Studies Show the U.S. Health-Care System Hampered by Waste and Trailing Other High-Income Countries

A Conversation With Eric C. Schneider, MD

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Eric C. Schneider, MD

Eric C. Schneider, MD

Recent studies show that at least one-quarter of our nation’s health-care expenditures are being consumed by waste, fraud, and abuse. Moreover, since 2004, annual reports from the Commonwealth Fund have consistently rated the performance of our health-care system last among high-income countries, despite the fact that we spend more per capita than any other nation. As the new election cycle heats up, the debate over how to fix our health-care system’s flaws rages on. To shed light on this issue, The ASCO Post spoke with Eric C. Schneider, MD, Senior Vice President for Policy and Research at the Commonwealth Fund.

About the Commonwealth Fund

Please tell the readers a bit about your current work.

The Commonwealth Fund is a private philanthropy more than 100 years old. It is charged with answering questions about health-care policy. Our goal is to help decision-makers improve the quality and affordability of health care in the United States. We do that through a variety of different types of research.

For instance, our staff conduct national surveys and analyze federal data to track insurance coverage and access in the United States, regularly comparing states’ performance and comparing how the U.S. compares to other high income countries on access, quality, and related topics. We also fund researchers at universities and other organizations to study areas such as controlling health-care costs, delivery system reform, and new models of care and payment. We support research on government policies related to the Medicare and Medicaid programs.

Health-Care Cost Drivers

A recent study published in JAMA estimated that waste, fraud, and abuse consume upward of 25% of the U.S. health-care system’s total spending.1 What’s your opinion on this assessment?

The recent JAMA study is consistent with prior work in this area, showing the huge amount of money we’re currently wasting in the U.S. health-care system. The authors did a great job of summarizing the literature and estimating the different types of waste in the system.

One often overlooked part of this puzzle involves huge administrative complexities that burden the system. These not only drive excess cost, but more importantly, hamper the delivery of care. Clinicians and their staff spend countless hours completing documentation to prove that insurance coverage is active, that benefits and services are covered, that services were delivered, and that payment or reimbursement occurred. Coping with the complex layers of administration results in high levels of burnout for doctors, which can reduce the quality of care. Despite these efforts, our system is still prone to fraud and abuse.

The fact that this situation has been consistent over time means that the problems are entrenched in the system and very difficult to fix. The problem with low-value care has been with us since the 1980s, when RAND first started measuring these health metrics. But waste attributed to low-value care is also pervasive in other high-income countries, even those that spend a lot less per capita than we do in the United States.

Coping with the complex layers of administration results in high levels of burnout for doctors, which can reduce the quality of care.
— Eric C. Schneider, MD

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Similarly, waste attributed to care coordination has been identified for some time now. We just completed a survey of primary care physicians in 11 countries that demonstrates ongoing challenges related to care coordination, regardless of how their health-care systems are organized. Although difficult, improving care coordination is an area in which various interventions should be tried.

As far as drug spending, we’ve published several pieces on international efforts to keep costs in line with value, such as France and Germany’s programs, which take steps to evaluate the value new drugs create over the existing standard of care. In these systems, a new drug is evaluated, and if it’s not more efficacious than the old drug, it can’t exceed the older drug’s pricing.

Another approach other countries use to control drug prices is to allow the government or payers to collectively negotiate prices with the manufacturer. In the United States, Medicare—the largest purchaser of drugs—is forbidden to negotiate prices. It’s a good idea that has been proposed in some of the recent debates among presidential candidates. There’s pushback, but it makes sense for the biggest drug purchaser in the country to use its leverage in price negotiations as it does today with hospitals and other providers and services.

There is also increasing attention from the oncology sector and others about the value of new, expensive drugs. So, even if the government doesn’t act, I think we’re getting to a better place, at least in terms of value-based health care, where more organizations are starting to use reference-based drug acquisition and pricing.

Universal Coverage

The Commonwealth Fund ranked the U.S. health-care system as the worst among industrialized nations. The majority of the nations with better-ranked systems have some form of universal health care. Although the political climate would make any consensus near impossible, is a Medicare-for-all approach, or some other model, a good idea?

We know the system works better when everyone has health-care coverage, but it’s difficult to measure against countries that have had success with such programs, such as Australia, the Netherlands, and England, because they have very different ways of financing care than we do. At the Commonwealth Fund, we believe that simply improving aspects of the Affordable Care Act (ACA) would make a big difference in coverage and care. Just having states expand Medicaid, for instance, would help extend coverage to the uninsured. Also, giving more subsidies to the individual insurance market would have benefits for the population, especially in access to care.

We noticed that utilization rates for many services in the United States were actually lower than in many countries with universal care, even though the U.S. spends more. We think that’s driven by the fact that people aren’t getting early access to care to treat a health issue before it becomes more serious and complicated and is much more costly to treat and manage.

Another way to drive down costs and improve health-care outcomes is to increase the availability of primary care clinicians. Other high-income countries make primary care widely and more uniformly available. In these other countries, in contrast to our system, a higher percentage of the medical workforce is dedicated to primary care than to specialty care, which allows for a broader range of services to be delivered at first contact.

Cost and Value

Please share a closing thought on the issue of cost and value in health care.

I believe that we’re in an interesting period in health care in the way we’re beginning to rethink the way we look at cost and value in the delivery system. If you look at other sectors of the economy, it’s remarkable how they’ve matured in ways that allow for higher productivity and quality at lower cost.

Those improvements are chiefly due to digital technology enhancements that haven’t yet penetrated the health-care market, but I believe we’re on the verge of seeing that kind of fundamental change, for example, with the use of interactive automated tools that can handle data-gathering. We’re also seeing machine learning tools that can help streamline the diagnostic process and get answers to physicians in real time. We’re not there yet, but these digital technologies will eventually have a large impact on the delivery of high-quality care while reducing the cost of that care. 

DISCLOSURE: Dr. Schneider reported no conflicts of interest.


1. Shrank WH, Rogstad TL, Parekh N: Waste in the US health care system: Estimated costs and potential for savings. JAMA. October 7, 2019 (early release online).