by Virginia Postrel • Jun 4, 2009 at 1:16 am
In a remarkably disingenuous report, the Council of Economic Advisers assumes the can opener of easily reduced health care costs. One crucial argument, illustrated by this map, is the presumed waste represented by disparities across Medicare regions (click for a larger view):
From the report:
These large differences in spending suggest that nearly 30 percent of Medicare's costs could be saved without adverse health consequences. If these patterns are consistent with the experience of other populations, such as Medicaid enrollees and the privately insured, then it should be possible to cut total health expenditures by about 30 percent without worsening outcomes. Since we currently spend approximately 18 percent of our GDP on health care, a 30 percent reduction in expenditures would again suggest that savings on the order of 5 percent of GDP could be feasible.
"Nearly 30 percent of Medicare's costs could be saved without adverse health consequences."
The report also suggests that we know what the problems are, listing the usual suspects:
We spend a substantial amount on high cost, low-value treatments.
Patients obtain too little of certain types of care that are effective and of high value.
Patients frequently do not receive care in the most cost-effective setting.
There is extensive variation in the quality of care provided to patients.
There are many preventable medical errors that lead to worse outcomes and higher costs.
Our system is complex and we have high administrative costs.
Think about this for a moment. Medicare is a huge, single-payer, government-run program. It ought to provide the perfect environment for experimentation. If more-efficient government management can slash health-care costs by addressing all these problems, why not start with Medicare? Let's see what "better management" looks like applied to Medicare before we roll it out to the rest of the country.
This is not a completely cynical suggestion. Medicare is, for instance, a logical place to start to design better electronic records systems and the incentives to use them. But you do have to wonder why a report that claims that Medicare is wasting 30 percent of its spending thinks it's making a case for making the rest of the health care system more like Medicare.
UPDATE: Thanks to reader Colin Gilboy for pointing me to this New Yorker article, which fleshes out the aggregate data with reporting from McAllen, Texas, which has some of the highest Medicare expenses in the nation--much higher than very similar El Paso. If Medicare can't fix McAllen, why think a similar program will fix the country?
ADDENDUM: A physician who asks not to be named writes:
I put a plate on a distal radius today. Fifteen years ago, I may have used a cheaper technology, an external fixator or reducing and pinning it. Open reduction and internal fixation of distal radius (wrist) fractures gives the best result and it is because of significant improvement in plate and screw design and manufacture (and better surgical technique, if any credit in America can go do physicians). This is on small problem that can lead to significant disability and pain. Multiply by every medical and surgical condition. Under a government controlled healthcare system, how much improvement will follow? Where will be the evidence for "evidence based medicine" when a green eyeshade guy is determining whether new technology can be used? If everyone is happy with healthcare in 2009, performed at the lowest per capita cost that can be managed, then go for Obamacare. If you think there might be significant improvements in the future, realize Obamacare will be an abortion. Doctors will do their best with whatever system we get, but we are not driving this. If it is a poor system that we get from the government, expect a worse future for medical care. Thanks for letting me vent.
On this issue, see my Atlantic column on cancer drugs and the followup response to letters.
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