1/3 of Medicare Spending is Wasted
And this amount is still wasted today. Not much has changed since 2014 when this was written and also appeared on Angry Bear. I have added some links at the end for reading and backup.
And like then, rather than attack the issue, Congress is willing to cut services to the people needing Medicaid. It may happen yet. A Republican Congress and President will forsake their constituents and cut Medicaid services to reduce the deficit created by the 2017 tax break which did not result in greater productivity.
A decade ago or so, I recruited Maggie to come and write on Angry Bear. She had been writing elsewhere. I am not sure what happened with her. She did give up writing . . . to our loss. Her answer to one commenter, Urban Legend.
Maggie Mahar’s answer to . . .commenter Urban Legend , , ,
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 “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 “fee – for service;” 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. Health Care Costs by Country 2025.
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.
Salve Lucrum: The Existential Threat of Greed in US Health Care – Angry Bear
HPB_Waste_Dec_13_2012.indd
Berwick Tells AJMC Healthcare Spending Can Be 15% of GDP, “Without a Hint of Rationing”
Donald Berwick – Wikipedia 30%
1/3 of Medicare Spending is Wasted – Angry Bear
Thanks for reposting. I don’t think things have improved. It’s still true that the best compensated specialties are ones that do procedures, whereas what we could use more of is pediatricians, primary care physicians and geriatricians.
One phrase that isn’t mentioned is “defensive medicine,” which I believe is a major driver of this wasteful spending. This is a byproduct of our litigious society.
Joel:
I wish Maggie would relent and start to post again. It was great to have her words on Angry Bear.
Correct on the general partitioners, pediatricians, andgeriatricians. The biggest issue is when a mistake is made, no one will admit to it, and no one wants to ante up to take care of the issue. Not like you need my conclusions.
Thank you for the comment.
This inadvertently shows part of the reason I have trouble with her conclusion. If you’re defining less useful surgeries, back surgery is right at the top, yes. (I note that my wife had successful back surgery almost two decades ago, but the plural of anecdote is not data; the last consensus I saw was that around 70% of back surgeries are unnecessary at best, so that she fell into the 30% that are good doesn’t make back surgery a good idea in general. Then again, if you’re in that 30% who would have been helped, being told no isn’t “science’; it’s bureaucracy masquerading as consensus because you don’t have the data.)
But look at the final example above: “a C-section.” Maybe there are too many of those–partially because VBAC only became encouraged in the past 10-15 years, partially because they can be scheduled so you don’t get a doctor who is coming off a 20-hour shift or straight from a publican house–but I will give you Very High odds that almost all (easily >97.5%) of the C-sections performed in the U.S. are not performed on Medicare patients.
Which is why I call bullshit on the “1/3” number. If you’re arguing–and maybe she is, because using C-sections and back surgeries as your example sure as shit isn’t talking specifically about the Medicare cohort–that 30-40% (or higher) of all medical procedures in the U.S. are unnecessary, that’s an entirely different argument than the claim that 1/3 of Medicare spending is somehow “waste.”
Shorter: it’s a horseshit argument to claim that Medicare is 1/3 waste without stipulating that care provided under private medical insurance in the U.S. is at least as wasteful.
If Maggie Mahar–who should know better–wants to argue that 1/3 of Medicare payments specifically are wasteful, then she needs to make that argument using the Medicare cohort (those of us 65+, none of whom have given birth while the program has been in existence). Or she needs to put the claim in the context of overall U.S. medical spending, where it likely becomes something like “Medicare spends about 1/3 of its budget on wasteful treatments, compared to the 43-47% spending on wasteful treatments by private health insurers.”
Similarly, if you want to claim that there are too many NMR machines or Computed Tomography scanners in the U.S. just because European countries have fewer per capita, that’s an argument. It’s not necessarily a good argument–it presents Europe as optimal, even though they have a healthier overall population than the U.S.–but it is an argument.
Or, if you want to claim that “science” recommends fewer colonoscopies–or at least recommends less invasive (and less expensive) procedures first–I’m all for that. But again, most of those recommendations apply more to the pre-Medicare cohort; once you’re north of 65, every five years if you’re lucky and every three if you aren’t (or weren’t, at some time in your medical history) is the baseline recommendation if you’re showing no other symptoms.
