The coronavirus pandemic didn’t cause the problem but it has opened our eyes to the reality that our health care system is severely lacking and its failings cry out for reform.
Die-hard conservatives have dug in their heels to resisting any changes, but how long can they keep saying that our system is the envy of the world? We have about 30 million people without any insurance at all and another 44 million with deductibles and out-of-pocket costs that are so high, they are essentially uninsured. When it comes to life expectancy, we are not number one; we are actually number 36, better than Albania but not as good as Chile. We offer a trifecta; incomplete coverage, poor care and staggering cost. We’re taken for a ride when we pay for a prescription or a hospital bill or get stuck with a bill from somewhere out in left field… a surprise bill. Medical debts and bankruptcies are crippling our families and soaring costs of publicly funded programs like Medicaid are squeezing our states’ budgets. It doesn’t help that a huge share of the expense is going to waste.
A sentinel publication in 2012 of the National Academy of Medicine named six categories of waste: needless services, high prices, fraud, administrative complexity, fragmentation and missed prevention opportunities. Together, these account for one-third of the total $3.5 trillion we spend to improve our health. Let me show you how.
Offering needless services that add cost with little or no benefit, such as medicines that don’t work, tests that do not yield meaningful results, needless screening, etc. lead the way. Physicians say that 25% of all tests, 20% of all prescriptions and 10% of all procedures are unnecessary. If 20% of the total health expenses go to clinical services and if 20% of those are unnecessary, then 4% of the $3.5 trillion, or $1.4 billion, is unnecessarily spent each year on services that add nothing but cost.
Our outdated bureaucracy accounts for more billions wasted each year. Other countries have the same administrative tasks that we do but they do it at a fraction of what our system spends. Private insurance companies spend 12-15% of your premiums on their overhead. Medicare, a single-payer system, spends less than 2% of its revenue on administrative expenses.
This next category will surprise no one. We are massively over-charged. An American MRI costs $1,121, but its Spanish counterpart costs only $230. We overpay for our hospital care. Hospitals are free to charge $15 for a Tylenol tablet, $53 for each non-sterile glove used and $10 for each plastic medicine cup. The average hospital stay per day is $5,220 in the United States and $765 in Australia. Bypass surgery in the U.S. costs
$78,380; in the U.K. it costs $24,059. We overpay for everything, but the amount we overpay for prescription drugs is the mother of all overpayments. A month of Lipitor costs $124 in America and $6 in New Zealand. Eliminating this price disparity would save hundreds of billions each year.
We are victimized by clever fraudsters. The creativity of health-dollar swindlers has not been matched by our regulatory agencies, who have been content to discover fraud when they can and then recover what stolen dollars they can. We lose more to fraud than we spend on medical research. It is so lucrative and so low-risk that the FBI reports that a number of cocaine dealers in Florida and California have switched from illicit drugs to Medicare fraud.
Our dysfunctional, uncoordinated and fragmented care is responsible for additional billions of waste every year. All too often, the left hand does not know what the right hand is doing, and so the left hand pays for services already provided by the right hand. Visits to the primary care doctor are dropping as more people are using emergency rooms and urgent care clinics for conditions that are neither emergent nor urgent. Those visits often run up huge bills for conditions that could have been addressed by the primary care provider at lower costs.
Billions could be saved each year — along with human lives — if we improved our efforts in preventing illness, not just treating it. Our immunization rates and cancer screening rates are too low. Much of our health is connected to our behavior and we must make better choices
In Ripped Off!, I showed how we could prevent the amount of waste without sacrificing quality. I showed how we spend too much on the wrongs things and not enough on correcting the social inequities that are so instrumental in determining our health. I encouraged everyone to have the courage to question the necessity of their physician’s orders, take more personal responsibility for their health and keep their own health records and their Medicare numbers under close wraps.
And now you might ask what this has to do with our response to the coronavirus crisis. Recall, that the biggest concerns are cost and capacity. The two spring from our health care system, which is driven to make profits for its owners. What is our cost is their revenue. It is only natural that our costs of care (the industry’s revenue) will be as high as possible. A recent Commonwealth Fund poll showed that two-thirds of Americans are so concerned about the costs of care that their decision to get care if they had symptoms of the coronavirus would be impacted even if they had insurance.
Loss makes up the other side of the balance sheet. Inventory is a loss so profit-driven corporations make use of just-in-time inventories. Increasing inventory (stockpiling) beyond current needs is anathema since it lowers bottom lines on financial statements. We should expect high costs and low inventories when the bedrock of a system is the profit-driven corporation.
Imagine a system with a different bedrock, one that is designed to serve a public good, instead a high return on investment for a few. Such a system would provide universal coverage leaving no American without care The single payer, the government, would have massive bargaining and regulatory power and would negotiate prices down to the level of our peer nations. Further, a federal system would have the wealth to fund and the incentive to invest in an emergency medical supply reserve.
We have such a reserve to protect our economy. The U.S. has a Strategic Petroleum Reserve with a total capacity of 727 million barrels theoretically replacing about 60 days of oil imports. We have about 200,000 soldiers in the U.S. Army Reserve in case of war. We invest in reserves to protect our economy and our borders. We need to do the same for our health.
COVID-19 exposed our health care problems for all to see. Now that we see them, we must make major administrative and legislative changes. It’s time to stop kicking the can down the road.
Gilbert Simon, MD, is a professor at California Northstate Medical School, and the author of Ripped Off! (Paper Raven Books 2020).