There seems to be a growing consensus that meaningful health care reform needs to address the skyrocketing cost of medical care. This doesn’t mean market reforms won’t be central to whatever evolves in Washington, but unlike past efforts, these efforts won’t be the only game in town. Instead what care is delivered, how it’s delivered, and who pays for it will play a leading role in the upcoming drama.
There are some easy ways to restrain health care costs. According to Peter Orszag, then Director of the Congressional Budget Office and now Director of the Office of Management and Budget, 30 percent of medical spending is on “wasteful or low-value services.” Preventing this misspending would save health care system over $600 billion. That’s a meaningful start. Emphasizing preventive care and wellness would also help. So would increasing adoption rates of medical technology. Once you move past this low hanging fruit, however, the issues get more complex and more contentious.
Consider a post today in The American Conscience blog reporting that chronic illness accounts for 75 percent of overall health care spending. According to the post, chronic illness affects 45 percent of the population. Clearly, reducing the incidence and severity of chronic illness will need to be a part of any reform effort. The posting then goes on to recommend eliminating co-pays and co-insurance on prescription drugs. Citing a Journal of Medical Care study, the blog claims $1 spent on prescription drugs for diabetes and cholesterol saves $7.10 and $5.10, respectively, on other medical services. Yet, in part due to the cost sharing required for prescriptions, the incidence of non-adherence to drug regimens is high. And non-adherence, according to a John Hopkins study cited in the post, “increases national health care costs by $100 billion to $300 billion annually.” Consequently, the author calls for reducing or eliminating cost sharing in connection with prescription drugs.
I have no idea if the studies cited in The American Conscience post are valid — the author of the blog doesn’t identify him or herself and the studies sound like what the pharmacy industry would produce. But the underlying point: too many individuals fail to treat their chronic conditions in a cost effective manner, is a legitimate concern. It also highlights the challenge facing lawmakers.
Prescription cost sharing has been shown to cut down on their overuse. According to this blogger, however, it also reduces the legitimate use of medication. How can patients be encouraged to seek lower cost, proactive solutions to their health problems without providing an incentive for anyone with a head cold from stocking up on expensive drugs? Finding that balance is a multi-billion dollar dilemma. But any meaningful reform plan is going to have to try.