Want to Save Money on Health Care? Do Less of It. A Lot Less.

4862has anyone looked into how muc 600x400 Want to Save Money on Health Care? Do Less of It. A Lot Less.

The primary goal of health
wonks and health policy activists is to generate plans and systems
that allow us to save money while also providing better health
care. That’s what the folks at the Trust for America’s Health are
presumably after with their new
initiative to encourage policy makers to “move from sick care
to health care” by spending more money on the prevention of chronic
diseases. Given that about three quarters of U.S. health care
spending is on chronic disease, much of which is theoretically
preventable, this intuitively seems like a good idea that will save
money by making us healthier.Sadly, that’s not the case. Most economists agree that large
scale efforts to spend more on prevention end up costing a lot more
in the long run. The problem is that you end up spending a lot more
on preventive care for people who were never in need of it just to
catch the few who will eventually get the diease.  As the
Congressional Budget Office
noted during the ObamaCare debate, “for most preventive
services, expanded utilization leads to higher, not lower, medical
spending overall.” Other
studies and
experts have come to basically the same conclusion. Indeed,
there’s been
evidence that prevention programs don’t save money since at
least the mid 1980s.Yet we continue to see proposals to focus on prevention anyway.
The appeal is understandable, but with a few narrow exceptions for
things like hypertension screening, these proposals are usually
misguided.Much of the appeal, I suspect, stems from the desire to take
active measures to save money on health care—to do
something. But if we want to save money on health care, then
that will probably involve doing less. Perhaps a lot less.That’s because a large amount of medical care is probably
unnecessary.How much, exactly, varies based on
the estimate: Health researchers at Dartmouth Institute for
Health Policy and Clinical Practice have suggested that about 30
percent of clinical spending could be avoided without impacting
health outcomes. Former Medicare administrator Donald Berwick
helped author an estimate suggesting the figure could be as high as
37 percent. But the general consensus is that the number is
high.Much of that unnecessary
spending comes from providing treatments that aren’t necessary or
don’t work. The fact is, there’s still an awful lot we don’t know
about medical care—including treatments we use already. A recent
study published in the British Medical Journal reviewed
randomized controlled studies for 3,000 medical treatments and

found that we don’t know how well about half of them work. It’s
a good bet that a fair number of them simply don’t work—or don’t
work very well.The trick, then, is to figure out how to do less. That’s hard,
for multiple reasons. One is that people understandably resist the
idea that we can probably do without lots of medical care. The
other is that we don’t really know what’s worth doing and what’s
not—and it can be really hard to tell. This is where liberal health
wonks point to government-funded research and cost-cutting advisory
panels like the Independent Payment Advisory Board built in
ObamaCare. Time-intensive clinical studies and effectiveness
research can provide us some information, but in many cases these
only tell us what happens on average. That’s useful to know, but
it’s not enough, because many individual cases might differ. Which
is why I suspect there’s more to be gained by dispersing decisions
about health care needs and costs amongst the individuals most
affected by those decisions. Health care is enormously complex, and
markets driven by individual preferences are usually the best way
to manage complex information and preference ecosystems.The more we do that, the more I suspect we’re likely to find
that what happens is that, on the whole, we spend a lot less money,
but aren’t noticeably less health. Several years ago, economist
Robin Hanson wrote an
essay for Cato Unbound pointing out that there’s not much
correlation between a society’s overall level of medical spending
and its health outcomes. Things like diet, exercise, and education
levels are much more predictive. Hanson argued provocatively that
we should be able to cut out somewhere in the range of half of our
health spending without a significant overall reduction in health
outcomes. That rough figure may be high, but the broader idea has
merit. If we want to reduce health spending—which is an open
question overall but is certainly necessary at the federal and
state levels—then what we need to do probably isn’t look for ways
to spend money differently, but accept that doing so will actually
require us to do and spend less.

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Want to Save Money on Health Care? Do Less of It. A Lot Less.

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