A new report by the Institute of Medicine has been getting a fair amount of attention. The report not surprisingly found that the American health care system is radically more expensive than it should be. It found that in 2009 the nation spent an estimated $750 billion in unnecessary health spending. From their press release:
The costs of the system’s current inefficiency underscore the urgent need for a systemwide transformation. The committee calculated that about 30 percent of health spending in 2009 — roughly $750 billion — was wasted on unnecessary services, excessive administrative costs, fraud, and other problems. Moreover, inefficiencies cause needless suffering. By one estimate, roughly 75,000 deaths might have been averted in 2005 if every state had delivered care at the quality level of the best performing state.
By simply comparing us with other first world countries I have little doubt that this country overspent by roughly that amount on our health care but I have a problem with this issue always being described as “waste.”
When I hear the word “waste” I feel it almost implies the money was overspent by accident or the unnecessary byproduct of laziness/ignorance. For example I wasted money on groceries because I let my fruit go bad. Much of what we see as wasteful medical spending the health care industry sees as a very profitable business model that needs to be protected. The “wasted” money does not simply disappear, it goes to companies and professionals.
While figuring what care is unnecessary and how to reduce medical errors can be difficult tasks, there is no mystery about how we could eliminate the roughly $200 billion we spend on excessive administration costs and $100 billion on drug prices being too high.
If a drug company is given a special government protected monopoly over a necessary drug and Congress also bars the government from regulating what prices the company charges, they are going to charge as high a price as they can get away with.
We can quickly eliminate much of our large administration costs by adopting any of a dozen proven international models, such as an all-payer or single-payer system.
The only reason we aren’t using proven methods to eliminate this waste is because the industry spends millions on lobbying our politicians to not fix the problem and even pass new laws to make the situation worse. When money is being given to government to write the laws to help companies extract more money from regular Americans that is not waste, that is corruption. The waste remains because to eliminate it would mean eliminating much of many companies’ profits.
We don’t so much have a health care waste problem, we have a corruption problem.