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News of the Day - 2/21/17

States may have Best Plan to make Health Care Affordable Again

As President Donald Trump, Republican, and Democrats in Congress wrangle over the future of Obamacare and its replacement, the answer to how to make health care affordable for all Americans may not come from another contentious health reform battle in Washington.

Instead, we may follow Trump’s ideas on Medicaid and education reform. Let the states derive their own solutions, particularly when it comes to cost containment.

Gallup says that 26 percent -- or more than 1 in 4 health care dollars -- are completely wasted. These dollars are spent on defensive medicine or when physicians order more tests, procedures, and medications than are clinically necessary. I see it every day as my colleagues order everything from x-rays, blood work, MRIs, CT scans and a host of other unnecessary procedures to protect themselves from a potential lawsuit.

The impact of wasteful spending by physicians --known as defensive medicine -- is astounding. Consider this:

  • BioScience Valuation, a health care economics firm, says that doctors ordered $487 billion in defensive medicine in 2015. That, of course, results in higher premiums, co-pays, deductibles and out-of-pocket expenses for consumers and employers.
  • A 2015 survey conducted by the Congress of Neurological Surgeons found that 75 percent of neurosurgeons said they practice defensive medicine to protect themselves from litigation.
  • A 2014 survey of hospital administrators conducted by Jackson Health care, one of the nation’s largest medical staffing firms, found that 32 percent of costs generated in a hospital could be attributed to wasteful, defensive medicine.

According to the Centers for Medicare and Medicaid Services (CMS), health care spending is expected to consume more than 20 percent of our nation’s GDP by 2025, up from 17.5 percent today. In 2015, federal, state and local governments spent $1.5 trillion. In the same year, the private sector spent $1.7 trillion on health care, according to CMS. Spending will continue to skyrocket if we don’t offer incentives for physicians to change their behavior when it comes to defensive medicine.

That’s why we may need to look to six states that are aggressively working to contain costs. The Florida, Georgia, Alabama and Tennessee legislatures are considering a proposal to eliminate defensive medicine by abolishing each state’s medical malpractice system and replace it with a no-blame model similar to workers’ compensation. Two other states are also examining the concept.

When doctors are no longer the target of litigation, they would be less likely to order unnecessary tests, medications and procedures.

Under the proposal known as the Patients’ Compensation System, a patient could still file a claim if a physician had injured them. But the claim would no longer go through the traditional legal system and instead would be heard by a state administrative panel of health care experts. This administrative system, similar to workers’ comp, would hear a claim in a matter of months instead of the years it takes to litigate a case. Compensation would be identical to awards in a legal system. Patients with smaller injuries could also be compensated for a loss.

But completely abolishing the malpractice system and replacing it with a no-blame model would change the behavior of our nation’s physicians. It would result in annual savings of $115 billion in Medicare and $133 billion in Medicaid, according to BioScience Valuation. In the private sector, employers could save 11 to 22 percent in health care costs for each employee annually– as premiums, co-pays, deductibles and out-pocket costs drop with the elimination of defensive medicine, according to BioScience.

No matter how swiftly Congress acts to repeal and replace Obamacare, there is no doubt that waste in our health care system has to be a top priority. Eliminating defensive medicine with a new state-based solution may just be what’s needed to make health care affordable again for all of us.