Wasted Health Spending: Who’s Picking Up the Tab?

There is a significant amount of wasted spending in the US health care system, with estimates of over 30 percent of spending, or more than $1 trillion annually. An article published on the Health Affairs Blog takes a market-specific approach toward examining the causes of this waste and points to three intriguing insights:

1. “Private insurers—and ultimately employers and individuals who pay premiums—account for a disproportionate share of the waste attributable to administrative complexity and billing bureaucracy.
2. “Patients and private insurers may be particularly exposed to the cost of unnecessary or low-value outpatient services, such as diagnostic imaging for uncomplicated headaches.
3. “Given its membership demographics, Medicare is heavily impacted by the cost of failures of care coordination, in hospital and skilled nursing facilities.”

Study authors make several recommendations to address these insights. In particular, analyzing all-payer claims databases could help to pinpoint wasteful spending and measures ways to reduce its burden. Public and private payers could reduce waste by focusing on health priorities specific to their patients and members, such as care transitions or targeting overtreatment through education programs. Simplifying administrative complexity might require regulatory intervention, but it also could reduce the spending burden. Read the full article, “Wasted Health Spending: Who’s Picking Up the Tab?” by Daniel P. O’Neill and David Scheinker, on the Health Affairs Blog.