that admin costs rise every year, with the service level of your DMV. And with governments now the employers, think work disruptions and high-cost labour.
As for restricting costs. That's done by reducing access to care. You don't like not being able to choose your doctor? How would you like having no access to state-of-the-art procedures and medicine because you don't pass a bureaucrat's cost/benefit analysis? Your ability to pay doesn't matter. It's not available to you.
Then there's the add-on effects of medical businesses not developing innovations because they are adopted more slowly, or not reimbursed sufficiently.
Would you like it if your health care tech was locked in at 70s technologies? Fast forward into the future, with care locked in at current tech. Hard to imagine the benefits you would lose by killing the engine of innovation. But they would be substantial, and would very likely affect your life in a negative way.
Those same innovations create high-value careers and businesses that export products and technologies around the world.
Don't kill the Golden Goose.
4
@Dred
We have the same issues you describe, but in the end have to pay for it. So you can have the same problems for little to no cost to you, or you can have the same problems with all the costs shifted to you.
I'm a nurse in an academic institution. I have been waiting to see an allergist for an acute onset rash since February; the appointment is the end of this month.
I haven't met my deductible and since allergy is a 'specialty', I'll have to pay both my $80 co-pay, as well as a 20% co-insurance.
I also happen to have an MPH in Health Policy and can assure you that the issues you describe do not need to be the only solution or outcome to single-payer plans.
Health care is not binary, and it's that thinking that keeps us from creatively and effectively solving the problems so many face.
18
The Golden Goose? The highest costs with some of the worst health outcomes in the developed world. These tired old arguments have long kept the U.S. from having universal health care. They are based on ideology, not fact. The “market” has not worked for health care, and this study shows we get massive waste, not wellness from a profit centered system.
8
@Dred: Regarding medical 'innovations': I would be perfectly happy with the federal entities like the NIH as well as our public universities taking on a much greater role in developing medical technology.
Then maybe the focus of the innovation would be on improving health and curing disease rather than just making money. Too much so-called innovation is corporations just chasing revenue with duplicate products and tinkering to game the patent system.
Meanwhile, the lack of development in drugs like antibiotics poses an enormous risk to public health and the blessed free market isn't doing much about it. The money is in high-cost treatments for acute illness and maintenance drugs patients take indefinitely, so that's what the pharma companies work on.
There is no profit in making a cheap, effective drug you take for two weeks and are done with.
5
It’s time for America to look outwards to see what every other industrialized nation does for affordable and universal healthcare. The numbers clearly show what we are doing here is not efficient or fair.
85
Here's a thought for another article: The actual waste of plastic. When I first started nursing back in the 80's, the hospital had a central sterile facility where everything was sterilized and wrapped and returned to the floor. This was everything from surgical equipment to bedpans. Now it's almost all plastic. IV's were in glass bottles, now in plastic. The amount of plastic that is thrown away makes me cringe. Even suture kits, they come with a metal pair of scissors that are just thrown out in the trash after use, no further purpose in society. I understand it must be financially better to have this throwaway plastic existence in the hospital, but what's it doing to our world?
149
@Celeste We didn't have super-bugs back in the 80s. Read the research on re-using plastic.
6
@Celeste
The hospital had to employ people to do that sterilizing. Cutting staff is a great way to cut costs and increase profits. Throwaway plastic is cheaper!
6
Interesting observations. Much of that plastic waste is going to biohazard waste, so it's more expensive to dispose of than regular trash. I guess it shows how cheap plastic is compared to training and labor for autoclaves.
The superbugs --bacteria, yeast, and fungi-- I'm aware of are destroyed by autoclaving, done properly. However, prions cannot be destroyed by autoclave. CNS material can contain prions, though majority of procedures do not involve CNS tissues or fluids. There is new evidence suggesting prions are also blood-borne, in low but potentially pathogenic amounts.
3
At 20% of total healthcare costs, waste is TWICE the share of prescription drugs at 10%. This according to the CDC.
3
Pretty impressive/bold that the CMO of Humana directly states that administrative costs are the #1 source of waste/inefficiency in our system. In other words he knows that no one will do anything to try and recover this $266 billion. And by the way, my salary is part of that $266 (I'm in the "administration" of health care too). I'd be happy to lose my job if we could save the country that chunk of change.
21
How much is wasted when I get emails, phone calls and text messages constantly to remind me to go to an appointment? How much money is wasted in postage alone when I get a survey for every single appointment or procedure? And how much of my time is wasted? There is an incredible amount of administrative waste, not to mention material waste, in the health care system. Another commenter was worried about all the people who would lose jobs if administrative positions were cut. I say, good, retrain them to do something that actually has a benefit to society.
