Back to the thing that wouldn't leave

Political flood tides come and go. But high health care costs seem like forever in America and remain high when the floods recede. Recent studies point a way forward even in the modern hyperpartisan environment.

Our problem is well understood. American per-capita health care expenditures are twice those of other industrialized nations. We’re not living twice as long. We’re not twice as healthy. That hoped-for raise? It went to health care benefits. In the most highly regulated of all U.S. industries where one’s waste is another’s crown jewel, innovating for value and efficiency is not easy -- and is worth the effort.

It turns out that people are terrible consumers of health care. Health care price shopping is nearly impossible. Shopping for health is different. No one with heart attack symptoms googles the Groupon before dialing 911.

New research goes further: Even when one’s own dollars are at stake, people are undergoing care that the evidence shows does not work. Comparing consumers in high deductible health plans (HDHPs) versus those in traditional PPOs, researchers at RAND Corporation and the University of Southern California found no difference in people using and paying for 26 health care services that have no or unclear clinical benefits.[1] Such non-care services in the study totaled 0.5% of total health care costs. Extrapolated straight across America’s $3.3 trillion health care sector, every tenth of a percentage point represents $33 billion a year. Paying for non-care ordered or furnished by health care professionals could exceed $150 billion annually or nearly $500 from each American’s pocket. An earlier study in one state found in one year more than a half billion dollars’ worth of unnecessary health costs.[2]

More astonishing are costs associated with having failed to manage health well. In the U.S., 1% of the population accounts for 23% of health spending. Their annual mean health expenditure is $112,395 per person. On the healthier end, half the population accounts for 3% of health outlays. People generally buy coverage to hedge against financial risk of poor health. Of the 5% of persons with the highest health care expenditures, half had treatment for one condition: hypertension.  While one in five persons overall received treatment for hypertension,[3] clearly much of this silent condition is neither adequately treated nor prevented. People’s quality of life is put at risk and the costs of failure score in the hundreds of billions of dollars.

This evidence points to two common-sense innovations. First, don’t undergo or pay for non-care. Second, do prevent and treat chronic conditions affecting significant populations.

A concept called value-based insurance design (VBID) seeks to better link information about health and care to health care professionals and patients and is being tested among Medicare Advantage plans now. Recognizing that many chronic conditions hinge on behavior and environment traditionally outside health care, the Robert Wood Johnson Foundation Culture of Health initiative is making available to communities important national-level know-how to improve health and advance health equity.

With so much at stake, can innovations like these grow and thrive in our harsh policy world? If it was easy for every American to claim their $500 health care waste dividend it would have been done by now. So, while I say yes, I’ll hedge my bet and get my workout in.


[1] Reid R, Rabideau R, Sood N. Impact of consumer-directed health plans on low-value health care. American Journal of Managed Care, 12/7/2017., retrieved 12/13/2017.

[2] Mafi J et al. Low cost, high volume services contribute the most to unnecessary health spending. Health Affairs, October 2017., retrieved 12/13/2017.

[3] Mitchell E, Machlin S. Statistical brief #506: concentration of health expenditures and selected characteristics of high spenders, U.S. civilian noninstitutionalized population, 2015. Medical Expenditure Panel Survey, Agency for Healthcare Research and Quality, December 2017., retrieved 12/13/2017.