The US wastes an estimated $800 billion on healthcare a year, a staggering new study reveals.
Researchers at the University of Pittsburgh discovered that about a quarter of the healthcare budget is thrown away on sub-par treatments, administrative chaos and general failures of American hospitals and doctors.
As a result, the US wastes more money on healthcare than the entire Medicare and Medicaid programs cost, more than the budget for the defense department and many times the amount allotted to the Department of Education.
Cracks in the healthcare system are costing the US hundreds of billions of dollars and costs to patients are escalating beyond what the average American can afford.
To save the system, experts argue that doctors need to run tighter ships, but that political sway desperately needs to be cut out from the healthcare economy.
About a quarter of what the US spends on health care is wasted, according to a new University of Pittsburgh study that found costly cracks in the system that don’t benefit patients
Over half of Americans have put off getting medical treatment they knew they needed out of fear that they couldn’t afford it.
Nearly a quarter waited over a year to see a doctor for the same reason, according to a 2018 Harris poll.
The cost of healthcare in the US is moving in two seemingly impossible directions at once.
Each year, the government spends more on grants and federally subsidized healthcare through Medicare and Medicaid.
And yet, even as the government is spending more, the amounts that patients are responsible for paying out-of-pocket continue to climb.
Between 2017 and 2018, patient costs rose by about 14 percent, according to a 2018 TransUnion poll.
Yet, hospitals and doctors are making less.
So, as an author of an editorial accompanying the new study asked, where is all of that money going?
Analyzing spending data, the University of Pittsburgh study authors identified six areas of wasteful healthcare spending.
They found that between $102.4 billion and $165.7 billion of wasted healthcare money was spent on ‘failure of care delivery,’ or care that wasn’t effective or was executed poorly and led to additional harms for patients.
The main financial drain on healthcare comes from what the researchers called ‘pricing failure’ in their study, published in JAMA.
In other words, the price of many procedures and services in the US is far out of whack with its value.
For example, a CT scan costs about 10 times more in the US than it does in The Netherlands.
There’s no reason for that gaping disparity, except that these prices have run wild, unchecked by government regulation or the market.
Considerable wastes also went to administrative costs, accounting for about $265.6 billion.
‘Some categories of waste are so glaring that, prima facie, they can be removed with enough will,’ wrote Dr Donald Berwick of The Institute of Healthcare Improvement.
‘Consider, for example, the administrative waste that comes with cumbersome and inconsistent coding and billing practices. “Cannot remove” is just implausible compared with “will not remove.”’
Unlike waste from absurdly priced services – which may require systematic overhauls to undo – he says that hospitals could easily avoid administrative wastes by doing things like updating and ensuring the properly code these services.
He says that the use of outdated, ineffective medicines is similarly little more than laziness from doctors who don’t bother to keep up or change with shifting industry standards.
But the more insidious and, in Dr Berwick’s opinion, most ‘plausible’ explanation for the waste of so much money in health care, is politics.
He notes that this waste goes to the pockets of health care, pharmaceutical and medical corporations.
The more they make – even when those profits are gleaned from poor treatment and overcharges – the more powerful the sway of these corporate lobbies over politics is, and the more likely the same problems, wastes and price hikes can continue.
‘In large measure, the challenge of removing waste from US health care and reinvesting that harvest where it could do much more good is not a technical one,’ wrote Dr Bernick.
‘It is a political one.
‘In short, removing waste from US health care will require both awakening a sleepy status quo and shifting power to wrest it from the grip of greed.’