The Transatlantic Community Must Cooperate to Reduce Health Care Costs

On Tuesday, February 5th, the Atlantic Council hosted Novartis Chairman and Atlantic Council International Advisory Board Member Dr. Daniel Vasella for a symposium to open our new FutureHealth series we’re hosting in partnership with PwC. Dr. Vasella gave a wide-ranging interview on international best practices in healthcare policy, possible lessons learned for the US, and assessed the role of business and government in both paying for and providing insurance coverage.

The US must take on the task of reducing its annual health care bill, as it currently spends over $2.8 trillion per year, and that number is growing at an unsustainable pace.

The United States is not alone in confronting this sort of challenge–countries worldwide are dealing with rising healthcare costs resulting from aging societies and are facing the increased prevalence of expensive chronic diseases including cancer, diabetes, and obesity. However, the US spends vastly more money on healthcare than other developed nations without clear evidence that this money is well-spent. While no single country has the perfect formula for combating every health issue they face, Dr. Vasella argued that there is much that countries within the transatlantic community must learn from each other. Otherwise, the West faces a precipitous decline in terms of its economic competitiveness.

While the US health system has several important strengths—including providing specialized care for cancer—it ranks very low among OECD countries in addressing preventable disease. Dr. Vasella pointed out that the core of the problem lies within a flawed basic approach to health: keeping patients out of the hospital. Many European countries are far more successful at this. Vasella argued that the US reliance on hospital treatment is due to a lack of fully integrated, standardized, and proactive care at the general practitioner level. Suggesting that doctors in the United States should to be paid to treat the patient, and not just the illness, Vasella underscored that preventative medicine could substantially reduce the cost of care in the United States. A focus on quality of care, therefore, leads to long-term cost reduction.

Dr. Vasella called for a more data-driven approach to health policy and research. He cited examples where the use of data in the latter phases of drug research and development has produced significant overall system savings. Vasella also called for a restructuring of the current incentive system for doctors, including the reining in of unnecessary tests and treatments that account for over $100 billion annually in insurance costs due to the risks of being sued for malpractice–a practice he referred to as “defensive medicine” which is both costly and ineffective.

Despite these challenges, Dr. Vasella sees reasons for optimism in the future for healthcare in the United States. While the Affordable Care Act does not solve everything–it notably is largely silent on preventative care for obesity, for example—he argues that improving access to insurance will be an essential component for future savings. Innovations, such as the development of new technologies that will allow practitioners to share information more efficiently, are already making doctors jobs easier and diagnoses more reliable. In short, there are international success stories, and US innovation efforts are already yielding cost-reductions. The key will be to continue to engage globally on health policy and ensure that the United States takes these lessons seriously.

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