The Surprising Root Of The United States’ Wasteful Health Care Spending

Over the last several decades, U.S. national health expenditures have skyrocketed, increasing everything from the cost of treatment to the cost of coverage and the federal government’s entitlement obligations.

Experts have long held that anywhere from 30 to 50 percent of America’s $2.7 trillion annual health care spending is wasteful, either due to ineffective treatments, excess medical tests, hospital re-admissions, and medical billing fraud.

But there has been some debate over exactly how much each of these factors contributes to wasteful health expenditures. On Thursday, the nonprofit group New England Health Institute (NEHI) held a round table in which they explored exactly that, and their findings are striking: of the seven biggest factors contributing to waste, the largest by far is patients not adhering to their medication regimens. NEHI estimates that a staggering 50 percent of the 187 million Americans taking prescription drugs every year do not take them properly:

When Americans neglect to stick to their prescribed treatment regimens, they risk increasing the frequency of hospitalizations and preventable diseases and deaths. Other major factors in medical waste include the overuse of antibiotics leading to super resistant pathogen forms, as well as Americans’ woefully low rates of vaccinations.

Most of the policy solutions that NEHI explored to these problems are fairly standard for health reform advocates, including measures such as greater care coordination and case management, an emphasis on primary and preventative care, patient education, pay-for-performance for hospitals and doctors, and prospective rather than retrospective payments for patients’ care. Several of these measures — including extending access to preventative and primary care and pay-for-performance — are already slated to be implemented under Obamacare.

But another event speaker, Institute of Medicine scholar Dr. Michael McGinnis, emphasized that cost controls and expansions of access to care alone would not solve the underlying problem of wasteful spending — as evidenced by the study’s findings. Doctors and patients alike have to find incentives for effectively tracking and treating diseases, and get a handle on illnesses before they become more complex and expensive to treat. “We need to have a multi-faceted approach,” Dr. McGinnis said. “We need a change in prices, a change in culture, a change in health care delivery.”