Is Health Spending Excessive? If So, What Can We Do About It?

Abstract

The case that the United States spends more than is optimal on health care is overwhelming. But identifying reasons for excessive spending is not the same as showing how to wring it out in ways that increase welfare. To lower spending without lowering net welfare, it is necessary to identify what procedures are effective at reasonable cost, to develop protocols that enable providers to identify in advance patients in whom expected benefits of treatment are lower than costs, to design incentives that encourage providers to act on those protocols, and to provide research support to maintain the flow of beneficial innovations. [Health Aff (Millwood). 2009;28(5):1260-75; 10.1377/hlthaff.28.5.1260 A c h i l d t r a i n e d to s ay " c o s t, q ua l i t y, ac c e s s " might pass as a health policy analyst. Sustaining the deception would become more difficult if the innocent were asked to define those terms. "Access" would not pose much problem: being able to obtain care when you believe you need it. Defining "quality" would be more challenging. In concept, it means that patients are getting the outcomes expected from the application of current medical knowledge. Often, however, the practical difficulties in measuring outcomes and adjusting risk variation among patient populations means that "good" quality is instead defined in terms of whether certain processes have been followed.The problem of rising cost-or, more accurately, spending-once again, seems clear enough. But is it? To begin with, spending is simply price times quantity. Is the problem excessive price, excessive quantity, or both? Those troubled by rising spending seem to have a range of concepts in mind (see Exhibit 1). If spending is rising and if that seems problematic, the practical questions are as follows: what exactly is wrong with spending more on some good than one spent in the past? And what tools are available to control spending on something that is beneficial on average but not for each patient?Level Of Health Spending O v e r v i e w

The right amount of chemotherapy in non-curable disease: Insights from health economics

“…In general, a simple rule to determine the overall percentage change in QALYs from a percentage change in lol is QALY,lol = (1 + qol,lol ). 3 Thus, when qol,lol for new chemo = −1.33, increasing lol will lead to an overall decrease in QALYs (since the decrease in qol will be proportionally greater than the increase in lol). In contrast, when qol,lol for palliative care = −0.75, increasing lol will lead to an overall increase 1 As QALYs = qol × lol, and we have assumed qol is a function of lol, this means the optimal lol sets QALYs/ lol = ( qol/ lol × lol + qol) = 0.…”

“…For example, since = ( qol/qol)/( lol/lol) this means = ( qol/ lol) × lol/qol, so = slope × lol/qol. 3 For small changes, QALY = qol × lol + lol × qol, so ( QALY)/(lol × qol) = ( qol × lol + lol × qol)/(lol × qol). Simplifying, % QALY = % qol +% lol.…”

“…This trend produces pressure around the world for healthcare providers to prescribe and healthcare payers to fund these new products. There is agreement throughout medicine and especially in oncology that the current rate of growth in healthcare expenditures is unsustainable [3,4]. Recently published warnings have appeared in both general and specialty medical journals [5,6].…”

Defensive Medicine, Cost Containment, and Reform

“…When one adds the costs of all insurance premiums to those of all court costs and all payouts, the total cost of the current malpractice liability system is approximately 1.5 percent of total health care spending 19,31,32 . Although this figure completely ignores defensive medicine costs, it is often cited as evidence that the impact of malpractice on medical costs is negligible [33][34][35][36] .…”

Impact of a Patient-Centered Medical Home Pilot on Utilization, Quality, and Costs and Variation in Medical Homeness

“…The predominant payment system, fee-for-service, rewards volume over value (Aaron & Ginsburg, 2009;Goroll & Schoenbaum, 2012;Miller, 2009), does not incentivize coordination between providers or care settings (Miller, 2009), and does not invest in health information technology, chronic condition management, or broader practice and systemwide improvements (Abrams et al, 2011;Barr, 2008;Ginsburg et al, 2008). As the number of people with multiple chronic conditions grows, the task of providing and coordinating care becomes increasingly complex (Matlow et al, 2006).…”