1/3 of Medicare Spending is Wasted
This was initially posted at Angry Bear September 14, 2014 by Maggie Mahar of Health Beat A little history: Dan and I invited Maggie Mahar to write at Angry Bear Blog as I was covering much of the Healthcare debate and Maggie could add much more in-depth knowledge and analysis of healthcare than I could. This is an important post as it gets down to the nitty-gritty of Medicare-For-All, things we need to know, and why it may not work.
Maggie Mahar in answer to a commenter:
You write: “That claim that one-third of Medicare spending is wasted sounds pretty questionable to me.”
This is your opinion. If you had spent the last 20 years working as a medical researcher investigating unnecessary treatment, your opinion would be of great interest to all of us; but, I’m assuming you have not done so.
Thus, you might be interested in some facts . . .
Dr. Donald Berwick, who headed up Medicare and Medicaid during the 1st half of the Obama administration has said, repeatedly, that at least 1/3 of Medicare dollars were wasted on unnecessary tests, procedures and drugs that provide no benefit for the patient. He is only one of dozens of health policy experts who have made the same statement. (Google “Health Affairs” the leading medical journal that focuses on health policy and “unnecessary treatments” Over the past 30 years, researchers at Dartmouth have provided stacks of evidence documenting unnecessary care in the U.S.
You also write: “I doubt that treatment protocols in the U.S. are all that different from other countries.”
Again, this is your opinion. Unfortunately, you are wrong.
In other countries, doctors and hospitals tend to follow evidence-based guidelines. In the U.S. a great many doctors object to the idea of someone telling them how to practice medicine even though that “someone is “science”. They value their autonomy and prefer to do things the way they have always done them. Of course this is not true of all doctors; but even when you look at protocols at our academic medical centers, you find that the way they treat similar patients varies widely.
Here, I’m not talking about how much they charge for a procedure (which also varies widely) but how many tests they order, how often they prescribe spine surgery for someone suffering from low-back pain, how often they tell a woman she needs a C-Section . . .
One big problem is that our doctors and hospitals are paid on a “fee – for service basis;” in other words, the more they do, the more they are paid.
As Dartmouth’s Dr. Eliot Fisher points out: “U.S. patients are not hospitalized more often than patients in other countries; but in the U.S., a lot more happens to you while you’re there.”
In addition, traditionally our medical schools have trained doctors to practice very aggressive medicine. The resident who orders a battery of tests is praised. Students are told “Don’t just sit there (and think). Do Something!” Traditionally, our medical culture has been a very macho culture and it is just beginning to change.
Finally, Americans tend to think that “more is always better.” Larger servings in a restaurant, bigger cars, bigger homes, etc. And when it comes to healthcare, patients in the U.S. tend to think that “more care is better care.” They are wrong. Every medical product and service carries some risk. If it provides no or little benefit, the patient is exposed to risk without benefit.
When medical protocols in the U.S. are compared to how medicine is practiced in other countries, researchers have found: —- Much unnecessary spine surgery. The rate of back surgery in the U.S. is five times higher than in the UK. Studies have shown little difference in long-term outcomes for patients who undergo back surgery compared to those who select non-surgical treatment.
The U.S. does more testing than other countries. For instance, the number of MRI and CT tests for every 1,000 people in 2010 was double the average in other OECD countries. Comparatively, there were also more tonsillectomies, caesarean sections and knee replacements. Regardless of how much more, nearly every procedure, scan and drug costs; it’s nothing compared to how out-of-whack the medical heroics thrown at Americans in the last stages of life The Cost of Health Care: A Country-by-Country Comparison
Colonoscopies are prescribed and performed more frequently than medical guidelines recommend and are given preference over less invasive tests that screen for colon cancer. Those less invasive tests are not only routinely performed in other countries, they’ve also been proven to be just as effective by the U.S. Preventative Services Task Force.
“We’ve defaulted to by far the most expensive option, without much if any data to support it,” said Dr. H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice.
In the U.S. many more patients die in ICU’s getting futile care. This is a painful, lonely way to die. In other countries, more patients are treated in hospices or allowed to go home where nurses and even doctors visit them.
Half of all heart surgeries (using stents) do no good. We know which half! But stent-makers and other providers have turned this into a big business.
– Our drug companies enjoy 20% profit margins.
– Our device-makers boast 16% profit margins.
We are over-medicated (particularly older people), and undergo too many surgeries that involve very expensive devices. Medicare covers virtually everything (even drugs that have been shown to be dangerous–until they are taken off the market). If it does not cover all of the newest treatments and products lobbyists would howl– and Congress makes sure that heads roll.
This is one reason why we don’t want to give everyone 40 to 65 a chance to enroll in Medicare. No one could afford it. (This idea was considered in the late 1990s. Do you have any idea how much 40-65 year olds would have to pay for our extraordinarily inefficient and wasteful Medicare system? On top of that and like people over 65, they would have to pay hefty sums for MediGap to Medicare advantage — private insurance plans that cover all of the things that Medicare doesn’t.
