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Health care waste numbers

A new study published in the JAMA reveals the extent of waste in the American health care system. The researchers estimated waste totals for six different categories by looking at reports from January 2019 to May 2019. Here are some estimates calculated by the researchers: 

  • Failure of care delivery = $102.4 billion to $165.7 billion 
  • Failure of care coordination = $27.2 billion to $78.2 billion 
  • Overtreatment or low-value care = $75.7 billion to $101.2 billion 
  • Pricing failure = $230.7 billion to $240.5 billion 
  • Fraud and abuse = $$58.5 billion to $83.9 billion 
  • Administrative complexity = $265.6 billion 

The report concludes with estimating that in total, the range of waste probably sits somewhere between $760 billion to $935 billion. That is 25% of the total healthcare spending that we do as a country. 

If this mind-boggling number doesn’t concern you, it should. There’s no question that we have one of the most complex health care systems in the world. However, we should treat the waste problem with more urgency. This extra spending gets passed to all of us through higher health insurance premiums. We would all stand to benefit from a more functioning health care system. 

As we continue the important debate over how to make health insurance more affordable, this study helps us understand a huge problem we should emphasize more. 

Jordan Roberts / Health Policy Analyst

Jordan joined the Locke Foundation in the summer of 2018 as Health Care Policy Analyst. He analyzes state and national health policy issues with an eye toward removing governm...

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