Is The US Healthcare System Wasting Too Much Money?

Chapter 1:
Inspiration

Healthcare has always been a hot topic in the United States because patients and citizens can feel the burden of a under-performing healthcare system.

The US society as a whole (public and private) spends a lot on healthcare. However, the system does not translate the money into better health outcomes. Most OECD countries can use lesser amount of money to get more positive outcomes.

One part of the high healthcare spending is the amount of monetary waste that is not used to improve the health of the patients. Current debate on the healthcare spending waste seems to be trapped within the professional and academic circle. I find that the statistics on healthcare waste tend not to inspire follow-up actions. The statistics can sometimes be too abstract or too detached from everyday life for people to know the urgency of the issue.

According to the healthcare experts, Berwick and Hackbarth (2012), there are 6 categories of healthcare spending waste:

• Failure of care delivery: e.g. not using the best practices in medical science to provide care in the most cost-effective manner.
• Failure of care coordination: e.g. when different actors in the healthcare system do not communicate with each other, patients cannot receive the full treatment required, hence leading to even more hospital admissions.
• Over-treatment or low-value care: e.g. performing excessive medical procedures that does not improve health.
• Pricing Failure: e.g. paying too much for healthcare good and services.
• Fraud and Abuse
• Administrative Complexity: e.g. billing complexity requires additional administrative manpower who do not provide care.

In 2019, a group of researchers from Humana Inc and University of Pittsburgh (Shrank, Rogstad and Parekh), published a paper detailing the amount of spending waste in the healthcare system. They searched the academic world for relevant spending waste estimates. They found that each category of waste costs billions of dollars every year. The total ranged from US$760 billion to US$935 billion which is 20% to 24% of total health expenditure.

US$760 billion is definitely a big number and by itself it does not necessary mean that it is urgent to cut it down. USA has a trillion dollar economy. Surely, America can afford a few billion dollars?

How much is US$760 billion worth to an individual and the government?

If the money wasted was distributed to everyone in the US, everyone will receive US$2,300 to US$2,900.

This is equivalent to:

For every minute,
the US healthcare system is wasting

We can see that healthcare spending waste is already too big for the society to stomach. It is taking away precious resources which could be better utilized. If we did not intervene to stem the rise, it will be problematic for the society.

• We need to get the government to prioritize on solving the waste issue.
• Given that regulation of the healthcare industry is largely left to the private sector, there is room for the government to step in.
• USA.GOV provide a list of websites where you can search for the contact details of legislators and executive branch officials from the federal level to the local level.

• Given the insufficiency of existing solutions, there is a market need to tackle the waste issue.
• These waste will ultimately reduce the revenue that an insurance company or hospital makes.
• They will be willing to pay for a service that can help to boost their profits if the payment is lower than amount of waste.