Medicare is now beginning to cut back, and over time it will refuse to pays for unnecessary surgeries (heart surgeries, unproven prostate cancer surgeries, and some hip and knee replacements, unless the patient has tried physical therapy first–and losing weight, if possible. (Some people just can’t lose weight, even under a doctor’s supervision.)
Medicare will also stop covering every new drug that comes on market, setting up a formulary and only paying for drugs that are effective — and cost-effective. The same will be true of devices.
Then — and only then — we might talk about letting people 40-65 sign up for Medicare, though in many cases, research on quality of care suggests that they would be better off with the best of our non-profit insurers: Kaiser, Geisinger, etc.
Medicare is a highly politicized bureaucracy and inevitably, Congress dictates what it can and can’t do. Medical guidelines should be set by medical researchers and doctors who have no financial interest in the outcome.
Maggie Mahar is the originator and author of the Health Beat Blog. Maggie wrote “Money-Driven Medicine: The Real Reason Health Care Costs So Much (Harper/Collins 2006),” and was the co-writer of the documentary, Money-Driven Medicine (2009), directed by Andrew Fredericks and produced by Alex Gibney.
Run,
Another great post. I have often wondered that maybe what ails the US medical system, cost wise, is not that there is not enough health insurance, but that there is too much health insurance. No one has any interest in saving money or finding the most cost effective treatment because the insurance company is paying the bill.
My mother is on Medicare and has a supplemental insurance policy…. she goes to some doctor 5+ times a month paying only a small co pay. I pay cash for my medical care and go maybe once a year.
Maggie,
If I summarize your post what I get is that expanding Medicare as a national system is a lousy idea —basically because it’s a wasteful system relative to either other national health care systems or a more rationally based one.
You outline a few founded reasons for why its wasteful to the degree it is. These reasons can all be said to have their foundation in the U.S. representative political system where-in one problem is highly over-weighted representation by medical providers and drug companies, and the other problem being our worship of our national god “individualism” which reigns supreme in the U.S.
I don’t disagree with this in general and probably wouldn'[ disagree with specifics if you provided the detailed statistical analysis by independent research.
But I don’t think it was remotely possible in 1964 or at any time since then by any stretch of the imagination to do anything with respect to healthcare by congress … much less health care of the aged as in Medicare that didn’t require taking the over-weighted representation of special interests and our national love affair with god “individualism” into consideration to pass any congressional act, much less Medicare.
So are you indicting Medicare or our political system and love of “individualism” as a composite in the nation? Medicare is the result of the political system, so it seems to me that indicting Medicare’s flaws and waste is actually simply an indictment of our political system.
And as to waste in the Medicare system relative to costs, I’m pretty sure that the medical system that doesn’t operate under Medicare .. e.g. the regular system is equally wasteful for the same reasons you cited for Medicare being wasteful, considering the costs of the regular system..
So in reality you’re not being objective andt fully forthright by not citing the waste in the regular medical system considering costs in that system. In either case the waste ends up on the pockets of medical providers and drug companies as excessive “profit”.. e.g. income.
In this sense the entire medical system in the U.S. is simply part of the transfer of taxpayers’ and individual’s funds from the lower 90% or lower 95% to the upper 1%. what else is new? There’s more than adequate objective data to show this (e.g. UC’s Saez studies for example).is the case. The medical system is no exception.
So what is your real point? Is it that we can’t have a national comprehensive health care system because it’s not politically feasible yet… special interests political power; serving god “individualism”? or that we should abandon Medicare because it’s too wasteful?
I’m not at all sure from your posts what you’re proposing. Or are you just educating? And if the latter is your purpose on AB I applaud but wonder why your educational effort is not being directed at special interests in the medical community, the Breitbart and Fox News readers, and others who worship at the alter of god ” individualism”.
I do not think that the problem of overtesting/overtreating/overmedicating is limited to Medicare as I am not yet to Medicare and I have been subjected to a host of it already. I have said “no” to much of it but not enough and the dollars really do not come into play because I have had health insurance albeit with large deductibles. The insurance company goes along because it has the same fears that if I did have prostate cancer or a coronary artery blockage I could end up costing them more money down the road if it was not tested/treated now. Plainly this was the idea behind the ACA even if Sammy has not taken the hint–people should be encouraged to seek out medical assistance when they have symptoms and periodically for routine checkups–men in particular tend to look after their cars better than themselves. The problem is that medical providers then overtest/overtreat/overmedicate because we are a capitalist society and no one is more capitalist than medical providers. The problem of the pigs feeding at the government trough is not the government trough–it is the pigs.
Terry:
Why do I feel you mostly understand the message? A couple of questions;
– Are you getting the negotiated rate on billing for certain things or are they charging you 100% for a service, prescription, etc. telling you that you will use up your deductible sooner. There is a reason I ask this. If you are chronic, it may make sense to do this if you use up your deductible early in the year. Otherwise if you are not chronic, insurance is sticking you with the bill 100% and you do not get the advantage of their negotiating power. I had this discussion with UH one time. It was like screw you, give me the negotiated rate.
