The need is urgent to bring US health care costs into a sustainable range for both public and private payers. Commonly, programs to contain costs use cuts, such as reductions in payment levels, benefit structures, and eligibility. A less harmful strategy would reduce waste, not value-added care. The opportunity is immense. In just 6 categories of waste—overtreatment, failures of care coordination, failures in execution of care processes, administrative complexity, pricing failures, and fraud and abuse—the sum of the lowest available estimates exceeds 20% of total health care expenditures. The actual total may be far greater. The savings potentially achievable from systematic, comprehensive, and cooperative pursuit of even a fractional reduction in waste are far higher than from more direct and blunter cuts in care and coverage. The potential economic dislocations, however, are severe and require mitigation through careful transition strategies.
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The “wedges” model for US health care follows the approach based on the model by Pacala and Socolow.9 The solid black “business as usual” line depicts a current projection of health care spending, which is estimated to grow faster than the gross domestic product (GDP), increasing the percentage of GDP spent on health care; the dashed line depicts a more sustainable level of health care spending growth that matches GDP growth, fixing the percentage of GDP spent on health care at 2011 levels. Between these lines lies the “stabilization triangle”—the reduction in national health care expenditures needed to close the gap. The 6 colored regions filling the triangle show one possible set of spending reduction targets; each region represents health care expenditures as a percentage of GDP that could be eliminated by reduction of spending in that waste category over time.
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Eliminating Waste in US Health Care
JAMA: 2012-04-11, Vol. 307, No. 14, Author Interview
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