31
@Cindy
The most irritating aspect of surveys is that too often physician salaries are tied to survey results, which may have little or nothing to do with the quality of work performed by a doctor. Example: the response to a survey may depend on how a doctor responds to a request that may or may not be reasonable.
7
ACA was reported to have a mandate to reduce paperwork, at least by requiring common insurance forms. This was a good idea since a three-part NPR Planet Money report on healthcare costs reported one example group medical practice that spent 25% to hire people just to "code" all the forms from different insurance carriers.
So, hows that ACA paperwork act working out?
13
Interactions with anything the government has its hand in never has less paperwork.
1
Americans need to decide on the objectives of their health care system. Is it the physical and mental health of the population or the economic health of the corporations?
308
@Greg Yes. They also need to decide what gets covered and how quickly they want access to services? It all starts to get cheaper when you pay for less and ration the services. Of course, the patients have to then accept those conditions. Talk is cheap. Say all you want until you're told that you can't have it. Oh wait, that's not covered?
2
@Greg
We the people have failed at the ballot box. Examine your candidate next time. How much money has he or she taken from the private health insurance industry, health industry lobbyist, drug and medical equipment companies. Vote for the person who is not bound by quid pro quo to these people, assuming you can find one.
15
@The Closer
Oh please! Enough with the scare tactics and straw man arguments.
Medicare works very well for those who have it. If common sense ever prevails and Medicare for all happens, we will all be better off for it.
22
The "waste" can be found largely to the health care corporation profit, unrelenting health care litigation and attorney profit, and insurance corporation profit.
Take private profit out of the US health care system and you will achieve what the Constitution intended.
95
@Greg - The Constitution says nothing about health care.
3
@Remembers History How can the government provide for the general welfare of people without providing healthcare?
2
The current system is broken. We reduce waste with Medicare for All.
42
Frakt concludes: "Because health care waste comes from many sources, no single policy will address it. Most important, we have evidence on how to reduce only a small fraction of the waste — we need to do a better job of amassing evidence about what works."
Ridiculous! Every system of universal healthcare on the planet costs half or less per person than the American system. Yet Austin Frakt claims that we need more evidence of what works in eliminating waste? Somehow it is illegal or immoral to look to the myriad healthcare systems that actually work? That cost a fraction of ours, while delivering better outcomes to all of their citizens than our system does?
Come on! This is just more distract and deflect. Senators Warren and Sanders are proposing precisely the systems, based on those that work elsewhere, that we need and can implement. Only columnists for The Upshot seem to think that this is all a big mystery.
Universal healthcare with single payer. Now.
348
@Sean Agreed! Why is the Times focusing on a study whose lead author works for Humana?! Medicare for All is the obvious solution yet this study is obviously going to downplay its effectiveness because the health insurance industry wants to continue gambling on Americans' lives just to make a profit.
52
@Cassidy
"Why is the Times focusing on a study whose lead author works for Humana?"
Exactly. Talked about a biased source.
36
@Cassidy Exactly. This article is obviously a lobbying attempt by the healthcare industry.
30
Layers upon layers of administration, each just tweaking spreadsheets and plugging up potential liability holes, making rich salaries for this. In higher education, the equivalent layers would include the vice provosts of diversity and inclusion etc. These are the parasites in our brave new world.
15
What about the cost of supplies, run of the mill drugs (saline, generics, insulin, non-narcotic pain medications, etc.), and implantable devices (artificial joints, stents, etc.)?
4
@a href=Ned Spilsbury There are other forms of work that they could do.
@a href=Ned Spilsbury - What about them? What is your point? Plus, some of the things you listed (like insulin) are very expensive, while others (Tylenol/non-narcotic pain meds) are not.
Since administrative costs are part of the definition of waste (and 1/2 the staff in many private offices are devoted to billing, pre-authorization and responding to additional information from payers), artificial documentation requirements should be added and have made medical charts less useful and impossible to read efficiently. Providers have to be trained and reminded again and again to use the buzz words indicating severity when the purpose should just be clear communication for the good of the patient. Yes, the industry of insurance naturally resists this and the very existence of companies like United Health Care contributes to that waste. It is no longer the “unnecessary care” that should be receiving all the attention, there should be other ways to uncover fraud than making every transaction difficult.
Yes, health care would require many fewer people (non-providers) and so cost less if the administrative burdens were reduced.
36
Medical insurers were at one time non=profit. Once they became profit centers, owing dividends to their shareholders, it was inevitable that costs would rise. Pharmaceutical houses have become profit centers. Many medical practices work on corporate models, as do hospitals. Profit centers all!
70
@hopeE In some states insurers have to be non-profit by law and, let me tell you, it's absolutely no better. How do I know? I used to work for one. These non-profits were so profitable they'd burn through money wastefully basically just to hide it. Non-profit, for-profit, it doesn't matter. We need Medicare for All.