– Did you measure the difference between a lower deductible/ higher premium if chronic?
While it is a bullsh1t statistical comparison because of confounding factors that are ignored (auto accidents/gun homicides/military/etc), I know it is a comparison the bat sh1t crazy left wing lunatics employ, so I’ll use it for this audience.
Take socialized health care spending in the US and divide by the total US population. You will still find that the US spends more per capita on health care while attaining lower life expectancy than most other countries only counting our socialized health care/insurance. Therefore there has to be significant waste in socialized medicine in the US as government run health care/insurance could not cover the US population on private health care for $0.
Jay:
To whom are you talking?
The solution is not with how medical costs are paid, but what medical costs are paid. We have the medical system we do because it is controlled be the medical industries. Their interest is maximizing profits, not health. In order to lower costs and improve health, control needs to be moved to another entity.
The rest of the world has already figured this out. It is time we figure it out too.
Jerry:
Do you remember this in Maggie’s article? “One big problem is that our doctors and hospitals are paid on a ‘fee – for service basis;’ in other words, the more they do, the more they are paid.”
and this:
“In other countries, doctors and hospitals tend to follow evidence-based guidelines. In the U.S. a great many doctors object to the idea of someone telling them how to practice medicine even though that “someone is ‘science’. ”
Moving to another entity will not solve the issue. Think about it.
Jeffrey:
Rather than writing in anger. Go back and rethink your words. Some of this does not make sense. How old are you?
Run,
The current entity that runs healthcare runs it to maximize costs and hence profit. It has no interest in moving to a system that utilizes evidence-based guideline to reduce cost. That is why I say we need another entity to control healthcare.
I’m reading American Sickness by Elizabeth Rosenthal, an MD. The financialization of care (needed or not) she describes is an exact analogue of the financialization of the economy I just finished reading about in the Confidence Men about Obama’s first two years by Ron Suskind.
The tangle created is so convoluted that the only way I can see to reform it is to adopt the Canadian system: mandating paying doctors a salary and government taking control of medical capital spending. Cutting the Gordian knot.
PS. Just read that 20,000 Americans dies of Hepatitis C every year and there is a 99% cure for it — Sovaldi by Gilead — which would only take enough to manufacture as the amount the chief endocrinologist on the project made for himself, half a billion dollars. But Gilead wants $300 billion for three million patients. Where was Obama, Hillary — where are they now; could open their mouths anytime?
Dennis:
That is interesting Dennis. Shall I tell you how much it cost me to scrap 3 million tablets for a medical company?
Run,
Love to hear it.
Maggie,
I’ve read and re-read and read your post multiple times looking for what you are trying to say or suggest or inform others of.
The only thing your post says is “the sky is blue in daylight on a sunny day”… something I think nearly 99% of the public is already well aware of and thus deserves no comment or wasted cyber-space.
Then at the very end of your post you say:
“Medicare is a highly politicized bureaucracy and inevitably, Congress dictates what it can and can’t do. Medical guidelines should be set by medical researchers and doctors who have no financial interest in the outcome.”
The first sentence says “the sky is blue again. summarizing the entirely of your post which everybody or nearly everybody, even Sammy knows well already.
The second sentence above says we need to change the color of the sky which is an opinion that in this case I agree with, but you have nothing to offer anybody on how to change the color to the one you prefer (and that I also might prefer).
So what’s the point of you post? Why are you filling cyber-space with “the sky is blue …don’t you know.”
Run, just a comment about your statement that even the national health care systems, such as Germany you cited, pay 24% by non-gov’t sources (100% of medical cost outlays less 76% gov’t paid via taxes on the public).
You should become more familiar with who pays that 24% as a distribution of incomes…. about 1/2 of the 24% is paid by employers and the bulk of that on the upper 5% or so on way out of the ordinary healthcare expenditures they opt
So If the US is used as a basis, Germany’s costs are ~60% of that basis x 24% not paid by taxpayers through taxes, x ~ 50% for most of what the general public pays for full coverage. That’s that’s 7%-8% of what the US pays for their total costs.
The US non -government outlay is 54% of the basis. So 95% of the German public pays 7% of the base, and U.S. public pays 54% of the base so 95% or so of German’s pay 13% (= 7%/54%) of what we American’s pay (fos less care and worse outcomes).
The difference between Germans paying 13% relative to what we pay is profit by the insurance companies and their overhead costs, and profits by medical providers and drug company’s…. all of which occur because our political system is tied at the hip to special interests and god “individualism”.
I just thought it was relevant to recognize that the Germans pay 13% of what our public pays (out of pocket) rather than 45% (= 24%/54%) or so inferred by the 24% figure. .
The point still remains there is private input whether employer or individual and there is public input.