In the comment thread on khin's excellent post, Refuting Myths on Health Care and Medicare for All, Fred Moolten argues that:

Most of the excess [in health care costs] resides within healthcare itself, in the form of duplicate or unnecessary facilities, test, procedures, and specialty referrals driven by a fee for service paradigm that rewards excess.

and PseudoCyAnts asks a very good question:

any decent study citations to go along with this? it has the feel of conventional wisdom, which far too often is in error.

Since Pseudo's question isn't answered, I thought it might be worth starting a new thread.

We can agree there is some level of waste, duplication and even fraud, and that it should be contained as much as possible. The question is whether waste and duplication on the part of providers actually do account, as Fred avers, for "most of the exceess" in health care costs.

The Christian Science Monitor recently ran an op/ed by Dr. Arthur Gerson, former dean of the University of Virginia School of Medicine. Here's a quote:

Our current healthcare spending is approximately $2.1 trillion (that's up from $1.3 trillion noninflation adjusted in 2000). We waste an estimated one-third – or about $700 billion – on unnecessary procedures, unnecessary visits to the doctor, overpriced pharmaceuticals, bloated insurance companies, and the most inefficient paper billing systems imaginable.

Dr. Gerson doesn't quote his source, unfortunately, but if it's a good source our search for waste and duplication must extend well beyond health care providers, to include "overpriced pharmaceuticals, bloated insurance companies" and more.

Information published by The Commonwealth Fund, one of the go-to NGOs when it comes to health care research and quality advocacy, provides some support for looking beyond just the providers. You may find this Web page interesting. It contains a series of charts entitled, "Universal Health Insurance: Why It Is Essential to Achieving a High Performance Health System and Why Design Matters Charts."

One chart here, entitled "Health Expenditure Growth 2000–2005 for Selected Categories of Expenditures," shows growth in the following cost categories [if I knew how to do it, I'd reproduce the chart]:

• 12.0% – Program administration and net cost of private health insurance
• 10.7% – Prescription drugs
• 8.6% – Hospital care
• 7.9% – Physician & clinical services
• 6.1% – Nursing home & home health
• 8.6% – Total

Another Commonwealth page of interest here is entitled "Overuse and Duplication/Waste Charts." (click for Web reference).

Beyond waste and duplication, and perhaps even more costly, is our inefficiency in treating chronic diseases. The fragmentation of our health care system, with it's competing interest groups and agendas, causes a lot of this inefficiency.

The CDC makes a very plain statement about this (click for Web reference):

Chronic diseases – such as heart disease, stroke, cancer, and diabetes – are among the most prevalent, costly, and preventable of all health problems.

According to the CDC (click for Web reference):

• Chronic diseases account for 70% of all deaths in the United States.
• The medical care costs of people with chronic diseases account for more than 75% of the nation’s $2 trillion medical care costs.
• Chronic diseases account for one-third of the years of potential life lost before age 65.

If chronic diseases account for 75% of health care costs, and attendent suffering, we might want to look at what's driving those costs and whether there's a way to bring them under control. We might especially want to know if there could be a connection between providing better care and controlling costs.

Insurance companies, acting rationally as we expect for-profit corporations to do, control their own costs of chronic disease by refusing coverage, refusing treatment, and recision. The diseases don't go away, though, and the costs get dumped on non-profit hospitals and Medicaid. In other words, the excess cost of refusing intelligent treatment for chronic diseases is passed on to you and me. Meanwhile, there is more suffering than there needs to be.

One of the Commonwealth charts (see links, above) is entitled "Adults Without Insurance Are Less Likely To Be Able To Manage Chronic Conditions." The chart illustrates the following:

• Uninsured patients are three times more likely to skip their medications due to cost than are insured patients.
• Uninsured patients are 2.2 times more likely to be hospitalized or visit the ER than are insured patients.

Another chart, with a very long name, shows that putting caps on drug reimbursements increases the number of more adverse consequences suffered by patients, off-setting the savings in prescription costs.

The Robert Wood Johnson Foundation is another NGO that focuses a good bit of attention on chronic care (click for Web reference). Here's a quote from RWJ:

[Deficiencies in current management of chronic diseases] include:

• Rushed practitioners not following established practice guidelines
• Lack of care coordination
• Lack of active follow-up to ensure the best outcomes
• Patients inadequately trained to manage their illnesses
  

Overcoming these deficiencies will require nothing less than a transformation of health care, from a system that is essentially reactive - responding mainly when a person is sick - to one that is proactive and focused on keeping a person as healthy as possible.

Transforming complex systems, like health care, is not easy to do. Organizing the energies and agendas of doctors, hospitals, nurses, technicians, patients, consultants private insurors, Medicare, Medicaid, and innumerable other interest groups requires more than just research and advocacy. It requires leadership than can transcend the inevitable internecine squabbling. That's why I believe that single-payer universal coverage is the best way to achieve the transformation RWJ advocates.

But back to our discussion. There's no doubt that controlling waste and duplication will help save costs and, done correctly, improve outcomes. But we need to keep our eye on the prize. Affordable, high-quality health care for everyone.

One of the pervasive themes I've followed in TPM blogs is that we must divide the campaign for better health care into two parts.

1. Regulating and supervising the insurance side, and
2. Reducing waste and duplication on the provider side.

Fred Moolten, for one, argues that we are about to make some progress on #1 and hopefully can get around to #2 at a later date. He presents the case well but I am not convinced. I think what we are doing now may change some of the rules of the game, but the game will still be afoot.

Private insurance creates a distortion field that inserts itself between patients and providers in ways that are inimical to the interests of both. The industry takes hundreds of billions of dollars out of health care but does not add commensurate value back. We only put up with this situation out of fear.

If we manage some incremental reform, even including a crippled public option, the insurance industry will not roll over just because we have passed new laws and written new regulations. While we are patting ourselves on the back because we finally made partial progress on part of the problem, they will be organizing board retreats and hiring consultants and ginning up work groups to figure out how to gain back any profitable ground they have lost, plus a little more. It is the nature of any for-profit organization to work that way.

If you and I have a vision of providing high quality health care, affordably, to every American, we must pursue a truly game-changing strategy. Patients, providers and our government all have positive contributions to make to this new game, but insurance companies can never be counted on to be part of the team. The incentives that help make them profitable are not the same incentives that help make health care better and more equitable, and vice-versa.

We can't do this piecemeal.

The American health insurance industry is inadvertently doing its best to promote single-payer universal health care. A report commissioned by America's Health Insurance Plans (AHIP) and released this weekend estimates the following:

• $12,300 is the cost of an average family health plan today. The same plan will cost:
• $15,500 in 2013
• $18,400 in 2016
• $21,900 in 2019

That's if we do nothing. Of course, the real value of these plans will also decrease as they become more expensive, because insurance companies will raise co-pays, lower caps and become even more creative about denying claims and canceling policies when people need them as time goes on.
I know AHIP is using this to argue against health care reform (see TPM article and Jonathan Cohn in TNR), but really, I can't imagine a better argument for universal, single-payer health care.
Can you?