Three imperatives for improving US health care

Making health care more affordable is the key to making the US system sustainable. We can bring three of the largest sources of underlying costs and their growth under control.
Paul D. Mango and Vivian E. Riefberg
The McKinsey Quarterly DECEMBER 2008
In This Article
Exhibit 1: Premiums paid by commercial health insurance policies help subsidize the uninsured, as well as people in government-sponsored programs.
Exhibit 2: End-of-life health care costs are a small share of lifetime health care costs.
Exhibit 3: The average annual cost of health care claims associated with morbidly obese patients is more than $7,500 a year, nearly twice the average for adults who are not obese.
Exhibit 4: The medical outcomes of the providers often bear little relation to their reimbursements.
Exhibit 5: Nearly 60 percent of all US health care funding in 2007 came from insurance, while only 43 percent of health care payments covered infrequent, random, or catastrophic events.

1. The high incidence and cost of treating lifestyle- and behavior-induced diseases, such as obesity. These diseases are responsible not only for a majority of the deaths in the United States but also for the fastest-growing share of health care costs.
2. Public and private stakeholders should make health care more affordable and improve its quality by minimizing the economic distortions that now tend to prevent consumers and providers from making value-conscious decisions.
3. Simplify the system’s pervasive and unnecessary administrative complexity to remove the waste that drives up costs, to facilitate the real-time flow of critical information, and to promote the introduction of productivity-enhancing technologies.