Healthcare spending is currently over 18% of GDP in the US, almost twice the average of other developed countries. US National Health Expenditures hit $3.5 trillion in 2017 and are expected to reach $5.7 trillion by 2026. About 10% of Americans remain uninsured, mostly working age adults who say they just can’t afford the premiums or out-of-pocket costs.

Fraud and waste are why US healthcare is so damn expensive. An estimated 10% of Medicare/Medicaid is lost to fraud. As for waste, at least 20% of US healthcare spending is unnecessary due to:

  • Overuse of Medications (e.g., antibiotics)

  • Overuse of Screening Tests (e.g., colonoscopies)

  • Overuse of Diagnostic Tests (e.g., endoscopies)

  • Overuse of Therapeutic Procedures (e.g., cardiovascular, knee replacements)

  • Overuse of Aggressive Care for Dying Patients

  • Failures of Care Coordination

  • Administrative Complexity

  • Fee-for-Service Incentives

  • Defensive Medicine

  • Overuse of Specialists (insufficient gatekeeping)

  • Under-use of Primary Care Nurse Practitioners

It all adds up.

Imagine if the US cut healthcare spending by a quarter. That would shave off almost a trillion dollars - enough to fund a healthcare system where everyone is covered and everyone’s paying less. All it takes is political will, including a willingness to face down the AMA.

Here are a few suggestions:

  1. Stay with a multi-payer system, but with strict cost controls, like Japan and Germany.

  2. Develop fee schedules for diagnostic procedures, treatment, and medical equipment, set by federal or regional governments, like Japan and Canada. Public and private payers would use the same fees schedule, streamlining the medical billing process (i.e., reducing administrative complexity)

  3. Increase Medicare/Medicaid fraud prevention, detection, and prosecution.

  4. Greatly expand the number of nurse practitioners as independent primary care providers and gatekeepers to specialists, as is already happening in several European countries.

  5. Institute a no-fault medical malpractice system, like the one in Denmark.

  6. Develop federal guidelines for medical testing and treatment, much like the NICE system in Britain, which would reduce defensive medicine as well as malpractice claims. As in Britain, medical providers would still be allowed to depart from guidance per their independent judgment of what’s best for the patient.

Some beneficial side effects: personal bankruptcies would be cut in half and employers would have more money to increase wages. And for those who want more choice and easy access to specialists, fine. All you have to do is pay for it.

Links and References:

National Health Expenditure Projections 2017-2026 - CMS

Berwick DM, Hackbarth AD. Eliminating waste in US health care. JAMA. 2012; 307 (14):1513–1516. DOI: 10.1001/jama.2012.362

Brownlee, S., Chalkidou, K., Doust, J., Elshaug, A. G., Glasziou, P., Heath, I., Nagpal, S., Saini, V., Srivastava, D., Chalmers, K., … Korenstein, D. (2017). Evidence for overuse of medical services around the world. Lancet (London, England), 390(10090), 156-168.