1
Administrative "cost" and "waste" is a paycheck for someone. Eliminating all that administrative complexity would eliminate a massive number of jobs. Hospitals and insurance company call centers are the main (sometimes only) employer other than Wal-Mart across small town America. Eliminating the "business office" at the local hospital means lots of high-school-educated workers (90+% female) lose their jobs. I'm not arguing the waste is a good thing, but there is a Keynesian aspect of this (injecting money into parts of the country that have few other economics prospects) that is typically ignored when hand-wringing about the cost of the American health system.
3
@Zartan
Yes, I should empathize and for a moment care about someone deeply in need of the medical status quo...but I don't. It's been BLED out of me.
7
@Zartan
Instead of do-nothing jobs, we should have do-something jobs.
You are making an argument for stimulating the economy by having people do useless work to give them a job and keep the economy going.
It would be even better to stimulate the economy by having them do *useful* work. For example, schools, libraries, post offices and federal services like IRS help lines have been cut back under Republican policies.
(According to Paul Krugman, they are trying to promote an ideology that the government can't do anything, and the best way to prove that is to cut government services so that they can't do anything.)
If you are concerned about the welfare of hospital administrative workers, I would prefer that we do what the Germans do -- give them long-term unemployment insurance, retraining, and early retirement.
But don't drive up my health insurance.
21
I've been getting a lot of care recently from Kaiser-Permanente in Northern California. It appears to me they do a wonderful job of avoiding most of the waste described in this article. I'd be very interested to see a comparative study of the KP model vs. other health delivery models. I think we should be looking at expanding uptake of the Kaiser model.
34
@Thomas King Kaiser’s per capita cost is a third less than the national per capita serving a population mix that roughly mirrors the nation. They are the standard to which others should aspire.
19
@Bluff City Brad The mix of patients that Kaiser has is different than the population at large.I like Kaiser but the comparison is not valid.
3
@GDK I don’t think that’s correct. Kaiser’s patient mix is fairly representative of the population. Probably has a larger percentage of working-class. Even people on Medic-Aid can have Kaiser. And it has a lot of people on SS through its Advantage plan.
What is true is that the patient population of other countries like Canada, Norway, Sweden, Belgium, Denmark, etc., which are so touted, are markedly different from both the Kaiser and US patient pops.
If the US had a patient population like Sweden’s, the US would be in the top ranks. The US has a very unhealthy patient population, which is not the fault of the US healthcare system.
5
20 - 25% waste is that all?
How much does the dance between health care providers and insurance companies waste.
How much is wasted paying health insurance brokers commissions when most areas have no free market competition?
How much is wasted paying administration staff to code billing to deceive the reader?
How much of the $3.4 trillion per annum spending winds up as profits for Wall Street investors - many of which reside overseas.
How much of the amount we collectively spend on healthcare goes on TV advertising.
The per capita cost of US healthcare is roughly twice the cost of the rest of the developed world. Medicare costs are well below private sector costs.
I respectfully suggest that the waste is closer to 50%.
168
@MrC
And you left out a lot of ancillary costs this study may not have taken into account, which disappear when everyone has medical care:
- No lawsuits over who pays medical costs in a car accident, or workman's comp. Everyone has health care, so no argument.
- No one has to worry about shifting jobs and losing healthcare. Your healthcare goes with you. So more mobility.
- No time arguing over medical bills, which members of my family in the US spend a lot of time doing -- along with worrying they won't get paid for items that they are supposed to get
- No complex union negotiations over healthcare for retirement.
- No difficulty getting doctor's appointments
And imagine that with premium payments of around $30 a month and doctor's visits that cost another $35 or $40, mostly reimbursed.
This is not nirvana or a fantasy. It is Belgium, where I live. My taxes are high but I don't worry about medical care. It is the best healthcare I've ever had in my life.
279
@MrC
Private health care industry profits, profits mind you, hover currently about a trillion dollars a year.
Dump private healthcare and you virtually pay for your single payer plan. Especially if you can make these Medicare for All nuts listen and adopt a system very like Ontario's, a few minutes to the North.
This is America. We're mean, and we're cheap. Mostly because the people making decisions are very rich, and thy want more for themselves.
In a single payer system that views itself as a service provider rather than a gate-keeper, administrative fees are drastically reduced because you don't need an entire bureaucracy in place to prevent people from ripping you off.
29
@david in brussels
- Another ancillary cost eliminated:
bankruptcies due to medical bills. Bankruptcies cost money for creditors who don't get paid, not just the bankrupt. In addition, elimination of the social costs of a bankrupt person or family becoming homeless, with all the problems that accompany that.
17