We have incredible waste in our health care system. Up to one third of the two trillion dollars that we spend on it is wasted on overpriced drugs and devices that replace older drugs and devices that work fine and on overused and ineffective procedures that do not actually increase the health quality of American lives.
Elliott Fisher and Jack Wennberg of The Dartmouth Atlas of Health Care have studied the data for three decades, proving how much waste there is in the system. They’ve mapped out health care across the country, discovering that in high treatment states, like New York, California, Florida, and New Jersey, Medicare spends 20% more per patient than the average. And in low treatment states, like Iowa, Utah, or North Dakota, Medicare spends 25% less than average.
As Maggie Mahar reports, what the Dartmouth studies reveal is “that in Manhattan and Miami, chronically ill Medicare patients receive far more aggressive care than very similar patients in places like Salt Lake City, Utah, and Rochester, Minn. Their research reveals that Medicare beneficiaries in high-cost states are likely to spend twice as many days in the hospital as patients in low-cost states and are far more likely to die in an intensive care unit. The odds are higher that patients in high-spending regions will see 10 or more specialists during their final six months of life. These facts alone aren't terribly surprising. But here's the stunner: Chronically ill patients who receive the most intensive, aggressive, and expensive treatments fare no better than those who receive more conservative care. In fact, their outcomes are often worse.”
In the 1990s, the insurance industry tried to stop paying for exorbitant procedures. HMOs based these decisions not on medical efficiencies and quality of procedure but merely based on cost. There was a major backlash against this, so by the turn of the century, HMOs stopped managing care and instead agreed to pay for anything that Medicare approves. The higher costs for paying for all these procedures was just passed onto employers in the form of higher premiums. That’s why health care is the mess it is today. The cost for health care as a percentage of our nation's Gross Domestic Product is unsustainably increasing each year. It has not always been this way; there was a time when we were more in line with the rest of the world.
Why does the United States spend so much on its health care? Elliot Fisher and Jack Wennberg of Dartmouth have shown that we have overbuilt our health care industrial complex to the point that it needs to be used – there’s too much profit to be lost if we don’t. We have what Harvard’s Donald Berwick calls “supply-driven care.”