Having dodged the fiscal cliff, Washington is now focused on cutting spending. We know where huge cost savings could be found in health care — but it won’t be easy.
There are bits and pieces of savings all over that are worth going after and that, as they used to say, adds up to real money. But there are two massive pots of money that seem the most tempting savings targets — each big enough to pay for health care for every American who’s uninsured today, with some left over.
One pot of money you could call “red tape” — the excess administrative costs from our patchwork of public and private payers, each with its own bureaucracy. Adding to these costs is the fact that private insurance typically spends only 80 cents on the dollar for actual patient care, compared to better than 95 percent for Medicare, Medicaid and the VA.
The other pot of money has “unneeded procedures” written on it. This is what we spend today on tests and treatments that, according to the best science, provide no benefit for patients, while often putting them at risk for side effects (for a sample list see www.choosingwisely.org).
The “red-tape” pot of money runs to about $150 billion to $200 billion annually, more than enough to pay all the costs of the recent health reform law. The unneeded procedures pot is even more massive, conservatively estimated at $640 billion to $750 billion.
What would it take to save all this money? Since not a dime of this, so far as we can tell, provides one smidgen of good for any sick person, you’d think the politics would be easy.
You could do a lot to trim the red-tape pot, such as by forcing all payers to use the same paperwork forms. But to save all that pot of money, you’d have to impose single-payer national health insurance. Regardless of pluses or minuses, I’ll assume that simply won’t happen anytime soon.
You could also go at some of the “unneeded procedures” pot with various government payment reforms, some of which are tested in the health reform law. But what’s most interesting about that pot is that, in theory, you could save every penny tomorrow without the government doing a thing. All those procedures are ordered by doctors, and if doctors simply stopped ordering those things, health costs would plummet.
Of course it’s not quite that simple. Today we have solid evidence for some of what’s in that pot, but we need better evidence, called comparative effectiveness research, before we can be sufficiently confident for the rest of it.
The major political reality, however, is that every dollar in that pot goes into someone’s pocket as profit. Talk about taking $640 billion to $750 billion in profits out of people’s pockets, and expect to hear loud squawking. Expect a return of the lies about “death panels” and expect vigorous lobbying in Congress.
Still, addressing this big pot of money makes more sense than many politically more popular moves, such as raising the age of Medicare eligibility. Do we really want to save money by making even more Americans uninsured?