U.S. Must Cut Spending on Medical Technology, Harvard Study Says

U.S. policy makers wrestling with the deficit should focus on reducing the number of angioplasties and other medical procedures that don’t always deliver clinical benefits, two Harvard University economists said.

The overuse of expensive medical interventions is a prime culprit behind rising U.S. health-care spending that’s encouraged by private health plans and Medicare, Kathleen Baicker and Amitabh Chandra wrote in a paper presented at a Federal Reserve Bank of Kansas City symposium today. The two professors spoke at a conference in Jackson Hole, Wyoming.

“We are neither allocating resources efficiently between health and other uses, nor are we getting as much health as we could for every dollar spent,” Baicker and Chandra wrote.

Getting at the root causes of health spending that reached $2.6 trillion last year and is projected to be one-fifth of the gross domestic product by 2020 is the only effective way to reduce the drag on the economy, the authors wrote. Raising taxes or cutting payments of Medicare, the federal health program for the elderly and disabled, won’t improve care, they said.

A 12-member congressional supercommittee will meet next month aiming to reduce U.S. budget deficits by $1.5 trillion over a decade. Medicare cuts may result, and if Congress doesn’t agree on a bill, health care providers will see their payments cut 2 percent.

‘Not Optimistic’

“I’m not optimistic about what Congress will do about the growth of health-care spending,” Chandra said in a telephone interview before the conference.

Angioplasty, which uses balloons and stents from companies such as Abbott Laboratories (ABT) of Abbott Park, Illinois, to open blocked arteries, isn’t always a necessity, according to the economists’ paper. Because Medicare and private plans base payments on procedures instead of the outcome of a treatment, physicians and hospitals don’t have a financial incentive to gauge the effectiveness of therapies, Baicker and Chandra wrote. Less expensive treatments, like aspirin for heart-attack patients, are underutilized, according to the economists.

Angioplasties are being performed when needed and aren’t being overused, said Christoper White, president of the Society for Cardiovascular Angiography and Interventions, in an e-mail.

Compensating caregivers for the outcomes of treatments could pare U.S. health-care spending by more than 30 percent, Baicker and Chandra wrote.

Provisions in the 2010 health-care law, such as the creation of accountable care organizations linking hospitals, doctors and other providers, may accelerate some of the changes Baicker and Chandra recommend.

The authors recommend other shifts, such as researching the effectiveness of new treatments against established ones and requiring patients to pay a greater share of bills for unproven therapies.

To contact the reporter on this story: Jeffrey Young in Washington at jyoung89@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

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