Newspaper article

U.S. Squanders a Staggering $750 Billion Each Year on Health Care

Newspaper article

U.S. Squanders a Staggering $750 Billion Each Year on Health Care

Article excerpt

The amount of money that is wasted each year on unnecessary health care in the United States is nothing short of staggering.

In 2009, we squandered an estimated $750 billion -- about 30 percent of total U.S. health-care costs -- according to an Institute of Medicine (IOM) report released last Thursday.

That's a figure we've heard before, of course. But what's so helpful about this report (which got buried in all the political news last week) is how it puts the number into perspective.

As the report points out, $750 billion is equal to 1.5 times the total amount the U.S. spent on infrastructure investment in 2004, "including roads, railroads, aviation, drinking water, telecommunications, and other structures." It's also $100 billion more than the entire Department of Defense budget for 2009.

And here's the number in a health-care context: $750 billion is enough to pay the salaries for all of the country's firefighters, police officers, emergency medical technicians and other first responders for 12 years. It's also enough -- and this is the comparison I find most stunning -- to provide annual health insurance (both the employee and employer contributions) for 150 million working Americans. That's more workers than were in the entire civilian labor force in 2009, the IOM report points out.

Currently, an estimated 50 million Americans are uninsured, and at least another 25 million are underinsured.

Biggest waste: unnecessary treatment

U.S. health-care waste comes in a variety of forms: unnecessary services ($210 billion in 2009), excess administrative costs ($190 billion), inefficiently delivered services ($130 billion), inflated prices ($105 billion), fraud ($75 billion), and missed prevention opportunities ($55 billion). (These categories add up to $765 billion, but recognizing that some of them overlap, the IOM lowered the waste estimate to $750 billion.)

Note how "unnecessary services" leads the list. That's also the category for which health-care consumers as well as the medical community need to take responsibility.

Both patients and physicians must "consider each health care decision and not always assume that 'more care is better care,' which has been the health care mantra for many years," wrote Dr. Rita Redberg, a cardiologist at the University of California, San Francisco, in an Archives of Internal Medicine editorial about the IOM report.

"We must remember that a number of what were thought to be advances turned out to not be beneficial, or even to be harmful, such as prostate-specific antigen (PSA) screening or some breast cancer treatments," she added. "... It took many years for our system to get to its current complex and dysfunctional state and will clearly take some years to make real improvements. In some ways, we are the victims of our success because these problems come from the many more technologies, procedures, and treatments that are now available as well as the many different financing schemes. …

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