Nearly 25% of US health care spending is wasteful, new analysis finds

Consumer


(CNN)–A study published Monday in the medical journal JAMA finds that 20% to 25% of all US health care spending is wasteful. In total, the researchers estimated that $760 billion to $935 billion is wasted annually due to numerous issues, including lack of preventive care, unnecessary hospital visits, over-treatment and overuse of procedures, inflation of pricing and administrative inefficiencies. This sum of wasted money is more than the entire 2019 federal defense budget.


The study looked at 54 different studies and government reports published between 2012 and 2019. The biggest driver of waste was administrative issues related to billing and coding, which represented 28% to 35% of total waste. The second greatest contributor to waste was attributed to what the authors called “pricing failure,” or the waste related to pricing of drugs and services “because of the absence of effective transparency and competitive markets.” As an example of “pricing failure,” the authors point out that the costs of MRI and CT scans in the US cost several times more than in other countries.

The United States spends more on health care per capita than any other developed nation. Health care costs in the US are close to 18% of GDP and account for more than $10,000 per person annually. The most widely cited estimate of health care waste, from 2012, found approximately 34% of health care costs were wasteful.

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