U.S. Health Care System Wastes $700 Billion On Unneeded Tests - Enough For $15k Per Uninsured American

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Public Health
Article Date: 29 Oct 2008 - 2:00 PDT

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At a time of financial crisis and a soaring deficit, the amount of reckless spending in the health care system is astounding: $700 billion is wasted each year on unnecessary tests and procedures that do not improve patient outcome. That wasted money is enough to give over $15,000 towards care for every one of America's 45.7 million uninsured. Hospitals spend almost half their budgets on unnecessary treatments, and the government programs which cap the costs for medical services have created an incentive for doctors to test more - regardless of necessity. The current system offers little hope or incentive for care that is both high quality and cost-effective.

The latest in the Progressive Policy Institute's (PPI) Memos to the Next President series, "Improving Health Care - by 'Spreading the Mayo'," calls on the next president to lead a shift from the current system of managed healthcare to an integrated system, which would cost less and deliver better care. PPI Scholar David Kendall recommend that the next president issue a "Mayo Challenge" to strive for patient care standards as good and economical as those of the world-renowned Mayo Clinic, a successful example of the integrated health care model. You can read the whole Memo at http://www.ppionline.org.

"Improving Health Care - by 'Spreading the Mayo'" is the sixth in PPI's ongoing Memos to the Next President, a series of policy prescriptions written directly to the next occupant of the White House so that he can hit the ground running on the problems facing Americans today. PPI experts will propose solutions on issues ranging from economic growth to national security, which the next president will confront as soon as he takes office.

In his Memo, Kendall lays out several steps the government can take to follow through on the "Mayo Challenge." Among Kendall's suggestions:

-- Lead Doctors Provide patients with a "lead doctor" who determines specific patient needs and is charged with coordinating care between hospitals and specialists. This eliminates gaps in care and wasteful spending while patients benefit from more customized and efficient care.

-- Package Prices Move from the current fee-for-service fee model to a "package price" for health-care services. In order to shift to a packaged-price model that would charge for sets of services rather than reward excessive testing, the federal government should create regional public-private partnership with the top 60 employer coalitions that already cover 34 million Americans as well as with state governments.

-- Shared Data on Outcomes Find the most cost-effective models, practices, and products. Set new standards for the most effective and cost-efficient treatment options by investing in comparative research of medical products, devices and practices; and encouraging regional partnerships to share patient data and weed out overpriced services.

-- Leverage federal health-care spending The government provides 57% of all of the nation's health-care spending and covers 44 million Americans under Medicare. The government could use this influence to support the most cost-effective outcomes, which would naturally lead integrated care to come out on top. This would encourage more patients and doctors to move toward integrated care facilities.

-- More Choice Let individuals choose their own health plans. Offer alternatives to employer-chosen care by allowing consumers access to competing plans and have states set up purchasing pools similar to the Federal Employee Health Benefits program (FEHB), the health care system used by federal employees and members of Congress.

-- A Consumers Checkbook Guide to Competing Plans Supply consumers with better information to choose health-care plans. Federal employees receive the Consumers' Checkbook guide to help choose health-care plans, and all patients should be given similar tools to determine the actual price and quality of their plans.

-- A Health Fed Create a new regulatory body modeled on the Federal Reserve Board to oversee new systems of medical payments. This "Health Fed" could set goals for national spending and if states fail to meet these goals, residents would be allowed to shop around, creating a competitive market driven by cost-efficiency and quality.

You can read the full text of "Improving Health Care - by 'Spreading the Mayo'," along with the entire Memos to the Next President series, at http://www.ppionline.org.

The Progressive Policy Institute's mission is to define and promote a new progressive politics for America in the 21st century. Through its research, policies, and commentary, the Institute is fashioning a new governing philosophy and an agenda for public innovation geared to the Information Age. For additional information, Web users may access the Progressive Policy Institute, at http://www.ppionline.org, or contact PPI's press office at (202) 547-0001.

Source
Moira Vahey
Deputy Press Secretary
Democratic Leadership Council
600 Pennsylvania Ave SE Suite 400
Washington, DC 20003
Progressive Policy Institute's