Less Than $26 Billion? Don’t Bother.

Everyone—conservative and liberal—agrees that $2.6 trillion a year is too much to spend on health care, and that we have to cut costs. But they don’t agree on who is to blame or what is to be done.

Everett Dirksen, the Republican senator from Illinois, reportedly said, “a billion here, a billion there, and pretty soon you’re talking about real money.” But health care spending in the United States typically increases by about $100 billion per year. Cutting a billion here or there from something that large is undetectable. In health care, you have to be talking about tens of billions of dollars before you are talking about real money. A useful threshold for savings is 1 percent of costs, which comes to $26 billion a year. Anything less is simply not meaningful.

Where can you find that kind of money? Conservatives mostly point to frivolous lawsuits that encourage doctors to order unnecessary tests and procedures, and extremely expensive patients like premature infants. Liberals target drug companies and for-profit insurers. Although each of these cost-saving targets has some merit, malpractice reform and cutting back on drug and insurance company profits would be insufficient and a distraction from the real efforts necessary to control costs.

The above excerpt was originally published in The New York Times.