- Between $760 and $935 billion spent on healthcare every year is waste, according to a new JAMA study.
- This waste comes from premiums, taxes, and out-of-pocket spending. The most wasteful spending came from failure of care delivery.
- The bloat contributes to the issue of healthcare affordability, and the profits that healthcare companies turn.
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A quarter of total US healthcare spending — between $760 and $935 billion every year — is waste, according to a new JAMA study lead by William Shrank, who is Humana's chief medical officer.
Why it matters: We all pay for this waste through our premiums, out-of-pocket spending, and taxes, and every dollar of it ends up in someone else's pocket. Meanwhile, the healthcare industry is thriving.
By the numbers: The study breaks down the wasteful spending into 6 categories.
- Failure of care delivery: $102.4–$165.7 billion
- Failure of care coordination: $27.2–$78.2 billion
- Overtreatment or low-value care: $75.7–$101.2 billion
- Pricing failure: $230.7–$240.5 billion
- Fraud and abuse: $58.5–$83.9 billion
- Administrative complexity: $265.6 billion
The bottom line: This system-wide bloat contributes to everyday Americans' struggle to afford their healthcare and the large profits being made by the companies that provide it.
