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The Administration may not need to push a healthcare reform bill though Congress. It might be better off creating laws that would wring excess out of the current system. It would avoid risking hundreds of billions of dollars in taxpayers money and would yield enough capital to help give insurance to the uninsured.

New data compiled by the healthcare analytics group at Thomson Reuters (NYSE:TRI) found that the “U.S. healthcare system wastes between $505 billion and $850 billion every year.”

The primary culprits in causing the waste are overuse of antibiotics and lab tests which adds $200 billion to $300 billion to the cost of American healthcare per annum and fraud, kickbacks, and scams which add another $200 billion a year. Medical mistakes and preventable medical conditions were also listed as major causes for tens of billions of dollars in waste.

Most of these problems can be prevented by legislation, closer monitoring by the Health and Human Services Department, harsh prosecution of fraud, and incentives for patients who lead more healthy lifestyles. Almost every one of these things is financially preferrable to a healthcare package which could cost nearly $1 trillion over the next decade.

The government would have to set up an agency like the SEC to monitor overused medical practices and fraud. The new agency would have to have broad investigative and subpoena powers and the ability to bring civil actions against people, companies, and doctors who violate rules and regulations for the disbursement and payment for medical services. The agency would also refer criminal violations to the Justice Department.

The other part of any effective effort to bring down costs is to give financial incentives for patients to change behavior to curtail the rise in preventable diseases. This would probably involve dropping insurance premiums for those who were willing to sustain reasonable diets and exercise and avoid smoking and heavy drinking.

Better regulation of healthcare might be a bureaucratic nightmare, but it is likely a better alternative to a healthcare spending program that could break the back of the American economy.

The entire report: TR_-WASTE_WHITE_PAPER_LW_10_25_09_v4[1] 

Douglas A. McIntyre