We Can Reduce US Health Care Costs

Reducing Administrative Costs 

We spend more than a third of our health care dollars on overhead and administration: billing, advertising, profits, and bonuses for health care executives.2, 3 Administrative costs in countries such as Canada that have a single payer (non-profit national health insurance) are half as much as in the US.2 If we had a single payer instead of hundreds of insurers with thousands of different plans, we would save 15% of our health care costs. Fifteen per cent of trillions adds up!

A Price Waterhouse Coopers study reported that our complex, fragmented health care delivery system wastes $210 billion per year on unnecessary billing and administrative costs.4 The ultimate solution to our excessive health care costs is national health insurance: Medicare for all5; but that won't happen–at least not in the very near future. What can we do to decrease health care costs now?

Focus on Preventive Care 

We need to change our focus from disease management to prevention and health promotion. To change our focus to prevention we need more primary care physicians, family physicians, and general internists. Multiple studies have shown that generalists practice more cost-effective medicine than specialists and that their patients have better health outcomes.6, 7, 8

Due to poor planning, currently we have an overall shortage of physicians in the US.9 The number of medical students recently has increased, but we have an even greater problem. The number of US MD graduates choosing primary care careers keeps decreasing. In the 2009 National Residency Match, only 7% of graduates chose family practice, and 19% chose internal medicine.10 Only a minority of those choosing internal medicine will become general internists; the majority will become subspecialists or hospitalists. Hauer et al reported that only 2% of US senior MD medical students planned to have a career in general internal medicine.11

One reason that medical students enter specialties is that the average educational debt of the class of 2008 MD graduates was $150,000.12 This influences many graduates to enter specialties that pay, on average, twice as much as primary care so that they can pay off their educational debt.13

To influence more physicians to choose primary care we need to pay off their educational debt if they choose and remain in primary care. In addition, they should receive an annual stipend for each Medicare patient for whom they coordinate care and provide a medical home. These stipends added to their fee for service income should provide an income comparable to the average specialist. This would be an excellent investment for Medicare. If each primary care physician can avoid 1 unnecessary hospitalization or even 1 expensive but unnecessary test for each patient, Medicare will come out far ahead!

To be effective in prevention, primary care physicians must have certain skills that our current medical school curriculum does not provide adequately. We offer minimal training in nutrition, prescribed exercise, stress reduction techniques, and other effective therapies for certain conditions, for example, acupuncture for specific chronic pain syndromes.

Eliminate Unnecessary Tests and Procedures 

In addition to training a new cadre of adult generalists with expertise in prevention, we must ensure that all physicians (specialists and generalists) practice cost-effective medicine. At the present time, physicians vary tremendously in their use of expensive diagnostic tests and treatments. The average cost of treating a Medicare patient in some parts of the country is twice as expensive as in other areas.14 The most expensive cities have more hospitalizations, and physician visits and their physicians order more expensive diagnostic tests and procedures. There is no evidence that the more expensive treatment benefits patients.14 Much of the excessive treatment and unnecessary testing occurs at the end of life. We must encourage all citizens to have living wills to avoid unwanted procedures at the end of life.

Many unnecessary tests are performed to prevent malpractice suits. Kessler and McClellan, in 1996, estimated the annual cost of defensive medicine to be as much as $50 billion per year.15 It must be much higher at present. We need malpractice reform including limits on awards for pain and suffering. Our current system of paying millions of dollars to patients and their attorneys when malpractice is documented does not prevent malpractice. We need to require retraining of physicians who are shown to practice substandard medicine. We need to suspend or deny participation in Medicare for repeat offenders.

In addition, we need to increase research funding for projects that will help to determine which diagnostic tests and procedures actually benefit specific patients. This research will increase the number of evidence-based practice guidelines. Medicare should not pay for procedures that do not benefit patients. This is not rationing–it is common sense.

Controlling the Costs of Prescription Drugs 

Our government must control the prices of prescription drugs as is done in nearly every other nation. Drug companies can charge whatever they wish in the US. Citizens of other nations pay 20% to 40% less for prescription drugs compared with what Americans pay.16

Millions of Americans have chronic conditions that require life-long medications. If their insurance doesn't pay for them, or if they fall into Medicare‘s donut hole17 and cannot afford prescribed medicines, many patients stop taking their medications. The result is increased emergency room visits and hospitalizations and a further increase in our health care costs.18

Some authorities have suggested that if we decrease the profits of drug companies they will stop developing new drugs. Given that drug companies spend more than twice as much for marketing and advertising as they do for research19 this is a very unlikely outcome.

In summary, we must reduce the cost of health care in the US. We can do this by developing a health care system that emphasizes prevention rather than disease management. To do this we must encourage more physicians to be adult generalists and we must provide them with new skills.20 Furthermore, we must insure that all physicians have cost-effective practice patterns that avoid unnecessary tests and procedures and that all citizens adopt living wills. As a nation, we need to have better control over the cost of prescription drugs.

Finally, at some point in the future, we should adopt a policy of national health insurance, Medicare for all.