How to Reduce Soaring Health Care Costs

According to the Centers for Medicare and Medicaid (CMS), the United States spent about $4.1 trillion on healthcare in 2020, the latest year for which figures are available. This amounted to 19.7 percent of the nation’s GDP. Of that $4.1 trillion, about 50% ($2 trillion) is directly or indirectly financed by federal, state, and local governments, while households paid about $1 trillion. In other words, the government dedicates nearly 10 percent of the economy toward health care. By 2028, these costs will rise to $6.2 trillion. Beyond then, healthcare costs are expected to continue to grow and consume an increasing share of the nation’s economic resources.

The U.S. spends more per person on healthcare than comparable countries. Health spending in the U.S. was about $12,500 per person in 2020, 42% higher than Switzerland, the country with the next highest per capita health spending. Nearly all developed economies — including Germany, Norway, Denmark, Netherlands, France, Sweden, and Austria — spend far less, from one-third less to half as much. Let us see how our system got so costly, and how we can solve this problem. 

The Current Procedural Terminology System

The start of the high cost of American healthcare can be traced back to 1966 when the American Medical Association (AMA) created what became known as CPT® codes to standardize reporting of medical, surgical, and diagnostic services and procedures performed in inpatient and outpatient settings. Since then, qualified healthcare professionals (QHPs) have had to report the professional services they provide to patients so that they can be universally understood by government healthcare payers, private insurance companies, researchers, and other interested parties. The QHPs’ data are used to identify claims for payment and gather statistical health-care information about various populations. Each year, U.S. healthcare insurers process over 5 billion claims for payment. 

To ensure that healthcare data are captured accurately and that claims are processed properly for Medicare, Medicaid, and other health insurance programs, a standardized coding system for medical services and procedures is essential. Given that new procedures and treatments are constantly created and new technology developed for medical instruments and machines, CPT codes must be periodically updated. Success in obtaining a new or revised CPT code requires preparing an application that spells out the new or updated process or treatment and a review by appropriate members of the medical community who must agree on the need for the new or modified CPT code. 

Information requirements for a new or revised CPT code application include:

• A complete description of the procedure or service (e.g., describe in detail the skill and time involved. If a surgical procedure, include an operative report that describes the procedure in detail).
• A clinical vignette, which describes the typical patient involved and the service to be provided.
• The diagnosis of patients for whom this procedure/service would be performed.
• A copy(s) of peer-reviewed articles published in U.S. journals indicating the safety and effectiveness of the new procedure.
• The frequency with which the procedure is performed and/or estimation of its projected performance.
• A copy(s) of additional published literature further explaining the request (e.g., practice parameters/guidelines or policy statements on a particular procedure/service).
• Evidence of FDA approval of any drug or device used in the procedure/service if required.
• The rationale for why the existing codes are not adequate or an explanation if any existing codes are modified to include the new procedures without significantly affecting the extent of the service.

The problem is, something crucial is missing from this list. There is no requirement to provide evidence of benefits to patients including how the new or updated procedure improves patient care over past methods. Do patients recuperate faster? Do they live longer? Has their quality of life improved? 

This omission is an open invitation for misuse by those who can cleverly use medical terminology, scientific equations, and favorable interpretations of laboratory findings to demand the creation of a new CPT code. This is exactly what happened with Type 2 diabetes — and it is costing the US hundreds of billions of dollars each year. With nearly 10% of all American adults age 18 and over having Type 2 diabetes, and that statistic expected to increase to 33% in future decades, we must get better control of Type 2 diabetes among the first steps in lowering our enormous health-care costs. Otherwise, those costs will ultimately bankrupt the US while the population goes into a downward spiral of costly long-term lifestyle conditions that lead to poor quality of life and premature death.

The Costly Mistake of Misunderstanding Type 2 Diabetes 

Since the 1920s, it was known that children with Type 1 diabetes have high levels of blood glucose because of the inability of the child’s pancreas to produce insulin. This hormone’s function is to inform cells of the presence of glucose outside the cell wall. Without insulin, the cell nucleus won’t know to send out “transporters” to retrieve the glucose and bring it into the cell where it provides the energy to power the cell’s functions. The discovery and administration of synthetic insulin resulted in a dramatic improvement in diabetic children’s lives and prolonged their lifespan. This justifiably led to the classification of Type 1 diabetes as a hormonal disease.

However, when experiments showed that adults who had elevated blood glucose nevertheless had sufficient levels of insulin, medical scientists conjured up a theory that these adults were “insulin resistant.” This theory allowed them to create a new CPT code and get it approved, without having to prove the hypothesis through the three accepted scientific validation criteria:

• Logic – How can any cell decide to resist just one hormone amongst 50 in the body? 
• Mechanism – How do cells change their process from that of “responding” to “resisting” insulin?
• Measurement – Does the degree of resistance change from one cell to another? From one person to another? During the course of the condition?

Since the code for “Type 2 diabetes” was approved, none of these three standards has ever been answered with proper scientific proof. Nevertheless, pharmaceutical companies have had little trouble getting new CPT codes approved for various formulations of insulin, simply by showing that it lowered blood glucose levels but without proving the theory of insulin resistance. No one has satisfactorily explained how someone who is insulin resistant is helped by injecting more insulin. Doctors do not increase the dosage of any other medication that patients are resistant to, so why insulin? 

