Obama vs Romney: Why Neither Candidate Can Reduce Health Care Costs

The Affordable Care Act, better known as "Obamacare" projects Medicare savings of $700 billion over ten years. According to a report released this week by the independent non-profit Institute of Medicine (IOM), the U.S. health care system wastes more than that every year. What this indicates is that government, federal or state, does not hold the key to fixing health care in this country. Rather the health care industry itself holds the key and can bring costs under control at any time. The question is, does it want to?

The report’s findings should not surprise anyone. The IOM estimates that approximately $210 billion is wasted annually on unnecessary services, $130 billion on inefficient delivery of care, $190 billion on excess administrative costs, $105 billion due to inflated prices, $55 billion on prevention failures, and $75 billion due to fraud. These are all areas that health care providers and insurance companies can change. They just have to agree to work together to develop and implement the solutions.

The solutions do not require reinventing the wheel. While the report recognizes differences in health care when compared to other industries, they find systems in place in these other industries that can, if applied properly, have the same cost-savings impact. How bad is the health care system? Imagine if it took days instead of seconds to get money from an ATM, if carpenters, plumbers, and electricians building a home worked from different blueprints, if airline pilots created their own flight plans, it stores not only didn’t post prices but changed prices depending on who was shopping.  According to the IOM, this is what would happen if these industries operated as health care does.

The IOM makes ten common sense recommendations:

1. Digital Infrastructure: Makes information readily available to those who need it.

2. Data Utility: Allows data to be used to allow for better health care outcomes.

3. Clinical Decision Support: Integrates all available clinical knowledge into health care       decisions providing information to health care providers and patients.

4. Patient-Centered Care: Patients and their families should be full participants in all health care decisions.

5. Community Links: Health care should include partnerships between health care and community organizations.

6. Care Continuity: Payment schedules should reward communication and coordination.

7. Optimized Operations: Implement principles of continuous improvement.

8. Financial Incentives: Payments should be based on continuous improvement and value-oriented outcomes.

9. Performance Transparency: Health care providers must give patients all the information.

10. Broad Leadership: Health care organizations should be based on organizational cultures that support and encour­age continuous improvement, the use of best practices, transparency, open communication, staff empowerment, coordination, teamwork, and mutual respect.

During the next eight weeks we will hear a lot of rhetoric about health care. The arguments will be based on the same assumption; government should be involved in how our health care system is structured. The difference is how much. Perhaps first, the government should stay out of it and let the health care industry implement the recommendation in this report.