Health Care Wasted Spending

I read an interesting piece in Forbes tonight about the wasteful spending endemic in our health care system. It only further entrenched in me my already strong belief that as long as consumers continue to have health "insurance" that covers every medical expense, paid for by a third party, with high premiums and low co-pays, we will continue to see this upwards spiral of cost increases.

Procedures, tests, and drugs are all taken and prescribed, even though there may be little to no benefit for the patient. Yet the patient does not have to bear much, if any, of the cost of these activities. There is therefore no incentive not to utilize every available remedy their doctor may be willing to prescribe.

High deductible, low premium, catastrophic loss true health insurance policies, coupled with health savings accounts where the consumer controls the majority of first costs for health care coverage, would eliminate a lot of the waste described below. "Waste" facts highlighted in the article included:

• In 2008, the consultant firm McKinsey found $650 billion in excess medical costs.
• A Dartmouth Medical School study estimates that 20% or more of all health care costs could be eliminated without harming anyone.
• At least 40% of all specialist visits and 25% of all hospital stays are unnecessary.
• We now do 70 million CT scans per year, compared with just 3 million in 1980, all at a cost of $200 or more per scan. The number of scans has doubled in this decade alone (from 35 million to 70 million). Scans are frequently done when not needed, just to be safe, or when other symptoms and factors would otherwise indicate that one is not needed.
• Over the past 5 years, spending on antipsychotic drugs has increased 50%. One doctor states these drugs are prescribed "a little wantonly." Another says their wide use is "one of the reasons we haven't been able to control health care costs" and that the wide use is "without scientific justification."
• Spending on back and neck pain treatments increased 65% (after inflation) between 1997 and 2005, to $86 billion. Yet the Journal of the American Medical Association found no evidence that the increased spending was making people feel any better.
• Surgeries to put in artery-widening stents cost more than $12,000. But studies find many people who get them didn't really need them. Drugs that cost less than $1000 lead to outcomes almost as good as $12,000 stents (only a 1/2 percent difference in the odds of suffering a heart attack using drugs over stents).
• From 1996 to 2006, knee arthroscopy procedures increased over 50%, to 956,000 annually - many to help patients with arhritis of the knee. Yet two vigorous trials show that this $5000 procedure doesn't actually help patients with arthritis of the knee (granted, not all of the yearly arthroscopies performed were solely on patients w/ arthritis). One doctor says "This is one of the most frequently performed procedures in medicine, and we don't know whether it works."

There is much that can be done to help bring down health care costs (and thus insure more people), but clearly one of them is to have a system where patients have more skin in the game, and control the majority of first dollars spent. Only then will consumers begin to ask themselves "Do I really need this?" and in doing so create some cost containment. Until then, as long as a third party is paying, the only words you'll hear will be "Where do I sign?"