approaches to their control, the primary opportunities for improvement in the near- and long-terms, and the policy levers necessary to engage. The motivating proposition for the series of meetings was to reduce healthcare costs by 10 percent within 10 years without compromising patient safety, health outcomes, or valued innovation. Leading experts from across the nation presented papers and participated in the discussions reflected in this summary publication. The ideas encapsulated throughout this summary reflect only the presentations, discussions, and suggestions that coursed throughout the workshops and should not be construed as consensus or recommendations on specific numbers or actions.

As defined in the meeting planning and presentations, excess health costs derive from the dynamics at play in six overlapping domains of activity.

  • Unnecessary services

  • Services inefficiently delivered

  • Prices that are too high

  • Excess administrative costs

  • Missed prevention opportunities

  • Medical fraud

Because of the overlaps, the difficulty of measurement, and the subjectivity inherent in estimates made under conditions of scientific uncertainty, precision was elusive for estimates of the total amount of excess in the costs of health care. It was, however, notable that estimated totals from three separate approaches discussed in the workshops—extrapolation from observed geographic variation within the United States, contrasting overall U.S. expenditure levels with those of member countries in the Organisation of Economic Co-operation and Development (OECD), and summing the lower bounds of the various estimates for the six domains considered in the IOM workshops—amounted to approximately $750 billion, $760 billion, and $765 billion, respectively, for excess U.S. healthcare costs in 2009.

As meeting discussions focused on the factors at play that give rise to patterns of unnecessary costs, certain elements were most commonly discussed as prominent drivers, noted below and generally working in a mutually reinforcing fashion.

  • Scientific uncertainty

  • Perverse economic and practice incentives

  • System fragmentation

  • Opacity as to cost, quality, and outcomes

  • Changes in the population’s health status

  • Lack of patient engagement in decisions

  • Under-investment in population health

Discussions on strategies and policies shown in limited assessments to offer solid prospects for simultaneously lowering costs and improving health outcomes included a number of key levers to address the drivers of excess costs.

  • Streamlined and harmonized health insurance regulation

  • Administrative simplification and consistency

  • Payment redesign to focus incentives on results and value

  • Quality and consistency in treatment, with a focus on the medically complex

  • Evidence that is timely, independent, and understandable



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