I’m all for the argument that America spends too much on medical care for the outcome; that G20 graphic, especially since 1980 (for some strange reason), indicates that we’re getting the bang for the buck of bunch of firecrackers that were left in a cardboard box on the floor of a basement that flooded a couple of times. But I will give you odds that Medicare (ex-fraud, which is Doctor-driven) wastes less of its total expenditures on medical procedures than private insurance does.
If you are using some weird economic model that has 20-20 hindsight–I haven’t been diagnosed with colon cancer yet, so all but one or two of the colonoscopies I have had in the past ~37 years was “a waste”–or assumes in an ambiguity that it’s better to err on the side of not testing (the “what I don’t know can’t hurt me” diagnosis), then you can define precautionary spending as “waste.”
But you’re then using words in a manner unlike the rest of the world, so don’t be surprised when we all look at you funny. Especially if you claim to be talking about a program that treats the oldest and sickest but immediately move to general profit margins, scheduled C-sections, and people getting too many colonoscopies.
The argument that U.S. medical care is wasteful is a Very Different Argument than arguing that Medicare is wasteful–even though it “wastes” a lower percentage of funds than private health insurance does. (Private insurance has all of the problems Medicare faces plus a much higher percentage of spending on intermediaries/management and other non-medical costs.) And conflating the two while pretending to be talking about the first does not put you in a very positive light.
@Ken,
Well stated! Thanks!
Ken:
I do not think Maggie is going to pop in these days. Not sure what she is doing today and I would post her commentaries for her like I do for many others. I will show you two different pictures and make a comment or two or three.
As taken from Health Policy Brief 2011.
I do not believe Medicare has improved since Maggie has written this. My own personal experience using Medicare in commercial healthcare is that they can not charge more but they can and will code you for other issues which you may not have but are common for oldsters.
I definitely differ from your take because I have experienced such maneuvers by commercial doctors who seem to think you are stupid because you are old and are easy to take advantage of by citing medical terms. It is a common practice to over code. If you or others have not experienced such you are fortunate.
I can look around for a more current piece than this Heath Affairs article by the Robert Wood Foundation Association. However, I believe the practice of over coding and over charging is still prevalent. Medicare Advantage could or would be another example of such practices as legitimized by CMS.
To answer the question thoroughly I looked up from where the citation came. Doctor Donald Berwick said such.
“Berwick writes in his article that ‘Health care in the United States has its own version of the Fermi paradox. It involves the strong evidence of massive waste that is updated in the Special Communication by Shrank and colleagues in this issue of JAMA. The authors recalculate the proportion of US health care expenditures that is waste. Their estimates, which they suggest are conservative, are similar to other major reports of the past decade, which came up with median estimates of waste amounting to 30 percent to 35 percent of total health expenditures. Shrank and colleagues estimated that waste represents 20 percent to 25 percent of US health care expenditures, but they explicitly did not include some extrapolations from Medicare data to the population at large. The authors further reviewed the literature on efforts to reduce waste, which, they claim, suggests that about 25 percent of that amount—approximately 5 percent of total health care spending—could be reduced with implementation of well-documented, current programs.
As Berwick notes, ‘These are massive numbers. With US health care expenditures exceeding $3.5 trillion annually, 25 percent of the total would amount to more than $800 billion per year of waste (more than the entire 2019 federal defense budget, and as much as all of Medicare and Medicaid combined). Even 5% of the total cost is more than $150 billion per year (almost 3 times the budget of the US Department of Education). That is worth repeating: by many pedigreed estimates, annual waste in US health care equals or exceeds the entire annual cost of Medicare plus Medicaid.’”
That there is this much waste in healthcare today can not be much of a surprise today. Whenever my platelets disappear (which they have several times since 1980) I am in the hospital for 3-5 weeks while I go through a serious of doses of drugs (which do not work) which included Dexamethasone and large doses of steroids and IVIG infusion the last go around. What does work is Rituxan at $28,000 per dose list. Four doses and I am fixed till the next time. It is an old drug that carries a high price somewhat less than list. That is my experience with high cost drugs.
“But, to paraphrase Fermi, ‘Where is it?’ Shrank and colleagues, like the prior studies they channel, examined 6 categories of waste: failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud and abuse, and administrative complexity; they estimated the amount of each.”
You do not have to believe what I am saying. There are a number of people out there who see what is occurring and what I am seeing. Berwick being one of them.
Read it for yourself. I gave one of the numerous links in this comment. The rest is up to you.