The media is abuzz with stories of outrageous markups at many hospitals. One of the most eye-popping numbers making the rounds? A supposedly "non-profit" hospital charges $1.50 per pill for a generic version of Tylenol. That's about 100 times the retail price.
Obviously, health care takes too much out of our paychecks, too much from our bank accounts, and too many of our tax dollars. Spending in this sector accounts for almost 18 percent of the economy. And the rising cost of government health programs is the biggest long-term driver of our national debt. Medicare alone cost $551 billion in 2012 and is projected to cost more than $1 trillion in a decade.
The question is what we should do about it. One approach is simply to squeeze down costs, and there are certainly savings to be reaped this way. A better approach, however, is to look at what is driving these high levels of health care spending and see if we can intervene there.
The simplest answer in terms of cost drivers is just two words: chronic disease. Right now, chronic disease is rampant in America -- almost half the population has at least one. It's a mistake to think of these conditions as mere nuisances to be managed. They kill. More than 1.7 million Americans succumb to a chronic condition; it's a factor in 70 percent of all deaths in the country.
In addition to being deadly, chronic disease is also expensive. Roughly three quarters of $2.7 trillion spent on health care in 2011 was linked to patients with chronic disease.
That's a huge cost for individuals and employers. It's an even bigger percentage of the cost to taxpayers of government-run health programs: About 83 percent of Medicaid spending and a whopping 98 percent of Medicare was for patients with some sort of chronic disease.
Medicare, the federal health program for seniors, is particularly susceptible to costs associated with chronic disease: Over half of its patients have five or more chronic conditions, and those patients account for about three quarters of the program's spending.
Our problem in a nutshell is that we are too focused on treating these conditions when we should be focused on preventing them.
The fact is that in America we don't really have a health care system. We have a sick care system. We spend too little time and money trying to prevent people from getting sick and too much on treating people who are already ill.
We shouldn't wait until people are sick to help them. And the good news is that many of the most common chronic ailments are preventable: According to the Centers for Disease Control, more exercise, better eating habits, and smoking cessation could prevent 80 percent of heart disease and strokes as well as 40 percent of cancers.
But prevention takes work. We need to gather more evidence about which prevention programs are most effective. We must fund new research and improvements in information technology that can make it easier to spot chronic disease before it becomes a problem.
We also need to find ways to encourage healthy behavior. One study looking at 32 different programs designed to promote good health found that such programs could save an average of $3.48 in health spending for every dollar spent on health promotion.
We also need better management and better coordination of those who are already chronically sick. Researchers have found that the chronically ill get just a little more than half of the preventive services that are clinically recommended.
That's not good enough. But there are signs of hope. Medicare, for example, is already improving as a provider of wellness, with more than 20 million seniors enjoying free wellness visits, cancer screenings, and other preventive services the program now offers.
There's plenty more to be done. We need to reward evidence based medicine and rebuild our health care payment system so that its pays for outcomes, not procedures. We need to facilitate communication between health researchers and practicing doctors, find opportunities hidden in the reams of patient data, and redirect basic research efforts toward cures for chronic diseases.
Ultimately, our challenge is not about spending less. It's about spending smarter. Prevention of chronic disease is the key.