Americans Spend Too Much on Healthcare, Then 25 Percent Goes to Waste

One cool trick could eliminate record-smashing medical expenditures lost to administrative inefficiency, price hikes, and overtreatment: Nationalize coverage!
Katie Way
Brooklyn, US
A genderqueer person sitting in a hospital gown sitting in an exam room

It’s no secret that the healthcare system in the United States is not exactly operating at max functionality. Ask anyone who’s ever crowdfunded to pay a medical bill or donated to someone else’s effort, paid an exorbitant fee for a prescription medication, or waited months to see a medical practitioner who actually accepts their insurance. That’s why it’s not surprising to hear that not only are Americans paying twice as much for healthcare as we were in the 80s, a solid chunk (25 percent!) of the money spent on healthcare can be classified as “wasteful.” Per the New York Times, the $760 billion wasted annually on healthcare exceeds annual military spending, which is pretty mind-blowing considering how much the U.S. government loves throwing money at The Troops (until they need healthcare or social services, of course).


According to an overview published by data analysts at Clever in September, the average American pays 101 percent more for healthcare than they would have in 1984, and the number of people choosing to forgo insurance is also climbing, with a 7 percent increase in the last year.

And what are people getting when they shell out more money to the American healthcare system? According to an analysis of wasteful healthcare spending published by the JAMA on Monday: “Administrative inefficiency,” like billing and coding waste and physician time lost to insurance coordination, to the tune of $265 billion; “pricing failures,” like spikes in the cost of medications, doctor’s visits, and emergency services, that max out at around $240 billion; plus overtreatment, failures in care coordination and delivery, plus Medicare fraud.

The JAMA report proposed a number of fixes for wasteful healthcare spending for each of the categories listed above, but even those would only tackle an estimated 25 percent of that $760 billion lowball, meaning that only 5 percent of the total healthcare spending in the U.S. would be affected. It seems worth noting that researchers in countries with socialized healthcare systems don’t seem to have to publish extensive overviews of how exactly their systems and citizens are hemorrhaging money in order to keep people alive, let alone healthy. At minimum, it seems like we could curb the ability of pharmaceutical companies to set prices so high that people die from treatable illnesses all the time.

In an editorial on the JAMA analysis, Donald Berwick, who briefly oversaw Medicare and Medicaid under the Obama administration, pointed to American politics as the most likely culprit for healthcare waste. “What [researchers] call ‘waste,’ others call ‘income,’” he wrote. “People and organizations (for-profit and not-for-profit) making big incomes under current delivery models include very powerful corporations and guilds in a nation that tolerates strong influences on elections by big donors.”

Of course, there’s the argument U.S. officials and pharmaceutical companies love to make: Money is necessary for drug research and development, which is why we can’t regulate drug prices. But when individual citizens of literally every other country in the world spend less money on prescriptions than Americans do, it feels safe to say there’s room for regulation.

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