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Health Care Waste Deconstructed: Patients Aren’t the Problem

The bottom line is that there is already enough money in the system to more than adequately cover everybody.

If anybody ever tells you we can’t afford health care for everybody, consider the following: Every other wealthy country in the world provides health care for all at an average of about half the per-person cost in the United States.

Their health care systems are more popular than ours and get better results for all their people. In those countries, there is no such thing as medical bankruptcies and there is no job-lock due solely to health care coverage.

Last month, the National Academy of Sciences reported that in the U.S. we waste $750 billion on health care, or about one in every three dollars we spend. Apologists for our dysfunctional health care system blame fraud and inadequate prevention — “blame the patient” — for most of that. But those two factors accounted for only 17 percent of the waste, according to the NAS.

The rest of the waste, 83 percent, was accounted for by other factors. Unnecessary services accounted for 28 percent. Unnecessarily high prices accounted for 14 percent. Excess administrative costs due to too many private insurance companies and types of insurance accounted for 25 percent.Inefficiently delivered services due to a lack of coordination among doctors, hospitals and other providers accounted for another 17 percent.

Many of these problems can be solved, and have been in other countries and in parts of this country. But they will not be solved anytime soon unless we fundamentally transform the ways we finance and deliver health care.

The mission of a public financing system, such as Medicare, is to facilitate the delivery of medical care. Medicare has an administrative overhead of less than 5 percent. The mission of private health insurance companies is to create wealth for their owners. To do so, they spend a lot of time, effort and money impeding the delivery of medical care in order to insure that they minimize payouts and maximize profits. In doing so, they have overhead approaching or exceeding the 20 percent limit imposed by the Affordable Care Act.

This is where much of the $190 billion in administrative spending that does little or nothing to improve health goes.

Americans have to wake up to the fact that most prices charged for medical care in the U.S. are simply too high — far higher for most products and services than in any other country. Technology companies are accustomed to charging far higher prices than are necessary to sustain a sound business. While there is a large range of incomes among doctors and other health care professionals, many are making far more money than is necessary to maintain a perfectly comfortable lifestyle.

For many years, in both the public and private sectors, we have attempted to solve problems with the delivery of health care by just throwing more money at them. This glut of money has led to an environment where improving the efficiency of care by better coordinating services, which is hard work, or factoring cost into clinical decisions has not been necessary.

This problem could be solved by putting our health-care system on a budget-driven diet while simultaneously expanding access. Such an approach would be politically sustainable only if we are all in the same system in a program like Medicare, for everybody.

If that were the case, we could then all see the benefits of making substantial and effective investments in preventing diseases before they reach advanced — and costly — stages. That’s the way it works in most other wealthy countries.

A centrally financed health care system, such as Medicare for All, would also permit large-scale collection of consistently formatted claims and illness data. Such a database would make fraud much more visible and therefore less attractive, and would make preventive health measures, such as tumor registries, much more effective. Canada, because it has a national health system, is now ahead of us in the creation of such comprehensive registries that help improve prevention measures, and produce their better results.

Moving toward a single, tax-supported public financing system in Maine and the U.S. would also hasten and greatly simplify reform of the ways we pay physicians, hospitals and other providers, rewarding them for improved results and more efficient coordination of services.

The bottom line is that there is already enough money in the system to more than adequately cover everybody, if we can eliminate the waste. To do so, we would have to kill a few golden geese. The owners of those geese will be unhappy and will fight tooth and nail, but the rest of us would be much better off.

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