Republicans Aren’t Talking About The Biggest Contributor To Rising Health Care Costs

Lost in the current debate over health care is the fact that the Affordable Care Act did far more than extend insurance coverage to millions — it also marked an unprecedented effort to change the modern face of health care in America.

The American health care system offers some of the best diagnostic technologies and cutting edge medical treatments of any country in the world, yet we have stunningly little to show for it. The U.S. spends twice as much on health care as other developed countries, but has far worse health outcomes.

According to a 2013 study published in the American Journal of Public Health, the U.S. health care system ranks 22nd out of 27 high-income nations when analyzed for its efficiency of turning dollars spent into extending lives. The study, which utilized data from 27 member countries of the Organization for Economic Cooperation and Development collected over 17 years (1991–2007), revealed stark differences between countries and showed that the U.S. pays an extremely high price for a remarkably low return on investment. For example, every additional $100 spent on health care in the United States yields a gain of less than half a month of life expectancy. In Germany, the same amount yields more than four months of increased life expectancy.

The U.S. spends more on health care than any other OECD nation, yet our life expectancy is below average — reflecting a strikingly inefficient approach to health care. (Image Credit: OECD)

While the study didn’t attempt to determine the causes of inefficiency in health care spending, researchers agree that America’s lack of investment in prevention is a significant contributor to excess mortality and increasing health care costs.

In the United States, preventable diseases such as diabetes, high blood pressure, obesity, and heart disease are responsible for about seven in ten deaths. They’re also a significant drain on the national economy, with annual productivity losses from diabetes and depression alone exceeding $100 billion nationally.

Yet, as a nation, we have failed to prioritize spending on initiatives to prevent people from getting sick. Instead, we devote the vast majority of our resources to treating people after they are already sick. Medical treatments for chronic preventable conditions accounted for about 85% of our annual health care spending in 2010, while just 3% went towards preventing these diseases in the first place.

Just 3% of annual health care spending in the United States goes towards preventing disease in the first place, while 85% is spent on treatment for diseases after the fact.

The Affordable Care Act tried to change this by establishing the nation’s first mandatory funding stream dedicated to public health and prevention activities. The Prevention and Public Health Fund allocated resources to strengthen state and local public health infrastructure, support new and existing community prevention and research projects, bolster health-related data collection, and enhance training for the public health workforce. The Affordable Care Act called for the prevention fund to receive $18.8 billion from 2010 to 2022, then $2 billion annually in future years. This represents less than 1/10th of 1% of annual health care spending in the United States — yet even this amount was seen as excessive by Republican lawmakers, who repeatedly targeted the fund for cuts or elimination. Against the recommendations of medical and public health groups like the American Public Health Association (APHA) and the Institute of Medicine (IOM), congressional Republicans took more than $6 billion out of the fund in 2012, and ended the Community Transformation Grants program — the main source of funding for local public health and prevention initiatives.

Research suggests that investing in broad population health initiatives like the ACA’s Prevention and Public Health fund has the potential to yield significant health and economic returns. A 2011 study published in the journal Health Affairs found that a 10% increase in city- and county-level public health spending could reduce preventable deaths by up to 7%. Another study, conducted by researchers at Trust for America’s Health, estimated that a $2.9 billion investment in preventive health initiatives could lead to more than $16 billion in annual savings within just five years, with greater returns over time.

Republicans say they want to reduce health care costs, but they are failing to address the underlying causes of our nation’s decades-long upward spiral in health care spending. What they are not considering is that it’s not only how much money is spent, but how that money is spent that really matters for long-term health care costs.