First Cut the Abusers, the Bureaucrats, and Useless Interventions!

by Amitai Etzioni Amitai Etzioni is a professor of sociology at The George Washington University and the author of The New Golden Rule (Basic Books, 1998). For more, please visit Etzioni can be contacted at 16.07.2009

Obama is challenged to come up with ways to pay for a health insurance plan that will cover most, if not all, Americans. Many call for cutting services and reducing fees for doctors and for hospitals. Others favor raising taxes one way or another. I say first cut out the crooks. You may say this is an often-used gambit; that people who do not want to face the tough choices that must be made claim that you can pay for what must be covered by curbing fraud and abuse. However, in this case, there is strong data that show that scores upon scores of billions could be saved in this way.

I served as a staff director of a commission that investigated abuses in nursing homes in the state of New York. We found that the owners cheated their patients and used the funds to buy themselves expensive paintings, mansions, fancy cars and numerous other goodies. When they were caught, which was rare, all that Medicaid did was to ask them to pay back the money, either with no penalty or with only a very minor one. Moreover, those who abused the elderly and the tax payers were not disbarred from receiving still more public funds in the future. Throughout the health sector, according to estimates from the federal government and the National Health Care Anti-Fraud Association, more than $100 billion are lost each year to fraud, abuse and waste in the health care system.

Another major source of savings, well known but still true, can be found in those who administer health care. According to Consumer Reports, the US spends three times more money on administering health care per capita than many other industrialized nations, Canada for instance. Physicians for a National Health Program find that more than 30% of U.S. health spending -- $294 billion -- goes to paper work and administration, compared to only around 17 percent in Canada. This large sum is due to a crazy system that tries to check every transaction, every medication, every x-ray, every procedure provided to most patients, instead of paying doctors and hospitals a flat fee (known as capitation). If we shifted to a Canadian-like system, we would save approximately 13% off our total health care bill: in 2008 that would have amounted to a savings of $312 billion.

Computerizing health care records would save another bundle, by reducing the staggering number of medical errors and doctor and hospital induced illness from such simple problems as illegible handwriting and prescriptions that conflict with those previously prescribed. And these saving pale in comparison to the savings we could gain if the government would stop reimbursing for medical interventions that have not been proven to actually help patients. Even if we could just cut these interventions by half, we still would be ahead by some $350 billion a year.

It is possible that even if all this is done, we will still be short. However it is morally repugnant to claim that we cannot afford to provide beneficial medications and services to patients while so much money is being lost due to abuse, poor administration, and interventions that have no proven benefit.

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