Virtually every day, another article in the New York Times or The Wall Street Journal laments rapid rises in health care costs and their impact on business. Most recently, Medicare's announcement of a 15% increase in Part B premiums and the Department of Defense's alarm over the doubling of military health costs in only four years remind us that the health care juggernaut is everybody's problem. We spend way too much on care, proportionate to other goods and services. Even with such a huge national investment—47% more than the next most expensive country—we get nothing near our full money's worth.
Corporate America's concerns about our health system go beyond high costs. We have substantial evidence of uneven quality of care across the country; billions of dollars of waste on inappropriate, unnecessary, and even harmful care; and worse care for racial and ethnic minorities.
But our cost crisis is not about who pays for our nearly $2 trillion health care industry, although some believe the main issue is coverage and the solution to make others foot the bill. No matter whether it is employers, employees, retirees, government, taxpayers, or patients, no one can afford the high costs of care. We are seriously harming our nation's future by failing to control costs and get real value for our investments. Paying too much for care damages our ability to compete on the world market: our costs are 74% higher than in Germany and far higher than such countries as China, Korea, Japan, and India.
When it comes to getting health care, many people would say that any efforts are worthwhile, even if they prove ineffective. But with employers covering health benefit increases—and roughly 80% of the costs of health coverage or the monthly premium costs is paid by employers, with certain industries paying more—wages have not kept up with inflation in the past four years. Workers have been giving their raises to the health care industry.
Most employers agree that the cost crisis won't be solved as long as:
- We believe we can have it all and someone else will pay for it;
- We believe we can lead unhealthy lifestyles and the care system will bail us out;
- We fail to ensure patient safety and quality, thus increasing hospital stays, charges, and redundancies and losing 44,000 to 98,000 patients a year from avoidable medical mistakes, and;
- We reimburse for care even though it is not recommended by experts or based on evidence.
What Can Be Done
There is no single way to address the dilemma of high costs. But a number of steps hold promise.
We must invest in an information technology infrastructure to reduce human errors, prevent duplicative care, increase efficiency and effectiveness, and improve analysis of patient data. In particular, we should invest in computerized physician order entry systems (CPOE). A study at Brigham and Women's Hospital reported a reduction of 55% in adverse drug events and 81% in serious medication errors after CPOE implementation.
We must support efforts to improve patient safety such as the "Save 100,000 Lives" campaign led by Don Berwick, M.D., and the Institute for Healthcare Improvement. Not only are lives lost due to unsafe hospital practices, injuries result in much higher costs. Just one study involving 28 states found that postoperative bloodstream infections resulted in hospital stays almost 11 days longer than the average, adding $57,727 per stay and increasing the risk of death by 22%.
Core Benefits Based on Evidence
We have to get over the idea that we can or even should afford unlimited health care. There are many types of unnecessary care, including procedures taken even though there is evidence of their inappropriateness, wastefulness, or actual harm. These include prescribing antibiotics for viral diseases or widely prescribing drugs that are most effective for a small number of conditions. Unnecessary care also includes treatment for medical conditions that could be avoided by encouraging lifestyle changes such as healthy eating and exercise.
We need to have a national organization of all stakeholders, including physician groups, to make recommendations about treatments that meet evidence of effectiveness. This group could assess medical therapies on a comparative basis and ensure that the most effective treatments, drugs, or technologies are broadly adopted. To make budgetary room for emerging, often more expensive treatments, we need to eliminate older procedures that are demonstrably less effective. At the same time, we should continue to rely on existing low-cost drugs and treatments with long records of effectiveness and minimal harm. The recent problems with Cox-2 inhibitors should give us caution in too quickly or too widely adopting new technologies.
In some cases, there may be sufficient evidence to justify paying for certain new procedures or medications for which only limited evidence of effectiveness exists. We should cover such treatments only if providers and patients are willing to participate in an appropriate study to monitor their effectiveness.
Clearly, patients need high-quality, safe care, but physicians also need protection from a flawed tort system. With the right reforms, including instilling a culture of safety and fair compensation for injuries, physicians would be less likely to practice "defensive medicine." If providers knew that their near misses and errors would be treated by an appropriate committee in a confidential and nonpunitive process of review, they are much more likely to be forthcoming. As several studies have shown, defensive medicine wastes resources and does not necessarily make patients healthier or safer.
Tactical Approaches for Health Care Purchasers
All purchasers should select health plans that deliver value, based on evidence of quality and efficiency. We should reward plans and providers that are willing to report performance data, be held accountable for their record, and demonstrate high performance.
For prescription drugs, we should use pharmacy benefit managers along with other strategies to foster quality and efficiency, including preauthorization for selected drugs and patient decision support. For example, pharmacists, nurses or personal coaches could talk with patients about the pros and cons of different drugs and work with them to find alternatives such as diet and exercise to lower blood pressure or avoid diabetes.
We also should encourage patients to choose high-quality care. To do so, employers and other payers can set levels of patient contributions to favor high-performing plans and providers. In addition, we need to improve the body of information available to patients so that they can make informed choices.
We should be strategic about cost-control mechanisms in health benefit designs. For example, it may be best to offer low or no cost-sharing for drugs that help to avoid strokes, heart attacks, or diabetic failures and to make this offer contingent on participation in nutritional and exercise programs. Conversely, it may make sense to increase cost-sharing for emergency room use and certain outpatient tests. Carefully designed benefits can encourage patients to be wise users of health services and reward them for managing and improving their health.
In addition, we need to educate the public about the inefficiencies of the health system, explaining why we need to change the way we deliver and pay for care and answering the "What's in it for me?" question.
If Corporate America knows anything, it's the bottom line: If we fail to make hard decisions now, we will pour more and more money into a less than effective and less than efficient health system—wasting valuable resources, making it harder for U.S. companies to compete in the global economy, and lowering everyone's standard of living.
Helen Darling is president of the National Business Group on Health.
The views presented in this commentary are those of the author and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.
 Effect of Computerized Physician Order Entry and a Team Intervention on Prevention of Serious Medication Errors. Bates D.W., Leape L.L., and Cullen D.J. et al. Journal of the American Medical Association 280 (1998): 1311–1316.
 Excess Length of Stay, Charges, and Mortality Attributable to Medical Injuries During Hospitalization. Zhan C. Miller M.R. Journal of the American Medical Association 290 (2003): 1868–1874.
 Do Malpractice Concerns, Payment Mechanisms, and Attitudes Influence Test-Ordering Decisions? Birbeck G.L., Gifford D.R., Song J. Neurology 62 (2004): 119–121; Billions for Defense: The Pervasive Nature of Defensive Medicine. Anderson R.E. Archives of Internal Medicine 159 (1999): 2399–402.