Excessive Health Care Spending In The US
October 31, 2012

Study Proposes Eliminating Excessive Health Care Spending

Connie K. Ho for redOrbit.com — Your Universe Online

A new study by researchers from the University of California, Los Angeles (UCLA) found that, by redirecting excessive spending of $750 billion each year, the U.S. could increase the health and well being of citizens.

In particular, the group of scientists believes that the sum of money is due to a number of factors including inflated prices, fraud, unnecessary services and extra administrative costs.

"If cut from current health care expenditures, these funds could provide businesses and households with a huge windfall, with enough money left over to fund deficit reduction on the order of the most ambitious plans in Washington," explained Frederick J. Zimmerman, a professor and chair of the department of health policy and management at the UCLA Fielding School of Public Health, in a prepared statement. "The money could also cover needed investments in transportation infrastructure, early childhood education, human capital programs, rural development, job retraining programs and much more. And it could transform America with little to no reduction in the quality of, or access to, health care actually provided."

The researchers stated that alternative options proposed in the study could prove to be beneficial.

"When the fastest-growing part of the economy is also the least efficient, the economy as a whole loses its ability over time to support our current living standards," noted the study´s co-author Jonathan Fielding, a UCLA professor of health policy and management and director of the Los Angeles County Department of Public Health, in the statement. "The U.S. has become irrationally attached to its inefficient health care system. Recognizing the opportunity costs of this attachment is the first step in repairing the system."

The authors proposed one scenario as to how the money could be used. They believe that over $410 billion per year or a 55 percent of savings could be received by the private sector to be used however they wanted to spend the funds. An additional $202 billion or 27 percent could help in deficit reduction. Another $104 billion or 14 percent could help fund more investments in human capital and physical infrastructure.

Furthermore, $18 billion or two percent of the savings could be used to increase urban and rural quality of life; they proposed that the funds could help better the environment around local campuses, increase and modernize the number of public libraries, improve waste water treatment and give rural development grants to small towns in the country. The extra money would also provide job training for almost 50,000 unemployed individuals while two percent of the savings would pay for transportation projects that could decrease road congestion and increase public transit options.

Even with the number of options the funding could be used for, the researchers believe that it would be difficult to decrease the excess expenditures as the costs are spread over many different areas. To overcome this issue, economic sectors, governmental agencies and other organizations will have to work together cohesively. If successful in redirecting approximately $750 billion per year, it could be extremely helpful for people in the U.S. and pave the way for greater change.

“This will not be an easy fight," concluded Zimmerman in the statement. "But we believe reconceptualizing our excess health care spending by looking at its opportunity cost to society is an important first step."

The findings from the study were recently published in the online edition of the American Journal of Preventive Medicine.