Democracy Reports
Search
•
RSS Feed
Executive Summary
Our health care system is in crisis. Without swift action, that crisis
could threaten every Oregon family’s health and finances.
Unless
the new Congress and Administration act to reduce health care costs,
the yearly cost of the average employer-paid family health policy in
Oregon is projected to more than double from $11,613 in 2006 to $27,047
by 2016 even after adjusting for inflation. If recent trends continue,
wages and household incomes will simply not keep up with these high
costs. Nor will the business sector be immune to this crisis.
Unchecked, this cost epidemic could also severely impact the small
businesses that drive job creation in the Oregon’s economy.
Unfortunately,
too much of these astronomic costs are going to enrich special
interests, not buy the best health care. The Congressional Budget
Office estimates that nationally as much as one third of health care
spending is wasted and does not improve outcomes. That means that, in
2007, one out of every three dollars that Americans spent on health
care, or $730 billion, went to the insurance bureaucracies, drug
companies, medical device manufacturers, and providers without
improving a single person’s health. In Oregon, one third of health
spending amounts to $5.84 billion.
This report examines three
important sources of this unproductive spending. We conclude with a
package of urgently needed reforms which target those causes, improve
quality of care, and rein in this unnecessary spending. As part of
comprehensive health reform, these policies will enable America to
emerge from this crisis with a health system that consumers and
businesses can afford and families can depend on.
Unnecessary Medical Care Undermines Patient Health and Increases Costs
Research
has shown that patients who live in regions with above-average health
care spending are not any healthier than people in lower-cost regions.
In parts of the country where more specialists and hospital beds are
available, doctors send patients to specialists or to the hospital more
frequently, yet the patient outcomes are no better.
• Medicare
and private insurance payment policies compensate doctors on the basis
of how many tests and procedures are ordered, not on the basis of
whether effective treatment is delivered.
• Payment for care does
not adequately support effective strategies that improve patient health
and reduce the amount of unnecessary care prescribed such as primary
care, coordinated care, patient involvement in care decisions, and the
use of evidence-based care.
• High-performing health systems that
seek to reduce unnecessary care, like the Mayo Clinic and Utah’s
Intermountain Health System, can reduce costs per patient by as much as
43%, while providing quality care. If America’s hospitals achieved
Intermountain’s level of quality and efficiency, we would spend $299
billion less a year for hospital care. If Oregon hospitals improved
their efficiency by 43%, the state would save $2.58 billion.
Excessive Administrative Expenses Inflate Insurance and Medical Prices
Many
administrative costs within America’s health care system are the result
of efforts to shift costs from one payer to another—from the insurance
company to a hospital, or from a physician to a patient. This paperwork
increases total costs without improving outcomes for patients.
•
Unnecessarily duplicative and complex billing and insurance
certification requirements add billions in additional administrative
costs.
• The credentialing process by which physicians are certified as providers is unnecessarily burdensome and wasteful
•
Insurers and providers spend tens of billions a year nationally on
insurance-related paperwork that does not contribute to the quality of
care.
Unchecked Pharmaceutical Marketing Drives Up Costs
Americans
spend billions of dollars annually on prescription drugs that are no
better than cheaper alternatives or that may have dangerous or
unrecognized side-effects. Worse, drug companies’ marketing campaigns
in support of their most expensive drugs cost $11.5 billion in 2005.
•
Drug advertising generally encourages the use of newer, more expensive
medications, even if they are no more effective than existing ones
•
Pharmaceutical companies increased prescription drug advertising by 250
percent from 1997 to 2007. In response, physicians prescribe and
consumers purchase billions of dollars of unnecessary and even risky
medicine each year.
• Direct marketing to physicians, which has
been shown to rely on misleading information, boosts the total number
of prescriptions and increases the number of prescriptions for newer
and more expensive drugs that are no better than old ones.
Solutions
Fortunately,
the high cost of care can be reduced and wasted spending is
preventable. America can fix this problem now. In light of the 2008
election, health care reform will be on Congress’ agenda in 2009. If
these reforms are to be economically sustainable, they must tackle
unproductive spending that doesn’t improve health. This report
recommends the adoption of the following policy initiatives:
Reduce Ineffective Medical Care While Improving Quality
• Fund comparative effectiveness research that studies which medical procedures, regimens and drugs work and which do not.
•
Broadly implement and incentivize coordinated care systems such as
medical homes. Compensate primary care providers adequately.
• Expand information provided to patients and encourage them to share in decision making about their care
•
Reform public and private payment systems to provide the right
incentives for high-quality care and reduce unnecessary but costly
tests and procedures.
Reduce Expensive Administrative Bureaucracy
• Standardize systems for enrollment, credentialing, billing and insurance payment.
• Limit insurers’ administrative expenditures to a certain percentage of premium dollars.
Reduce Prescription Drug Costs
• Strengthen FDA monitoring of false statements in direct-to-consumer advertising and marketing materials
•
Undertake a publicly funded effort to publicize the benefits and prices
of drugs to counter the unreliable information provided by
pharmaceutical companies.
• Limit industry’s gifts to physicians
and require drug companies to disclose more information about their
marketing practices
Some of these reforms could happen fairly
quickly; others will take years. But it is critical that we start now
by addressing overspending that does not deliver results. Residents of
Oregon simply can not afford any more years of spiraling health care
costs.
|
