According to Yale University health economist Zachary Cooper, If U.S. health system were a country, it would have the fifth-largest GDP in the world, at more than $3 trillion. The growth of the U.S. health spend every year outstrips inflation and now accounts for 18% of the US's GDP. What's more, the the cost of a $400 hospital emergency bill would be impossible for at least 40% of Americans to pay.
High prices and booming out-of-pocket costs have been a focus of legislation at the state and federal levels, as have efforts to create more transparency, but any large-scale reform efforts are likely to be ineffective, according to Cooper.
"There's not one thing wrong with the U.S. health-care system. There are all these discreet problems that require incremental, plumbing-like solutions," he told Yahoo Finance in a recent interview.
Problems exist in three major silos of health care: health services, health insurance and pharmaceuticals, he says. And it why Cooper launched the One Percent Steps project to identify and tackle incremental reductions.
"A 1% inefficiency in the health care system is about what we'd be spending to give universal Pre-K to the entire country," Cooper said.
In a recent research paper, Cooper noted, "The average person drives past six cheaper MRI locations between their home and where they ultimately get care."
Such problems are largely driven by physician referrals, and shows the need for patients to take better control of their own health-care spend. If they went somewhere closer and cheaper, health care spending could be reduced by three-quarters of a percent in the country, saving tens of billions of dollars, he added.
Some members of the group of health policy experts and economists working with Cooper previously worked on another similar project which began in 2015 that analyzed health care spending, the Health Care Pricing Project.
In the recent past, there have been a number of ideas to curb health spend, things like payor-provider partnerships, pilot programs, high-deductible health plans, discouraging ER use, drug discount programs, and using an all-claims database, among others. Some worked in some states but never got off the ground in others. The Trump administration saw a flurry of executive orders on price capping and transparency, some of which are being set into motion today. But many of these examples were voluntary or simply tweaks to the existing system rather than addressing the larger issues full on, Cooper said.
Whack-A-Mole health system
Sachin Jain, CEO of SCAN Health, told Yahoo Finance that part of the problem is that scaling the ideas takes time and there is no incentive to do so.