In the health care world, financial toxicity is defined as direct harm that occurs when patients must pay out-of-pocket for substantial shares of health care services. But what about the harms patients can’t see – wasteful spending that indirectly drains the resources of families through increased health insurance premiums and taxes? That, Harvard Pilgrim Health Care Institute Associate Professors Frank Wharam, Anita Wagner, and Duke University colleague Peter Ubel say, is financial pollution.

The authors coin this new term in an Insight published in JAMA Health Forum. Naming the problem of financial pollution - about $900 billion in spending each year – they propose, will allow policy makers to learn how policy approaches to combat environmental pollution can be applied to creative policy solutions to help reduce financial pollution and increase population well-being. 
 

Q: How did you come to compare wasteful health care spending with environmental pollution?
A: Our concern about the societal harms of wasteful health care spending grew in part out of research collaborations with leaders of Harvard Pilgrim Health Care (HPHC) and discussions in the HPHC Ethics Advisory Group about the downstream effects of rising spending on pharmaceuticals.  It is well documented that new medications come to the US market with increasingly less evidence of benefit and at increasingly high prices – leading to one form of wasteful health care spending. 

Who pays for these medicines? Everyone does, in more, or less, visible ways and with more, or less, impact. Visible are out-of-pocket payments at the pharmacy counter. The harms individuals suffer from these out-of-pocket medication payments are known as financial toxicity. Less visible are increasing health insurance premiums and stagnating wages resulting from increasing health care spending which is in part due to increasing pharmaceutical spending on new drugs with exorbitant prices. And even less visible are budget decisions that states make to pay more for health care, like transferring funds from public education to health care and increasing taxes. These population harms of wasteful health care spending–of which pricing failures for pharmaceuticals are only one example–reminded us of environmental pollution. Like environmental pollution, financial pollution is insidious, incentivized by a human-made, market-driven system, and causes more suffering for poor populations than for wealthier ones.

Like environmental pollution, financial pollution is insidious, incentivized by a human-made, market-driven system, and causes more suffering for poor populations than wealthier ones.

Q: How do you think framing wasteful health care spending as financial pollution can help bring about solutions?
A: We believe the pollution metaphor could do two things: communicate the urgency of stopping the population harm caused by wasteful health care spending and provide examples from environmental pollution policymaking that might also rein in financial pollution. 

Q: What resources could health care policy makers look at to learn from environmental policy?
A: When polluted rivers were burning, bipartisan legislation created the federally empowered Environmental Protection Agency (EPA) in 1970 to protect the public from environmental pollution. The EPA oversees coordinated, funded environmental research, and sets standards, policies, and laws to curb environmental pollution. EPA’s 1970 Clean Air Act and its 1990 amendments drastically decreased air pollution in American cities, at the same time that manufacturing output increased substantially.

We think that learning from environmental policy experts could suggest a multi-layered approach to curbing financial pollution that would include legislation, policy development and enforcement, and public education to set new expectations for what constitutes good behavior in health care pricing, use, and spending.

We think that learning from environmental policy experts could suggest a multi-layered approach to curbing financial pollution that would include legislation, policy development and enforcement, and public education to set new expectations for what constitutes good behavior in health care pricing, use, and spending.

Q: Much of your research focuses on health care spending. What are some projects, past, present, or future, that highlight the points you make in this Insight?
A: In our pharmaceutical policy research collaborations, we currently study how information on uncertain benefits of new cancer drugs is communicated and how much money is spent on such drugs. The goals of this work include raising awareness of how regulatory and market system choices combine to generate what we term financial pollution. 

Among the spending types that constitute financial pollution, our research often focuses on low-value care and undertreatment. We have found that high-deductible health plans reduce some forms of low-value care such as low-severity emergency department visits, and these plans also reduce monthly health insurance premiums. On the other hand, among the poor with diabetes, we found that high-deductible health plans likely led to undertreatment, which subsequently increased costs, a form of financial pollution. We found similar undertreatment of breast cancer and cardiovascular disease among high-deductible health plan members. However, it is important to remember that the high premiums of low-deductible plans might also harm families. Ultimately, to reduce the harms of high premiums, high out-of-pocket costs, and high taxes, our health care system needs to rein in prices.
 

Ultimately, to reduce the harms of high premiums, high out-of-pocket costs, and high taxes, our health care system needs to rein in prices.

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