Stories

25% of health care spending is waste

Ambulances in southeast Missouri.
Ambulances in southeast Missouri. Photo: Michael S. Williamson/The Washington Post/Getty Images

A quarter of total U.S. health care 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 health care industry is thriving.

By the numbers: The study breaks down the wasteful spending into 6 categories.

  1. Failure of care delivery: $102.4–$165.7 billion
  2. Failure of care coordination: $27.2–$78.2 billion
  3. Overtreatment or low-value care: $75.7–$101.2 billion
  4. Pricing failure: $230.7–$240.5 billion
  5. Fraud and abuse: $58.5–$83.9 billion
  6. Administrative complexity: $265.6 billion

The bottom line: This system-wide bloat contributes to everyday Americans' struggle to afford their health care and the large profits being made by the companies that provide it.

Go deeper: U.S. drug companies lure Mexican blood plasma donors