Healthcare Systems Wastes Up to $800 Billion a Year

Healthcare reform could cut up to $800 billion a year in waste.  The American healthcare system does waste money, and healthcare reform legislation could cure some of the inefficiencies.  According to a Thomson Reuters report, the healthcare system wastes between $505 billion and $850 billion annually.  The report notes that, “America’s healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial.  That’s one-third of the nation’s healthcare bill.  The good news is that by attacking waste we can reduce healthcare costs without adversely affecting the quality of care or access to care.”

According to the Thomson Reuters study:

  • The paper-based records keeping system discourages information sharing and totals six percent of annual overspending.
  • The overuse of antibiotics and lab tests to protect physicians against malpractice costs consumers $200 to $300 billion a year.
  • Fraudulent Medicare claims, kickbacks for referrals for unnecessary service and other scams cost consumers up to $200 billion a year.
  • Administrative inefficiency and double paperwork account for 18 percent of healthcare waste.
  • Mistakes total $50 to $100 billion in unnecessary spending, or 11 percent of the total.
  • Preventable conditions such as diabetes cost $30 to $50 million annually.

These findings help explain why American citizens spend more dollars per capita on healthcare and the largest percentage of GDP than any other developed nation.  At the same time, the population is unhealthier, with high incidences of diabetes, obesity, heart disease and neonatal deaths.

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