Actuaries Speak Out On How To Reduce Healthcare Costs

Two surveys by the Society of Actuaries concerning healthcare have recently been released. One survey was of actuaries themselves, the other one was of consumers. I was anxious to find out what keen insights the actuaries might add to reducing healthcare expenditures. While some of their suggestions were fairly obvious, not all of the findings were what I would have expected.

90% of the actuaries surveyed felt that reducing the number and severity of medical errors would reduce costs. This is pretty much a no brainer and I wonder why the number isn't 100%. 88% believe that fighting fraud and abuse in the system will lower costs. Again this is an obvious conclusion. But only 8% of the actuaries recommend making quality information of provider care more available to patients. Clearly this group does not believe as I do that it is quality first then finances follow.

The major suggestion from the actuary group was that there be more transparency between providers and patients concerning cost of care and treatment options. 86% recommend making prices for treatments more available and 79% recommend educating consumers on the efficacy of care. Their conclusion is that as consumers know what the cost of treatment is, they will be less likely to utilize services at the current level. This is a good thing if you assume that there is a lot of unneeded care being delivered. But what about the studies that have shown that patients do not seek out needed care just because they can not afford it. All this does is delay care that is ultimately needed and usually results in a much costlier hospitalization down the road.

Their other suggestion was that we pay consumers to be responsible about their own health. 90% feel that offering consumers financial incentives through their insurance plan can be at least somewhat effective in helping them make better choices as patients and live healthier lifestyles. If we are talking about discounts for patients who practice good health habits, I am all for it. But if we are talking about paying patients to take their medications when prescribed (the subject of an earlier post) I object. People need to take responsibility for maintaining their own health.

Overall, I am disappointed with the insights offered from these actuaries who will certainly be playing a role in developing the healthcare reform that is underway. There are a lot of cost saving ideas that were not addressed here.

More on this later.

Mark Brodeur