It's no secret U.S. healthcare has a waste problem. But a new analysis from insurance giant Humana and University of Pittsburgh School of Medicine researchers underscores just how costly the problem is.
According to their work, between $760 billion and $935 billion—or about a quarter of all U.S. healthcare spending—is spent on waste.
Published Monday in the Journal of the American Medical Association, the analysis estimates most waste stems from $265.6 billion in administrative complexity due to billing and coding and physician time spent reporting on quality measures.
They also attributed between $230.7 billion and $240.5 billion in waste to pricing failures, between $102.4 billion and $165.7 billion on failure of care delivery and $75.7 billion to $101.2 billion on overtreatment or low-value care.
Further, they found $58.5 billion to $83.9 billion is wasted by fraud and abuse, and $27.2 billion to $78.2 billion is wasted due to failure to properly coordinate care resulting in unnecessary admissions or avoidable complications and readmissions.
"Implementation of effective measures to eliminate waste represents an opportunity to reduce the continued increases in US health care expenditures," the authors wrote. Their work was based on 71 estimates from 54 publications including government-based reports, articles and peer-reviewed publications between 2012 to 2019 that focused on estimates of costs or savings related to six areas of waste.
The authors also found estimates of the potential to cut waste—for instance, through insurer-clinician collaboration and data interoperability—ranged from $191 billion to $282 billion, or 25% of the total cost of waste.