Thursday, January 24, 2013

The staggering costs of too much medical care

Although I intentionally didn't mention financial costs in my previous post on too much medical care, informed readers might wonder if my specialized glaucoma testing was covered by health insurance (it was), and if any provisions of the Affordable Care Act restrict use of non-beneficial or low-value screening tests (it doesn't, despite plenty of political noise to the contrary). The Institute of Medicine recently estimated that $765 billion of the $2.5 trillion the U.S. spends on health care services is wasted, with more than half of that total ($400 billion) lost in providing unnecessary services and excessive administrative costs.

Too much medical care drains dollars away from other programs and services that produce health and happiness. In an illustrative thought exercise, researchers in the American Journal of Preventive Medicine suggested how the $337 billion in excessive healthcare costs that are currently paid by public insurance programs might be otherwise saved or spent as a "health dividend for America." (If the video is slow to load, you can also view it here.)

Dr. Jeffrey McCullough and colleagues propose devoting half ($168 billion) of the health dividend to federal debt reduction (which, they point out, is more than the goal of $1.5 trillion over 10 years that the Congressional "Supercommittee" failed to achieve in 2011 budget negotiations); $104 billion to education initiatives such as smaller classrooms, anti-smoking programs, and universal preschool education; and $61 billion to infrastructure such as public library expansions, career training, and transportation upgrades.

The point isn't that you or I necessarily agree with these specific choices - one might decide to devote every penny saved from eliminating medical waste to debt reduction or tax cuts, for example - but that reducing too much medical care leads to true savings, rather than simply shifting public spending to the private sector (by raising the Medicare eligibility age or cutting Medicaid payments).