In a report this week, we found out something we already knew—but probably not to this extent.
Our country’s health care system squanders a ridiculous $750 billion a year. That’s roughly 30 cents of every medical dollar spent. It happens through unneeded care, excessive administrative expenses and data, fraud and other problems, a report by the Institute of Medicine revealed.
Let’s go over some numbers. America spent $2.6 trillion on health care last year. And a third of that spending did nothing to make any of us any healthier. Our health care costs are rising faster than inflation, and it’s literally bankrupting many of us. It’s also killing us. By one estimate, the report says, roughly 75,000 deaths might have been averted in 2005 if every state had delivered care at the quality level of the best performing state.
So what the hell is going on?
The report breaks down the sources of overspending: Unnecessary services tops the list at $210 billion, followed by inefficiently delivered services ($130 billion), excessive administrative costs ($190 billion), prices that are simply too high ($105 billion), fraud ($75 billion) and missed prevention opportunities ($55 billion).
Though we’ve come a long way in health innovation—such as the management of previously fatal conditions—the report said, the American health care system is still falling short on “basic dimensions of quality, outcomes, costs and equity.”
Not that this is news. We know this. It’s apparent every time we see health report numbers or look at our own medical bills.
The question is what we can do about it.
The Institute of Medicine has recommendations: Fully adopt mobile technologies and electronic health records; increase transparency about the costs and outcomes of care; use better data; and move toward a system that rewards doctors for quality, not quantity, of care.
Sure, these are good ideas, but whether they'll happen any time soon is really a mystery. Sadly, it’s out of consumers’ hands.
But preventive care isn’t. There’s something each of us can do—get checked, get necessary and recommended health screenings, eat healthy, exercise, don’t smoke, be proactive about problems—the list goes on. Older people, the report notes, have a big problem with preventive care, and it’s especially problematic because they're more prone to serious and costly health woes.
It’s also worth noting that the report comes at an interesting time. The presidential race is tighter than anyone thought—and health reform and Medicare cuts are sources of major contention. President Obama didn’t even give mention the signature piece of his presidency, the PPACA, during his nomiation acceptance speech at the Democratic National Convention.
Seems like there’s a lot we—and Washington—can do to drastically cut health care costs while also improving care that doesn’t cost another trillion or so dollars to implement.