30 Cents of Every Dollar Spent on Health Care is Wasted

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With health care at stake in the presidential race, a new study finds just how much money gets wasted when it comes to our system: for every dollar spent, 30 cents. The study, conducted by the Institute of Medicine and reported in The New York Times, found that in 2009 an estimated $750 billion a year was unnecessarily spent. As The Times' Annie Lowrey writes: "That is roughly equivalent to the annual cost of health coverage for 150 million workers, or the budget of the Defense Department, or the 2008 bank bailout." For another perspective Peter Orszag at Bloomberg View points out "the report notes, that is enough to pay the full salaries of all the nation’s firefighters, police officers, and emergency medical technicians for more than a decade." In other words, that's a lot. 

The Times also editorialized on the report, concluding

What’s clear from this report is that the pilot projects in the Affordable Care Act to encourage better coordination of care, make medical prices transparent and accelerate the use of health information technology are only a modest start. These have to be expanded, not repealed, if the nation hopes to make a real dent in health care costs.

It wasn't just money that was lost either. The report explains that, in 2005, 75,000 deaths could have been avoided if "every state had delivered care on par with the best performing state." 

This article is from the archive of our partner The Wire.