Electronic medical concept A byzantine system of third-party payers, including insurers and government programs, keep consumers from understanding the true cost of their medical services, says Eli Lilly’s CEO. (Photo: Shutterstock)

It’s not rapacious drug companies that are the problem, but an antiquated, complex health care system, says the CEO of Eli Lilly, one of the world’s largest drug-makers.

The current system is unsustainable said David Ricks during a talk to members of the Detroit Economic Club last week, according to Benzinga.

“Thirty years from now, one disease — Alzheimer’s — will generate more spending in Medicare and Medicaid than the entire military budget,” he said.

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The pharmaceutical industry has been the target of bipartisan outrage over rising drug costs in recent years. Secretary of Health and Human Services Alex Azar, for instance, presided over a three-fold increase in the price of insulin when he was CEO of Eli Lilly from 2012 to 2017.

Azar has defended the price increases, highlighting the major discounts provided to providers and insurers and arguing that much of the outrage is due to the fact that an increasing number of people have high-deductible health plans and are therefore being exposed to the “sticker price” of drugs.

To Ricks, however, America’s health care woes are largely a result of the system’s complexity and lack of transparency. Consumers are not empowered to make sound decisions about health care products because the costs of those products are hidden by a byzantine system of third-party payers, notably insurance companies and public sector services, including Medicare and Medicaid.

For example, Medicaid pays 10 cents per vial of insulin produced by Eli Lilly, said Ricks, at a cost far below what the company spends to make the medication. In comparison, uninsured consumer, however, pays $300 per vial, effectively paying an exorbitant price to subsidize the Medicaid patients.

There are some reasons for optimism, says Ricks, notably efforts to reduce health care spending through technological innovation, such as telehealth and artificial intelligence that can reduce the amount of human labor needed to assess or treat a patient.

Ricks explained that offering care to patients via teleconference or videoconference can dramatically reduce costs and increase the chances that patients will attend appointments and follow through on treatment. He highlighted the effect of remote coordinated care for diabetes patients in Australia that had yielded annual savings of $900 per patient and significantly improved health outcomes.

Digitizing the health care system would also help to make it more transparent and to allow consumers to be better-informed and make better decisions, explained Ricks.