Causes and Controlling the Healthcare Costs

Requirement

Since the start of this course we have discussed the historical changes that have occurred in healthcare over the past 100 years. Many of these changes have been pivotal to where we are today in health care. Please pick a major change that you feel has impacted our society and is impacting health care cost today. Tell us about this change over time, discuss why you think it is a major contributing factor to the costs of health care today and discuss what we as a society need to do to impact this issue in a positive way.

Solution

Introduction

Healthcare reforms have affected patients, healthcare providers, spending by government and especially the biomedical researchers. Many health cares reforms have been introduced, and some of them have profoundly affected the whole healthcare system. A healthcare reform is considered good when its implementations and affordability are cost effective. An effective health care reforms should always help the population to receive insurance coverage, reduces the healthcare cost, and protects the patients and doctors. Further, to eliminate cases of strikes and patients’ suffering it should help to improve quality and accessibility.

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Various healthcare reforms that were implemented and introduced by the government have profoundly affected the profit margins, membership growth and medical management and expenses of insurance companies.

A study by Dranove (2000) mentioned three characteristic features of traditional U.S. health care system. They were

  • Reliance of the patients on autonomous physicians to act as their agents;

  • Receiving complex care from various independent and non-profit hospitals; and

  • No intervention of insurers in any part of medical decision making and reimbursed physicians, medical institutions, and other doctors by fee-for-service.

These situations resulted in significant increase in the cost.
Healthcare costs in many countries are soaring disproportionately for many reasons like expensive new tests and treatments, marketing of new drugs and procedures, overuse of specialists, high doctor fees, etc. One of the major factor that has affected the healthcare tremendously is use of expensive and unnecessary new diagnostic tests and treatments.

Causes of Healthcare Costs

A study conducted by Institute of Medicine in 2012 estimated that in 2009 around 30 % of overall spending on health, which cost around 750 billion dollars, was wasted on the worthless services like high administrative costs, etc. (Haelle, 2013). The problem of unnecessary tests and treatment had become so serious that the ABIM Foundation along with around 20 professional medical societies joined forces in a project called Choosing Wisely where a single group identified five treatments that the professional themselves declared to be used very often (Consumer Reports, n.d.).
A list was released by Choosing Wisely, which indicated lists of unnecessary healthcare services. Few examples of applicable yet expensive treatment are- using drugs that dissolve clots, clearing arteries for treating heart attack, etc.  These expensive methods are effective in saving lives of patients, but various new treatments have been introduced that are expensive and inappropriate and unlikely to provide benefits to the patients. An example of this kind of treatment is the once used to treat severe back pain by fusing together the bones of the lower back. Many doctors have stated that this procedure is ineffective. Furthermore, a study in 2011 found that the spending on twelve very commonly overused tests, like the annual electrocardiograms (EKGs) done for heart disease and the imaging tests that are used for lower-back pain came out to be about $6.8 billion.

Another example can be taken from a trial that was published in 2007. It found that the invasive procedure of angioplasty was ineffective and worked no better than the less expensive drugs available for it. But several years later a study discovered that many doctors still chose angioplasty over the simpler and less costly steps.
The advances in medical sciences have helped us to get well, delay deaths by avoiding diseases. It has been a blessing for many people struggling with critical diseases. But in this whole procedure, the medical sciences has resulted in driving the spending up. A study conducted in 2012 in the U.S. had indicated that almost half the population of the U.S. is affected by chronic diseases like asthma, heart disease or diabetes, etc. And about two-thirds of U.S. adults are suffering from obesity. These critical problems have resulted in additional medical spending (Wittman, 2012).
This increase in the diseases and chronic conditions due to the unhealthy lifestyle of people has led to many innovations and technologies in the medical market. People have become cautious regarding their health and hence demand latest treatments even if the evidence are not for these technologies. And due to this growing demands, the prices of latest procedures and technologies have soared higher than the procedure used initially.
Further, there is no standard that can help doctors and patients evaluate the treatments or how particular these treatments are when compared to other treatments. Even when the evidence are presented that show the treatment to be ineffective or harmful, a lot of time is taken to prove these evidence to be true and hence a long time is taken by the doctors and patients to change their practices and demands respectively. Additionally, it has been seen that the population of U.S. opts for every possible treatment and procedures that they believe can stave off the death, even if the possibilities of success are quite low (Wittman, 2012).

Controlling the Healthcare Costs

The excess spending on health care can be controlled by using 
Healthcare costs can be monitored or decreased only by using a definite approach to tackling the following issues:

  • Total people using health care services

  • The number of providers who are reimbursed for services

  • The amount of overhead to run a health care business (overhead does not include the spending of health care)

The measures that are used to assess the health care quality does not reflect how the people are affected when used for a longer period but focus on reflecting how care was delivered. Usually, the correlation between delivery of health care and its long term effect does not hold true.

Some steps that can be taken to reduce healthcare cost can be (Trivedi, n.d.):
(a.)   Reduce unnecessary care: Unnecessary care is the care that does not improve health, but the problem is that it is difficult to be recognized, in fact even harder to be eliminated. Researchers should study and compare the test, medicines, and drugs for their effectiveness and cost-effectiveness. Other factors like exercises, therapies, etc. can also be studied. Using these methods can help to approach a disease in the best way possible and hence avoid all the unnecessary tests. 
(b.)   Improved Health: Increasing the use of various inexpensive services that can help to prevent disease may decrease the expensive treatments. For example, screening for breast and colon cancer in time will help people avoid the treatments for advanced cancer. Various approaches that can increase preventive care are:

  • Increase the number of primary care doctors,

  • Elimination of co-payments for the preventive services,

  • Provide free preventive services for needy people

  • Rewarding health care providers financially for following every preventive care guidelines.

(c.)   Reduced drug costs: Using generic drugs or more cost-effective brand-name drugs can help to decrease the drug costs. Various ways to minimize drug costs are:

  • Teaching health care providers to use drugs in a cost-effective way

  • Limiting the amount of medications that are marketed to people and providers

  • Establishing rules on using drugs in hospitals and other institutions

  • Government should be allowed to negotiate lower prices of drug for people who are covered by government insurance

Increasing primary care use: The cost of primary care is less than the specialty care. Ways to improve primary care is to: 

  • Increasing the number of primary care doctors. 

  • Increase in reimbursement rates for primary care of Insurance companies, 

  • More funding for training of primary care and less on specialized care by government,

  • The patient-centered medical home.

Such reforms in medical advancement and healthcare practices may help to reduce the use of unnecessary and defensive medicine, drugs, treatments, etc.

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Reference

  • Dranove, D. (2000). The economic evolution of American health care. Princeton, N.J.: Princeton University Press.

  • Haelle, T. (2013). Putting Tests to the Test: Many Medical Procedures Prove Unnecessary—and Risky. Scientific American. Retrieved from http://www.scientificamerican.com/article/medical-procedures-prove-unnecessary/

  • Consumer Reports,. Choosing Wisely. Retrieved 7 February 2016, from http://www.consumerreports.org/cro/health/doctors-and-hospitals/choosing-wisely/index.htm

  • Wittman, J. (2012). The Drivers of Health Care Costs - Wagner Health Policy and Management Program Blog. Wagner.nyu.edu. Retrieved 7 February 2016, from https://wagner.nyu.edu/blog/health/the-drivers-of-health-care-costs/

  • Trivedi, A. Controlling Health Care Costs - Fundamentals. MSD Manual Consumer Version. Retrieved 7 February 2016, from http://www.msdmanuals.com/home/fundamentals/financial-issues-in-health-care/controlling-health-care-costs

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