In addition, manufacturers of blood glucose monitoring devices have received approval for new CPT codes simply by explaining that their devices help patients control blood glucose. No evidence of significant long-term reductions in diabetes-related complications was required.  

The net result is that currently, about $1 out of every $4 in U.S. health-care costs is spent on caring for people with diabetes. According to the Centers for Disease Control, the latest figures showed that in 2017, $237 billion was spent on direct medical costs and another $90 billion on reduced productivity. The total economic cost of diabetes rose 60% from 2007 to 2017. People over age 65 account for 61% of diabetes costs, mainly paid by Medicare. If you were to tally the lifetime medical costs for a person with diabetes, 48% to 64% of those costs cover complications related to diabetes, such as heart disease and stroke. It is estimated that if current trends continue, 1 in 3 Americans will develop diabetes sometime in their lifetime. 

A Proposal for Reducing Health Care Costs

I am not suggesting that all CPT codes are unnecessary or wasteful. My point is that there is a lack of periodic reassessment of healthcare costs associated with caring for people with Type 2 diabetes. Such a reassessment would likely find better explanations for what causes high blood sugar and diabetes in adults, and better, less costly ways to treat it. 

Two basic requirements for improving America’s healthcare system are giving people access to reliable information and to affordable care. The problem is, these are both vulnerabilities that can (and have been) exploited by dreamers, innovators, and entrepreneurs, based on their level of greed. Although the work of these players may advance science and technology, some level of greed is clearly necessary, especially among innovators and entrepreneurs who are unlikely to risk capital on producing and distributing new drugs, gadgets, and remedies without the promise of excellent payoffs. However, there has to be a balance between greed and the needs of people. 

How can we rebalance the current exorbitant costs of healthcare in the U.S. between greed and need? When it comes to Type 2 diabetes, and several other “lifestyle conditions” such as obesity and heart disease, I propose a few ideas. 

First, by definition, lifestyle-associated health conditions are preventable, improvable, and possibly reversible through lifestyle changes. This opens up enormous opportunities to exploit vulnerable people with false promises of useless tests, gadgets, vitamins, food supplements, and treatments. A significant number of people may not have the critical thinking skills needed to evaluate these, and thus end up choosing a path based on gullibility, ignorance, or personal trust in the vendor, spokesperson, or salesperson. This is evident everywhere today, with extensive disinformation and misinformation about medical conditions and treatments in the media. We even see it occurring due to popular and political pressure that leads to the approval of new CPT codes to compensate medical practitioners for heavily promoted but unverified remedies. All this disinformation and misinformation unnecessarily adds to our healthcare costs.

To remedy this, I propose that at least every 20 years, due to the pace of technology and medical advances, we conduct a formal review of the impact of expenditures related to the testing, treatment, and prevention of lifestyle conditions. There should be more frequent reviews for CPT codes associated with substantial payouts, as agreed by both public and private providers of healthcare funds. The costs of these reviews should be paid for by public and private health insurance programs.

These reviews can lead to significant new understandings and evaluations of costs. They should cover: 

Testing: Reevaluate tests that have been previously approved for CPT codes and used to detect the causes of the most common lifestyle conditions: Type 2 diabetes, obesity, cancer, and heart disease with two main objectives: to assess the effectiveness of these tests to correctly identify the lifestyle condition, and to identify critical opportunities for formulating more effective preventive measures. 

Treatment: Assess the overall result of treatments that the health-care system pays for to ensure they are worthwhile and identify any subgroups of people whose results differ from the norm in these treatments. This information could help us assess when treatments are less effective due to the presence of interfering agents such as drugs, coexisting conditions, or genetic variations. 

Prevention:  Evaluate new evidence related to causative factors of lifestyle conditions so better preventive measures can be formulated. This could also help identify more effective communication methods for the most vulnerable populations regarding testing, treatment, and prevention. The more the public understands lifestyle conditions and their own role in causing and treating them, the better. 

Educating the Public 

The value of this periodic review would not only inform legislators, policymakers, and the medical community, but also the public. Most people have no concept of the true costs of the healthcare they receive. Even those who may be aware of the costs are not likely to know the details of those costs or the level of health expenditures by the U.S. government. 

Senate hearings could be used to educate the public about the complexities involved in research, development, manufacturing, and marketing of procedures, medications, and gadgets, and how this contributes to health care costs.  Researchers and healthcare professionals would need to explain how they decide the type of test needed to identify a lifestyle condition; how they conduct research to evaluate the usefulness of tests; and what criteria they use to submit the test for official CPT approval. They would have to explain treatments and prevention strategies in a similar fashion. 

Federal regulators could also explain the criteria they use to approve new processes and what mechanisms they use to ensure that any test, treatment, and prevention method meets stated expectations. They would have to identify what safeguards are in place for early detection of potentially harmful side effects that may appear in the course of treatment or afterward. This could help cut health expenditures by avoiding costly complications that sometimes accompany new treatments. 

Such hearings could weed out taxpayer money wasted on tests, treatments, and prevention programs that do not improve the quality of life, prolong lifespan or lower the incidence of complications in lifestyle conditions. They could be a first step to raising awareness about the excessive costs of our healthcare system and enlist the entire nation to begin reducing these costs while also taking better care of themselves. 

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