The American Journal of Medicine
Volume 123, Issue 3 , Pages 193-194, March 2010

We Can Reduce US Health Care Costs

University of Arizona College of Medicine, Tucson

Article Outline

 

The primary reason that the US needs health care reform is that we pay more for health care than any other country in the world; yet our health outcomes are below that of other western nations.1 Our health outcomes are suboptimal because millions of Americans have limited access to ongoing primary and preventive care because they can't afford our health insurance.

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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?

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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.

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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.

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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.

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References 

  1. Organization for Economic Co-operation and Development. Health at a glance: 2007 OECD Indicators.
  2. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in the United States and Canada. N Engl J Med. 2003;349:768–775
  3. Kahn JG, Kronick R, Kreger M, Gans DN. The cost of health insurance administration in California: estimates for insurers, physicians, and hospitals. Health Aff. 2005;24:1629–1639
  4. PricewaterhouseCoopers Health Research Institute. The price of excess. http://pwchealth.com/cgi-local/hregister.cgi?link=reg/waste.pdfAccessed December 12, 2009
  5. Dalen JE, Alpert JS. National health insurance: could it work in the US?. Am J Med. 2008;121:553–554
  6. Baicker K, Chandra A. Medicare spending, the physician workforce, and beneficiaries' quality of care. Health Aff. 2004;W4:184–197
  7. Starfield B, Shi L, Grover A, et al. The effects of specialist supply on population's health: assessing the evidence. Health Aff. 2005;W5:97–107
  8. Kravet SJ, Shore AD, Miller R, et al. Health care utilization and the proportion of primary care physicians. Am J Med. 2008;121:142–148
  9. Dalen JE. The moratorium on US medical school enrollment from 1980 to 2005: What were we thinking?. Am J Med. 2008;121:e1–e2
  10. National Resident Matching Program, March, 2009. http://www.nrmp.org/data/advancedatatables2009,pdfAccessed August 18, 2009
  11. Hauer KE, Durning SJ, Kernan WN, et al. Factors associated with medical students' career choices regarding internal medicine. JAMA. 2008;300:1154–1164
  12. Association of American Medical Colleges. 2008 http://www.aamc.org/newsroom/reporter/dec08/graduates.htmAccessed August 18, 2009
  13. Bodenheimer T, Berenson RA, Rudolf P. The primary care–specialty gap: Why it matters. Ann Intern Med. 2007;146:301–306
  14. Fisher E, Goodman D, Skinner J, et al. Health care spending, quality, and outcomes. The Dartmouth Institute for Health Policy and Practice http://www.dartmouthatlas.org/atlases/Spending_Brief_022709.pdfAccessed December 9, 2009
  15. Kessler DP, McClellan M. Do doctors practice defensive medicine?. Q J Econ. 1996;111:353–390
  16. Danzon PM, Furukawa MF. International prices and availability of pharmaceuticals in 2005. Health Aff. 2008;27:221–233
  17. Dalen JE. It's time to bail out US seniors trapped in the Medicare donut hole!. Am J Med. 2009;122:595–596
  18. Tamblyn R, Laprise R, Hanley JA, et al. Adverse events associated with prescription drug cost-sharing among poor and elderly persons. JAMA. 2001;285:421–429
  19. Reinhardt UE. Perspectives on the pharmaceutical industry. Health Aff. 2001;20:136–149
  20. Benn R, Maizes V, Guerrera M, et al. Integrative medicine in residency: assessing curricular needs in eight programs. Fam Med. 2009;41:708–714

 Funding: None.

 Conflict of Interest: None.

 Authorship: Dr Dalen is the sole author of this manuscript and had full access to the data.

PII: S0002-9343(09)01115-2

doi:10.1016/j.amjmed.2009.12.011

The American Journal of Medicine
Volume 123, Issue 3 , Pages 193-194, March 2010

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