3 ways to cut disproportionate healthcare spending

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The new survey by the Agency for Healthcare Research and Quality (AHRQ) concluding that 5 percent of the population account for half of all healthcare spending drew a lot of headlines but contained few surprises.

It's long known among those in the healthcare industry that expenditures are tied disproportionately to those who are the oldest and sickest. In the AHRQ study, the leading culprits are elderly white women. They're the longest-lived group of people in the United States, often surrounded by adoring children and grandchildren who implore caregivers to restore their health by any means necessary.

That such spending hemorrhages could be quickly located and stanched has long rubbed America's "gimme first and fast" attitude the wrong way. No one wants to "ration" care and have those terrible (and imaginary) lines and death panels like they do in Canada and Europe--waiting six months to have your chest sliced and pried open would impact your quality of life, after all.

After my wife was pushed for two pricey but ultimately unnecessary procedures in the past year and my daughter was misdiagnosed with asthma a decade ago, I can say the "less is more" ethos actually serves a practical role in healthcare delivery.

Meanwhile, our political leaders have come up with solutions that never address the issue. On the left, the Affordable Care Act contains some cost-control measures as window-dressing, but it mostly rolls over for the insurance industry. Its implementation will likely replicate the experience in Massachusetts: most everyone insured but costs rising unchecked.

On the right is Rep. Paul Ryan's (R-Wis.) proposed Medicare voucher system. Like any full-bodied Republican recommendation, it punishes anyone who doesn't have the means or power to protect themselves--a mere 99 percent of the population.

There are some commonsense ways to dramatically cut expenditures without hurting a soul. I've listed three of the most clear-cut ways below. Some would say they sound punitive, but they're primarily pragmatic:

1. Mandatory do-not-resuscitate orders

When an aging patient stops breathing and their heart stops beating, it's a message, not a challenge. Anyone enrolled in Medicare should be compelled to waive the right to resuscitation after the age of 75. Families can override such a decision--so long as they agree to bear all healthcare expenses for their loved one moving forward. Medicare also retains the right to attach their earnings and assets in order to satisfy such a requirement. Those simple changes could compel far more rational decisions regarding end-of-life care, and ultimately drive the eligibility age for Medicare down rather than relentlessly up.

2. Cost-sharing on orthopedic and other elective procedures

I know relatively healthy people in their 50s who have had hip replacement surgeries! Given the failure rates for those devices, this is a prescription for repeat procedures, infections and crippling falls. In other words, a cost and pain cascade that could have been avoided by that person swallowing a few Advils a day for the next couple of decades. A steep but reasonable sliding co-payment on those procedures--say starting at $15,000 and vanishing by age 75--would direct a lot more people to the Advil option. The system could save billions, with likely no detectable deterioration in quality of life indicators.

3. A maximum 30-day hospice benefit

I hate to sound cruel, but the function and purpose of hospice care truly means no one should receive it for more than a few weeks. Yet it's becoming clear that some end-of-life providers are abusing the hospice care benefit by shuttling patients back and forth between acute and hospice care. If the benefit is capped at 30 days--with automatic recovery audits triggered by any reimbursement requests by hospice or other providers beyond that period--it will guarantee hospice and related end-of-life care is used properly.

Those are my suggestions. I'd be happy to hear some of yours. - Ron (@FierceHealth)