Lamar Alexander: My last two years will focus on cutting health care costs

Up to half of health care spending is unnecessary.

That’s according to Dr. Brent James, a member of the National Academy of Medicine, who testified before my committee that 30 percent, and probably as much as 50 percent of all the money spent on health care is unnecessary. That startled me, as I hope it startles you.

As a country, we spend a huge amount on health care. When we use James’ estimates, that means $1-1.8 trillion of our health care spending in 2017 was unnecessary. That is more than the gross domestic product of every country in the world except for the top nine, about 550 times as much as we spend on national parks, 60 times as much as we spend on Pell grants for college, and three times what we spend on all of our national defense. 

For the last eight years, most of the debate about health care hasn’t been about this extraordinary fact that we may be spending up to half of what we spend on health care unnecessarily. Instead we have been focused on health insurance. But the truth is we will never have lower-cost health insurance until we have lower cost health care.

While this problem can’t be solved in Washington alone, my top focus as chairman of the Senate health committee for the next two years will be to reduce the cost of health care in the United States.

Last week I asked leading health care experts, economists, doctors, nurses, patients, hospital administrators, state regulators and legislators, governors, employers, insurers and innovators to identify specific ideas about how to reduce health care costs for taxpayers, employers and families.

I would like to receive as many specific legislative, regulatory or sub-regulatory solutions as possible, in priority order and in writing, by March 1, 2019. 

One major reason for the unnecessarily high cost of health care is that the health care system does not operate with the discipline and cost-saving benefits of a real market. Too many barriers to innovation drive up costs. And most Americans have no idea of the true price of the health care services they buy, which also drives up costs.

Here is a story that illustrates the price problem: Todd is a Knoxville father who recently took his son to an emergency room after a bicycle accident. His son was treated, Todd paid a $150 copay because the emergency room was “in-network” for his health insurance, and they headed home.

So Todd was surprised when he received a bill for $1,800 – because even though the emergency room was “in-network,” the doctor who treated his son was not. Todd wrote me, trying to figure out why it is so hard to understand what health care really costs and said, “If I’m expected to be a conscientious consumer of my own health care needs, I need a little more help.” The issue of surprise billing is a widely recognized problem as highlighted in a report from the White House on health care costs released earlier this month.

High health care costs are a drain on taxpayer dollars, eat up employer budgets, and --most important -- are a top financial concern for American families. According to a Gallup poll released days before the midterms, 80 percent of registered voters rated health care as “extremely” or “very important” to their vote.

While it would be convenient to have a moonshot from Washington to reduce health care costs, a solution will involve people other than the federal government. This includes employers, states, private companies, hospitals, doctors and other health providers all taking an active role in reducing health care costs. And finally, information needs to be easily available so patients can find out the price of their care and take an active role in choosing health care and planning for medical expenses.

I plan on continuing my work and making the cost of health care my top priority next year. The federal government is not going to lower the cost of health care overnight, but I believe there are steps we can take that would make a real difference to American families. That might be two or three big steps, or a dozen smaller ones, but we shouldn’t let this opportunity to make progress pass us by.