By MATTHEW HOLT
Last week, I read a great article by Jeff Goldsmith that explained the reasons behind the rise in US health care costs from 1965 to 2010. He also highlighted that while health care has remained a consistent portion of the GDP for over a decade, the US spends 17.3% while other main OECD countries spend 11-12%. Goldsmith’s article also addressed the issue of overpriced services in the US, compared to other countries.
If we wanted to do something about health care costs, what could we do? There are 4 ways to cut health care costs: cutting prices, reducing overall use of services, reducing only unnecessary services, and replacing higher priced services with lower priced ones.
The health policy “dream” is to reduce only unnecessary services. The belief is that there is massive practice variation across the nation, leading to higher costs without better outcomes. While there have been attempts to educate patients and improve doctor behavior, the practice variation has not disappeared.
Replacing higher priced services with lower priced ones, such as by using AI-powered technology for therapy and preventative services, is another approach to lowering costs. But there are challenges in implementing this due to the traditional medical processes and payment models.
Lastly, the US could look to the rest of the OECD countries and consider central price controls and a reduction in overall use of services. However, these options are not without their obstacles, including resistance from provider organizations and the complexities of the US healthcare system.
In conclusion, the US faces significant challenges in reducing health care costs, and it’s unlikely to see major changes in the near future. The issue is complex and multifaceted, and there is no single solution that can easily address it.
