Health care costs can be controlled or reduced only through the use of strategies that reduce the following:

  • The frequency with which individuals use health services
  • The amount of money paid to health care providers
  • The general operating expenses of the company providing the health services (general expenses exclude the specific costs of the health service).

Some ways of achieving these goals compromise quality of care, while others can improve it. It can be difficult to predict the effects of major changes in the health care system. Often, the effects are unknown until after changes are made.

Ideally, cost reduction should not compromise quality of care:

  • Insurance companies control costs by restricting access to medical care (a strategy that is being used less and less because of the requirements imposed by the Affordable Care Act).
  • Unnecessary health care is easier to define than to eliminate or even to recognise.
  • It is not known whether strategies to improve health can reduce the overall costs of health care.
  • Many of the strategies used to reduce healthcare costs also have major disadvantages.
  • Reducing the overheads of insurance companies and health service providers, and reforming malpractice laws, could help reduce health care costs.

Some strategies produce negative effects because they make it difficult to obtain preventive care or actions. This can cause some diseases to progress, reducing the likelihood that treatment will be effective and increasing the likelihood of disability or even death. Other strategies can improve care.

Evaluating different strategies is difficult, partly because of the difficulty of accurately measuring the effect they have on treated patients. These assessments are costly as they involve the assessment of many patients, who must be controlled for a long time.

As a result, most of the measures used to assess quality of care reflect how service delivery was performed rather than how it affected the long-term health of treated patients. How care is provided may not correlate well with how care improves long-term health.

Decrease the use of health care services

Strategies for reducing the use of health care services include:

  • Limiting access to care to avoid unnecessary care (sometimes making it more expensive, difficult or impossible to obtain)
  • Limiting the need for health care services by improving health

Limiting access to health care

Traditionally, limiting access has been the strategy used to reduce health care costs. Insurance companies have limited access by rejecting those who may need more care (such as those who already have a pre-existing condition) and interrupting health coverage for people who use health services extensively. In the United States, the Affordable Care Act has prohibited these practices. The government may make it more difficult to qualify for health care programs.

Insurance companies can increase the amount patients have to pay themselves. For example, payers (insurers) can:

  • Limit the type and number of visits they reimburse (for example, for mental health care or physical therapy)
  • Increase deductibles and copayments
  • Decrease the amount they will pay for specific procedures

Thus, patients have economic incentives to limit the use of health services.

These strategies are likely to adversely affect health because many patients avoid both unnecessary and necessary care. For example, many patients who would need an influenza vaccine do not request it. In addition, women can avoid screening tests such as cytology or mammography. So, if cancer does develop, it may be advanced when you see your doctor.

Some insurance companies set up complex procedures for the patient to get care. They may require authorization for tests, referrals, and procedures. Hiring procedures and regulations can also be complex. These administrative requirements may slightly decrease the use of health services.

Limiting access to care can cause problems. For example, people denied access to health insurance can become seriously ill (more likely if they lack basic care). These people are often treated in a hospital when their condition progresses, and often cannot afford this care. These expenses are then borne by the people who pay in the health care system, and can be more expensive than if basic care had been provided on time.

Suppression of unnecessary health care

Unnecessary care is easy to define (any provision that does not improve health), but is often difficult to recognize and even more difficult to eliminate. To help define unnecessary care, researchers need to conduct studies that compare the efficacy and cost-effectiveness of tests, drugs, and other treatments. Other factors affecting health can also be studied. These factors include exercise, physical therapy and different providers, configuration of care, and reimbursement systems.

The use of assessment and treatment guidelines provided by various organizations can help health care providers use the best approach to a disorder to avoid unnecessary examinations and treatments. However, guidelines are only available for a limited number of disorders and are not always clear or useful. In addition, guidelines from different organizations may differ from each other.

Better coordination between health care providers (see Continuity of care) can make assessment and treatment more efficient. For example, better communication and the use of electronic medical records can eliminate unnecessary duplication of evidence.

About one-third of total healthcare costs occur during the last year of a patient’s life, when expensive treatments are used to try to prolong life. These treatments often greatly increase discomfort and dependence, and may only prolong life for a short period of time (see Treatment Options at the end of life).

Attention that focuses on relieving symptoms (palliative care and hospice care) is often more useful at this stage than attention that attempts to prolong life. Patients can request this type of care in documents called advance directives. The request for palliative and terminal care can help decrease the use of intensive, often expensive care and technology.

Improving health

Increased use of relatively inexpensive services that help prevent disease may decrease the need for expensive treatments later. For example, screening tests, diagnosis and treatment of hypertension and hypercholesterolemia may help prevent a heart attack or stroke.

Therefore, these patients will not need treatments such as angioplasty to permeate their clogged arteries. Screening for breast and colon cancer can detect cancer at an early stage and help affected people avoid expensive treatments for advanced stage cancer (as well as increase their chances of survival).

The Affordable Care Act requires insurance companies to cover certain preventive services without sharing the cost with patients.

Strategies for increasing preventive care include:

  • Increase the number of primary care physicians, who can often provide adequate screening measures and help prevent complications, which often require expensive treatments.
  • Elimination of copayments for preventive services.
  • The provision of free prevention services, especially for people in need.
  • Financially rewarding health care providers for following preventive guidelines (called pay-for-performance measures).